Bitwise Industries

Last updated
Bitwise Industries
IndustryTechnology
FoundedJuly 2013;11 years ago (2013-07)
FoundersIrma Olguin Jr. and Jake Soberal
DefunctJune 29, 2023;18 months ago (2023-06-29)
Fate Chapter 7 liquidation
Headquarters
Fresno, CA
Website bitwiseindustries.com at the Wayback Machine (archived 31 May 2023)

Bitwise Industries was an American company focused on computer programming instruction, technology sales, and real estate operations. Founded in 2013 by Irma Olguin Jr. and Jake Soberal in Fresno, the company grew to have campuses in additional cities before furloughing its workforce and terminating the co-CEOs in June 2023. [1] [2] In December 2024, Olguin and Soberal pled guilty to wire fraud and wire fraud conspiracy, agreed to pay $115 million in restitution to investors, and were sentenced to 9 and 11 years respectively in federal prison. [3]

Contents

History

Fresno-based lawyer Jake Soberal worked with technology designer and instructor Irma Olguin Jr. to found Geekwise Academy in 2012, a coding boot camp organization focused on serving the underprivileged community. This boot camp grew into Bitwise Industries, officially founded in July 2013, when it purchased an 8,000 sq ft (740 m2) building in downtown Fresno and leased out workspaces to small technology companies. The internal software development team was named Shift3 Technologies. [4] [5]

The company continued to grow, eventually purchasing a 50,000 sq ft (4,600 m2) building, also in downtown Fresno, that had been empty for many years. The building had previously been a car dealership. Bitwise renovated the building to have three floors of office space, a coffee shop and a 160-seat theater and named it Bitwise South Stadium. The building opened in 2015. [6] [7]

Belief of abandonment notice posted on the front door of Bitwise's South Stadium building Bitwise abandonment notice.jpg
Belief of abandonment notice posted on the front door of Bitwise's South Stadium building

In June 2019, Bitwise received $27 million in Series A round funding to create campuses in other cities. Oakland-based Kapor Capital provided the expansion funding. [8] In 2022, the company announced the cities in which it sought to expand, starting with renovating the Old Central Post Office in downtown Toledo, Ohio. It also began renovations in a 32,000 sq ft (3,000 m2) building at on Buffalo’s East Side and in the Sotoa Building in El Paso, Texas. After the expansion, it projected to have operations in ten cities in the US.

Cash flow problems and legal issues caused Bitwise to furlough all 900 employees on May 31, 2023. On June 2, 2023, the board of directors terminated co-CEOs Irma Olguin Jr. and Jake Soberal and installed Ollen Douglass as interim president. [9] [10] On June 29, Bitwise entered Chapter 7 liquidation and began winding down all assets. [11]

A lawsuit, filed on May 31, 2023, alleged that Bitwise improperly sought out loans and was unauthorized in listing properties for sale. It was filed by a Texas company that financed five Bitwise real estate acquisitions. The city of Fresno alleged that Bitwise has failed to pay taxes for two years. [12] [13] Reports later surfaced that Soberal misrepresented a pending large investment from Goldman Sachs in exchange for hard money loans. Former employees explored a class-action lawsuit for labor law violations. [14] [10]

On November 9, 2023, the U.S. Attorney's Office for the Eastern District of California announced federal wire fraud charges against Olguin and Soberal, citing $100 million in fraudulently obtained funds. [15] In July 2024, Olguin and Soberal changed their pleas to guilty of wire fraud and wire fraud conspiracy and agreed to pay $115 million in restitution. In December 2024, a judge sentenced Soberal to 11 years in prison and Olguin to 9 years [3]

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References

  1. ↑ Sheehan, Tim (July 28, 2013). "Valley's in a computer fix". The Fresno Bee . p. C3. Retrieved June 1, 2023– via Newspapers.com. Bitwise launched this month in an 8000 square foot building that CEO Soberal intends to be a technology hub for 10 small technology companies. In addition to each company having its own leased office space, there are shared workspaces that Soberal hopes will foster an atmosphere of collaboration and ingenuity.
  2. ↑ Hubbard, Les (May 31, 2023). "Dyer chides Bitwise for lack of furlough notice, failure to pay taxes". San Joaquin Valley Sun. Retrieved June 1, 2023.
  3. 1 2 "Bitwise Industries co-founders sentenced to prison". KVPR | Valley Public Radio. 2024-12-17. Retrieved 2024-12-23. While tech was at the heart of what Bitwise promised and promoted, its unraveling revealed that the business hinged primarily on workforce training, consulting and real estate. The company tried to place itself in underserved communities and attracted people from marginalized backgrounds. Prosecutors say much of the money Bitwise received went toward payroll, outfitting office spaces, inflated CEO salaries, and repaying debts owed to prior investors and lenders.
  4. ↑ Umoh, Ruth (June 26, 2020). "From Recycling Bottles for Cash to Tech CEO". Forbes . Archived from the original on July 18, 2020. Retrieved June 1, 2023.
  5. ↑ Fallows, James (March 14, 2015). "California's Centers of Technology: Bay Area, L.A., San Diego, and...Fresno?". The Atlantic . Archived from the original on March 17, 2015. Retrieved June 1, 2023.
  6. ↑ Fallows, James (June 19, 2019). "Bitwise goes big". The Atlantic . Archived from the original on February 15, 2023. Retrieved June 1, 2023.
  7. ↑ Casey, Anna (November 30, 2023). "Fresno moves beyond Bitwise". 1A Remaking America. WAMU . Retrieved January 29, 2024.
  8. ↑ Dishman, Lydia (February 24, 2021). "Bitwise Industries announces $50 million investment to grow tech apprenticeship program". Fast Company . Retrieved June 1, 2023.
  9. ↑ Stone, Reid (May 30, 2023). "Where is Bitwise Industries making its money? Internal docs shed light on business". San Joaquin Valley Sun. Retrieved June 1, 2023.
  10. 1 2 Ding, Jaime (June 14, 2023). "Bounced paychecks, frozen 401(k)s — How Fresno's 'shining star' let down the people it aimed to serve". LA Times . Archived from the original on June 14, 2023. Retrieved June 14, 2023.
  11. ↑ "Bitwise files for bankruptcy in Delaware federal court". GV Wire. June 29, 2023. Retrieved June 29, 2023.
  12. ↑ Stone, Reid (May 31, 2023). "Investor sues Bitwise alleging unauthorized sale of properties, loans". San Joaquin Valley Sun. Retrieved June 1, 2023.
  13. ↑ Gligich, Daniel (May 24, 2023). "Is Bitwise's boom over? Tax issues, money moves prompt questions". San Joaquin Valley Sun. Retrieved June 1, 2023.
  14. ↑ Tavlian, Alex (June 5, 2023). "Bitwise Industries hooked lenders with word of a pending Goldman Sachs deal. It wasn't real". San Joaquin Valley Sun. Retrieved June 5, 2023.
  15. ↑ "Eastern District of California | Bitwise Founders Irma Olguin, Jr. and Jake Soberal Charged for $100 Million Fraud Scheme". justice.gov. United States Department of Justice. November 9, 2023. Retrieved November 9, 2023.
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