The Securities and Exchange Commission has charged the former co-CEOs of a technology startup with misleading investors about their financial performance in order to raise money.
According to the SEC, Jake Soberal and Irma Olguin Jr. made material misrepresentations and falsified documents regarding the cash position and historical financial position of their Fresno, California-based private technology services startup, Bitwise Industries Inc.
While trying to raise $70 million in 2022, Soberal and Olguin presented potential investors with falsified bank records and even a fake audit report to convince them that Bitwise's cash balances and revenues were better than they were.
In fact, the company actually faced regular cash shortages, and eventually had to lay off all of its employees in May 2023.
"We allege that Soberal and Olguin resorted to blatant fraud, including the creation of fake financial documents, to deceive investors and raise money," said Monique Winkler, regional director of the SEC's San Francisco Regional Office, in a statement. "In one instance, the defendants allegedly conspired to send a purported screenshot to investors of a company bank account showing a cash balance of $23.4 million. In actuality, the account had only $325,100 in it. That's not a bank error—that's fraud, and the SEC is taking action to hold the defendants accountable."
Soberal and Olguin have agreed to resolve the SEC's charges, agreeing to the entry of a partial judgment, subject to court approval, that imposes permanent and conduct-based injunctions as well as an officer and director bar. Any potential disgorgement and civil penalties will be left to be determined by a court.
The U.S. Attorney's Office for the Eastern District of California has also announced criminal charges against Soberal and Olguin.
