In a significant development stemming from the collapse of Fresno-based Bitwise Industries, a Connecticut man has pleaded guilty to defrauding investors out of $20 million through loans made to the now-defunct tech startup.
This case adds another layer to the ongoing legal repercussions following Bitwise’s downfall.
The Guilty Plea
Andrew Adler, a resident of Connecticut, admitted in federal court to orchestrating a scheme that deceived investors into providing substantial funds intended as loans to Bitwise Industries.
Adler misrepresented the terms of these loans, particularly the interest rates, leading investors to believe they were entering into favorable agreements.
In reality, the terms were significantly different, resulting in considerable financial losses for those involved.
Background on Bitwise Industries
Founded in 2013 by Jake Soberal and Irma Olguin Jr., Bitwise Industries aimed to revitalize Fresno’s tech scene by offering coding boot camps and developing real estate for tech companies.
The company expanded rapidly, establishing campuses in multiple cities, including Toledo, Ohio; Buffalo, New York; and El Paso, Texas.
However, in May 2023, Bitwise faced severe financial difficulties, leading to the furlough of its 900 employees and the eventual termination of its co-CEOs. By June 2023, the company had entered Chapter 7 liquidation, ceasing all operations.
Previous Legal Actions
The collapse of Bitwise Industries has led to multiple legal proceedings. In December 2024, co-founders Soberal and Olguin Jr. were sentenced to 11 and 9 years in federal prison, respectively, after pleading guilty to wire fraud and conspiracy charges.
They admitted to defrauding investors, lenders, and others out of approximately $115 million by falsifying financial documents and misrepresenting the company’s financial health.
The Loan Scheme
Adler’s fraudulent activities involved soliciting investments for loans purportedly made to Bitwise Industries.
He provided falsified documents to investors, misrepresenting the interest rates and terms agreed upon with Bitwise.
These deceptive practices led investors to believe they were securing high-return, low-risk loans, when, in fact, the terms were unfavorable and risky.
The unraveling of Bitwise’s financial situation exposed Adler’s scheme, as the company defaulted on its obligations, leaving investors with substantial losses.
Ongoing Investigations
The Adler case is part of a broader investigation into fraudulent activities associated with Bitwise Industries. Earlier this month, David Hardcastle, a Fresno-based hard money lender, was charged with conspiracy to commit wire fraud for defrauding investors in loans made to Bitwise.
Hardcastle allegedly misled investors about the security and terms of their investments, resulting in significant financial harm.
Regulatory Oversight
The Securities and Exchange Commission (SEC) has been actively involved in investigating the fraudulent activities surrounding Bitwise Industries.
In November 2023, the SEC filed charges against Soberal and Olguin Jr. for falsifying documents to raise $70 million from investors. The commission alleged that the co-CEOs created fake financial documents to deceive investors about the company’s financial status.
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Impact on Investors and Employees
The collapse of Bitwise Industries and the subsequent fraudulent schemes have had a profound impact on both investors and former employees.
Nearly 900 employees lost their jobs, and many investors suffered significant financial losses. In December 2024, a $20 million settlement was approved for former Bitwise employees as part of a class-action lawsuit addressing unpaid wages and other grievances.
Legal Proceedings and Sentencing
Adler’s guilty plea marks a critical step in the legal proceedings related to the Bitwise collapse. Sentencing is scheduled for later this year, where Adler faces substantial prison time and potential restitution payments to the defrauded investors.
The case underscores the importance of due diligence and transparency in investment activities, as well as the severe consequences of fraudulent financial practices.
Conclusion
The downfall of Bitwise Industries continues to reverberate through legal and financial communities.
As more individuals like Andrew Adler are brought to justice, the full extent of the fraudulent activities associated with the company’s collapse becomes increasingly apparent.
These cases serve as a stark reminder of the necessity for rigorous oversight and ethical conduct in the financial and tech industries.
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