Financially-struggling Bitwise has not paid city business taxes since 2021, mayor says

FRESNO, Calif. (KFSN) -- It's not just Bitwise workers who are without a paycheck right now after furloughs were announced.

Businesses and organizations that rent space in Bitwise buildings say they've heard nothing from the tech company so far and they don't know what the future holds.

"We heard just like everybody else on the news. Getting information here and there," said Nicole Rodriguez of Best Buddies.

Best Buddies is one of the organizations that rent office space at the Bitwise Hive on Ventura Street.

Rodriguez said they have had no contact with Bitwise since the announcement, but they can still enter the building and their office.

The furloughs of Bitwise staff took Rodriguez by surprise because, to her, it appeared the company was thriving.

"Sometimes we'll go across the street to the 41. And they'll have a DJ out there for lunch and it just seemed like it was moving," said Rodriguez.

Bitwise also has an office in downtown Merced. Its opening created a lot of excitement in the community.

"So this was a big deal to us, too, and coming right to a very visible corner of downtown and helping to restore that and being very deliberate in the way that there seek to revitalize downtown and help downtown's and then improve our workforce as well," said Matthew Serratto, Merced Mayor.

Mayor Matthew Serratto said Merced wants to grow the tech industry in the city. They saw Bitwise as a significant partner in that plan, but Serratto still has high hopes for more tech growth in the North Valley whether or not Bitwise can bounce back.

"Just having that university there and having all the growth planned for around the university, I think puts us in a really great position long term to diversify our economy to have a more knowledge-based economy and attract a lot of those employers," said Serratto.

Businesses and organizations that rent space in Bitwise buildings say they've heard nothing from the tech company.

Others took the news differently, like a former Bitwise apprentice who agreed to speak with ABC30 anonymously.

"I wasn't overly surprised that it, you know, was not sustainable because just from what I saw, it did not seem like a business that knew how to function with the amount of people that it brought it in and just the work they were doing was just taking on too much," said a former employee.

In a letter sent to the CEOs on Wednesday, Fresno Mayor Jerry Dyer revealed that Bitwise had not paid city business taxes since September 2021.

Dyer wrote that the business has 30 days to send accounting information to the city controller or potentially face further action from the city.

"We're looking into why that happened. It's not uncommon for businesses to go unnoticed for perhaps a year, but to go that long -- it's over 18 months. So, we're having that looked into and it's certainly a blind spot that we need to make sure gets fixed," said Dyer.

The letter goes on to say that the business failed to properly notify the city, employees, and the Employment Development Department about the furlough, possibly breaking the California Worker Adjustment and Retraining Notification Act.

"Unfortunately, the appropriate agencies, including the City, received no such notice and were therefore unable to prepare to offer immediate and essential support to the impacted employees. This is an essential first step in providing services," Dyer wrote in the letter.

Fresno allocated a million dollars in American Rescue Funding to Bitwise.

"We did our due diligence at the beginning and quite frankly, only gave $500,000 of that. The second $500,000 was going to be provided after proof of performance. Certainly, that has not occurred," said Dyer.

A lawsuit against Bitwise was also filed in Fresno County by a company in Texas on Wednesday.

Among the allegations listed in the lawsuit is that Bitwise took millions of dollars from investors to buy buildings in Fresno and tried to sell them without letting the investors know.

"I would imagine as many states as they're operating in, there's going to be some other things that trickle up," Dyer said.

Since the announcements of furloughs were announced, Action News has not yet heard from either Bitwise CEO.

Action News reached out to both Jake Soberal and Irma Olguin, but got no answer on the phone, at their offices, or at their homes.

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