Bitwise under FBI criminal investigation, Action News sources confirm

FRESNO, Calif. (KFSN) -- ABC30 is learning that failed tech company Bitwise and its leaders are the target of a federal criminal investigation. The news comes nearly a month after employees were laid off uncovering major financial issues.

Sources confirm to Action News, that failed tech company Bitwise is now the target of an FBI investigation. They could not say the types of crimes the Fresno-based company is being investigated for. As a policy, the FBI said it does not confirm or deny investigations.

RELATED: What is Bitwise? Explaining the rise and fall of the Fresno-based tech company

On Memorial Day, the company's 900 employees were abruptly furloughed and told their most recent paychecks would likely not go through when deposited. Two weeks later the employees were officially laid off.

Action News also learned Bitwise stopped making payments to their employee insurance policies and had not been making 401K contributions since the end of March. Earlier this year, the company was sued by an investor for not repaying a more than six million dollar loan.

RELATED: Lawsuit against Bitwise reveals company allegedly owes $6M for loan

The FBI investigation suggests the alleged crimes may have reached federal levels.

"This would be a complex case, this is something that's very sophisticated and deals with bank fraud, wire fraud, and mail fraud," said Tony Capozzi, legal analyst. "Anytime you use the mail to commit any kind of an offense, it's automatically a federal offense."

Those six million dollars were tax credits Bitwise sold to an investor. That money was supposed to be used for employees Bitwise retained in 2020 and 2021 as part of American Rescue Funds.

RELATED: Employees seeking legal action against Bitwise after furloughs

"That's all part of that scheme to defraud," said Capozzi. "Where did the money go that they borrowed? Where did they put it in from that one bank account or business account? Where did the money go? They will track the checks to see where it went and to determine whether or not it was fraudulent and not used for the purpose that they said it would be used for."

Capozzi said it's unlikely we'll see charges filed this year and the case is not likely to head to court until late 2024, but those considered criminally responsible could be arrested before then especially if they try to leave the country.

"The FBI, they may file a complaint and then go into the US Attorney's office and say, you know, we're worried about these people absconding," said Capozzi. "And maybe the FBI asked for a warrant to arrest these people, the judge may grant that warrant and have them arrested, they could end up sitting in jail while the investigation is completed."

Capozzi said defrauding employees could also be part of the case if they kept the employees working knowing they would not be able to pay their paycheck which eventually bounced.

RELATED: Former employees file lawsuit against Bitwise for unpaid wages, failure to notify of furloughs

He said the penalities for these kinds of offenses are up to 30 years in jail and a one million dollar fine.

ABC30 tried to contact former CEOs Jake Soberal and Irma Olguin both by phone and at their homes but got no response.

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