A 31-year-old Connecticut man was sentenced Monday to three years and five months in federal prison for his part in defrauding investors in loans made to the failed Bitwise Industries.
The defendant, Andrew Adler, was also ordered by U.S. District Judge Jennifer L. Thurston to pay $9.3 million in restitution jointly and severally with the other Bitwise defendants. He must also forfeit $1 million.
Federal prosecutors charged Adler and his business partner, David Hardcastle, 61, of Fresno, with conspiracy to commit wire fraud and substantive wire fraud for defrauding investors in loans made to Bitwise.
According to court documents, Hardcastle and Adler carried out their scheme from December 2022 through May 2023 by giving Bitwise an approximately $20 million hard money loan, usually cash, through a company they created specifically for that purpose.
They then recruited other investors to participate in loaning money to Bitwise.
In doing so, they altered the original loan documents to make it appear that Bitwise was obligated to pay significantly less interest on the loans than was true. They also forged the signature of Bitwise’s Co-CEO, Jake Soberal, on the altered documents. This made the loans appear less risky and therefore more appealing to the investors, according to a news release from the U.S. Attorney’s Office.
Adler and Hardcastle also made tens of thousands of dollars in fees for originating the loans. They stood to make millions more in secret profits from the higher, undisclosed interest rates had the loans been fully repaid.
Unfortunately, however, Bitwise turned out to be a Ponzi-like fraud scheme and collapsed before that could happen. As a result, the participants lost nearly all their money. Adler told the court in his filings that he was motivated to commit the fraud by pure greed and nothing else, according to the news release.
Hardcastle’s case is currently pending trial.
“The collapse of Bitwise Industries exposed Andrew Adler’s lies to investors in securing a multi-million-dollar loan, which he used to secretly line his pockets.” said FBI Sacramento Field Office Special Agent in Charge Sid Patel. “This investigation clearly demonstrates the FBI’s tenacity and is a testament of the great work performed by FBI agents and personnel in our Fresno Resident Agency.”
The founders of Bitwise, Jake Soberal and Irma Olguin Jr., were previously sentenced to 11 years and nine years in prison, respectively, for orchestrating the scheme that caused the loss of more than $115 million.
