DOJ: Connecticut man pleads guilty to defrauding Bitwise investors

FRESNO, Calif. (KSEE/KGPE) – A man from Connecticut has pleaded guilty after being accused of defrauding investors of the failed Fresno-based, start-up company Bitwise Industries with his business partner, according to the United States Department of Justice on Monday.

The DOJ says Andrew Adler, 31, of Greenwich, Connecticut, pleaded guilty to the conspiracy to commit wire fraud when he defrauded investors out of $20 million in loans made to Bitwise.

According to court records, Adler and his business partner, David Hardcastle, 61, of Fresno, gave Bitwise approximately $20 million in hard money loans through their special purpose entity Startop Investments LLC.

The DOJ says the pair used a syndicate of investors to fund the loans. They altered the original loan documents to make it appear as though Bitwise was obligated to pay significantly less interest on the loans than was true and forged the signature of Bitwise’s Co-CEO Jake Soberal on the altered documents. All of this was to make the loans appear to be less risky and more appealing to the investors.

As a result, Adler and Hardcastle received tens of thousands of dollars in origination fees for the loans and stood to make millions more in secret profits from the higher, undisclosed interest rates had the loans been fully repaid. However, the loans were never repaid by Bitwise before collapsing, meaning the investors lost nearly all of their money, according to officials.

Per the DOJ, Adler is scheduled to be sentenced on June 2. He faces maximum statutory penalties of 20 years in prison and a $250,000 fine for the conspiracy to commit wire fraud charge.