Bitwise Industries hasn’t paid Fresno business taxes in more than a year, mayor says

Fresno Mayor Jerry Dyer is warning Bitwise Industries co-CEOs Jake Soberal and Irma Olguin Jr. that the technology and real-estate company is more than a year and half behind in paying its city business taxes and providing financial reports to City Hall.

In a letter released late Wednesday afternoon, Dyer also reminded Soberal and Olguin of the company’s obligations under California law to give employees — as well as the city and the state — advance notice of mass job actions such as Monday night’s furlough of the entire Bitwise workforce in Fresno and across the U.S.

“It has been brought to my attention that Bitwise related entities have not reported any gross receipts nor paid City business taxes since September of 2021,” Dyer wrote. “Please provide an accounting to the City Controller within 30 days of the receipt of this letter.

“Failure to do so may result in further action against Bitwise and its Board of Directors.”

The revelation by Dyer that Bitwise is behind on its business taxes comes after reports that the company, which was founded in Fresno in 2013 and expanded to other states across the country in recent years, is also delinquent on county property taxes owed for buildings and land it owns in Fresno and other California cities.

Some of those property tax delinquencies were detailed in a lawsuit filed Tuesday by a Texas company, NICbyte LLC, which accuses Bitwise Industries and subsidiaries of borrowing money against five separate properties in Fresno, Oakland and Bakersfield in which NICbyte has a 95% majority ownership stake. The suit also alleges that Bitwise and its affiliated entities listed for sale four of the five properties, including the historic State Center Warehouse building on R Street in downtown Fresno.

NICbyte states in its lawsuit that the Bitwise entities had no legal authority to either take out the loans, totaling almost $30 million, or to list properties for sale.

Dyer said Wednesday night that his office is trying to figure out why more than 18 months went by before the discovery that Bitwise was behind on its business taxes.

“It’s not uncommon for businesses to go unnoticed for perhaps a year,” Dyer said, “but to go that long, over 18 months that those business taxes were in arrears, we’re having that looked into. (It’s) certainly a blind spot that we have to make sure to fix.”

But how much is owed in those back taxes is uncertain. “They haven’t told us what their gross receipts are, which would then determine what their taxes are,” Dyer said. “So we’re waiting for that to be provided to us.”

Dyer said he has tried, unsuccessfully so far, to reach Soberal by phone. “But we are pursuing a couple of things,” he added, including a possible City Council resolution related to the city’s commitment of $1 million in federal American Rescue Plan Act funds to Bitwise to assist small businesses with technology literacy.

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

Dyer added that prior to this week, Bitwise had been able to account for about $120,000 in services the company had provided under the ARPA agreement, but he was uncertain about any services beyond that.

No advance warning to employees of mass furloughs

Dyer noted in his letter that California’s Worker Adjustment and Retraining Notification, or WARN, Act, requires employers to provide advance notification to affected employees, as well as to the state Employment Development Department and the chief elected official of the affected community “when a ‘furlough’ of this magnitude is imposed.”

California’s WARN Act requires “employers to give a 60-day notice to the affected employees and both state and local representatives before a plant closing or mass layoff,” according to a summary from the state Employment Development Department. “Advance notice provides employees and their families time to transition and adjust to the potential loss of employment, time to seek alternative jobs and, if necessary, time to obtain skills training or retraining to successfully compete in the job market.”

Soberal and Olguin Jr. told The Fresno Bee late Monday that they informed Bitwise employees of the furloughs Monday evening — at the end of the three-day Memorial Day holiday weekend — and that the furloughs took effect immediately. Some stunned employees posted on social media that they didn’t learn they had been furloughed until they opened their email on Tuesday.

“The sudden and devastating employment action taken in recent days by Bitwise, reportedly classified as a ‘furlough’ of approximately 300 Bitwise employees within the Fresno area, has sent ripple effects throughout our community,” Dyer wrote. “Many longtime supporters of your entrepreneurial presence in our community have reached out to express concern.”

“Unfortunately, it appears that neither Bitwise employees nor the City of Fresno received any advance notice of this company-wide furlough, which has upended the lives of hundreds of Fresno residents and caused considerable anxiety based on this lack of communication,” the mayor added.

While the language of the WARN Act refers to layoffs, “we’ve had the difference between ‘layoff’ and ‘furlough looked at by our city attorney, and we believe that the furlough does apply to the WARN Act,” Dyer said Wednesday evening. “Especially in light of the fact that the recent checks written to employees, they were not able able to cash them because there was no funding behind them.”

“In essence, whether you call it a ‘furlough’ or a ‘layoff,’ people aren’t getting paid,” he added.

Because there was no advance notification, city and state agencies “were therefore unable to prepare to offer immediate and essential support to the impacted employees,” Dyer wrote. “While it remains to be seen whether this ‘furlough’ is temporary or results in permanent layoffs, the City reminds Bitwise that regardless, it has legal obligations to its employees, and to the City.”

The mayor encouraged Bitwise and its subsidiaries “to immediately comply with all applicable state and federal law, including statutes regarding advance notice of qualifying employment actions.”

Dyer said Wednesday evening that the required advance notice would have given the city, local and state employment and workforce development officials more time to establish job fairs and other forms of support to affected workers. But, he added, “as it stands now, we’re trying to play catch-up.”

He added that a job fair is already being planned for June 9 for the furloughed Bitwise employees.

“I can assure you that had we been notified 60 days in advance, those employees would have already been offered job fairs, unemployment benefits, and many of those employees would have successfully been able to land jobs in Fresno,” Dyer said. “We have openings in the city of Fresno, and we’re going to be entertaining applications from some of the folks that might be qualified.”