Bitwise ex-president won’t turn over her company-issued computer, Bankruptcy trustee says [The Fresno Bee]

Fresno Bee, The (CA)

Former Bitwise Industries president Bethany Mily won’t hand over her company-issued laptop computer to the court-appointed trustee overseeing the company’s bankruptcy case in Delaware.

Bankruptcy trustee Jeoffrey Burtch alleged Thursday in court filings that Mily, through her legal counsel, “has thus far refused to voluntarily produce the company laptop in her possession on the grounds that it may contain information that is subject to attorney-client privilege.”

Burtch’s assertions came in his response to a request by Mily that she be allowed to seek coverage under a $5 million business insurance policy that Bitwise purchased prior to its collapse to defend the company’s executives and directors against lawsuits or investigations.

Mily, who lives in the Chicago suburb of La Grange, Illinois, was the president of Fresno-based Bitwise from mid-2015 through May 2023, when the company’s co-CEOs Jake Soberal and Irma Olguin Jr. announced that all 900 of its employees nationwide were being furloughed immediately, including about 400 in the Fresno area. Soberal and Olguin were fired days later by Bitwise’s board of directors.

The employee furloughs became permanent layoffs a few weeks later, and five Bitwise-associated companies filed for bankruptcy in Delaware on June 28.

Mily has been named as a defendant in one of the many civil lawsuits filed against Bitwise Industries, its former co-CEOs, and former directors after the Memorial Day blood-letting but before the June 28 bankruptcy filing.

Multiple sources have confirmed to The Fresno Bee that agents from state and federal agencies, including the Federal Bureau of Investigation, are looking into possible wrongdoing related to the financial meltdown of Bitwise. The company was founded in 2013 to provide technology training, tech services for businesses, and leasing space to budding tech entrepreneurs.

Bankruptcy court records indicate that Bitwise Industries Inc. and four other associated entities have stated liabilities of more than $511 million, plus additional claims from creditors that add up to another $25.5 million.

Burtch continues to investigate what factors contributed to Bitwise’s demise and what assets may be available to satisfy at least some of the companies’ debts. As part of that process, Burtch wants Mily’s laptop computer.

The bankruptcy trustee is asking that as a condition to being allowed to access coverage under the insurance coverage, “that Mily first turn over the laptop computer and any other devices” provided by Bitwise prior to the bankruptcy filing.

The company-issued laptop “indisputably remained Bitwise property” at the time that the company filed its bankruptcy petition on June 28, Burth said. “The computer, therefore, is property of the Bitwise bankruptcy estate … and Mily is required to deliver it to the Trustee. …”

Under the terms of Bitwise’s employee handbook, “Mily could not have reasonably expected that information on the computer might be kept private because she was specifically advised that it was not,” Burtch argues in the court filing. “The Trustee does not believe that any individual employee may refuse to turn over a computer that is property of the estate on the grounds that it may contain privileged communication.”

Burtch said he would agree to accept the computer from Mily under a court order that the handover would not represent a waiver of attorney-client privilege for Mily.