Bryan Sherbacow, the founder and former CEO of sustainable aviation fuel company Alder Renewables, was sentenced to 36 months in prison for embezzling over $5.9 million from his company and defrauding investors of $16 million. His fraudulent activities funded an extravagant lifestyle, including luxury vehicles, a waterfront condo, and exclusive club memberships.
Between January 2021 and December 2022, Sherbacow exploited his sole access to Alder Renewables’ bank account, making over 150 unauthorised transfers to his personal account. He used the stolen funds to purchase:
- A waterfront condo in Charleston, South Carolina
- A vintage Mercedes-Benz sports car and a Range Rover
- Payments toward personal tax liens, credit cards, rent, and a beach club membership
- Expensive art auction purchases
To cover his tracks, he fabricated bank statements and financial records, deceiving both the company’s third-party accounting firm and its board members. Additionally, he misled investors by presenting falsified financial statements to secure more funding.
US District Judge Carl Nichols emphasised the seriousness of Sherbacow’s betrayal, describing his actions as an abuse of power that funded a “ridiculous” lifestyle. As part of his punishment, Sherbacow was ordered to:
- Forfeit his waterfront condo and the Mercedes-Benz
- Be prohibited from opening new lines of credit
Before his sentencing, Sherbacow apologized to his co-founders, colleagues, investors, and family, admitting that he should have curbed his lifestyle but felt trapped by his personal circumstances.
How did a CEO manage to defraud so many people?
Sherbacow was able to siphon company funds into his personal accounts, manipulate financial statements, and mislead investors—all while leading the very organization he was defrauding. His ability to alter records and evade detection for a time demonstrates how dangerous it can be when compliance systems are either weak or not followed. Companies must ensure they have controls that prevent even the CEO from unilaterally accessing funds without oversight.
A well-designed compliance program should include:
Segregation of duties: No single individual, including the CEO, should have unrestricted access to financial transactions and record-keeping. Multiple levels of review should be required for high-value transactions.
Regular internal and external audits: A rigorous audit system can help detect and prevent fraud before it escalates. Sherbacow’s scheme involved sending altered bank statements to the company’s external accounting firm. A more robust reconciliation process could have caught discrepancies earlier.
Whistleblower protections: Employees must feel safe reporting suspicious financial activity without fear of retaliation. Anonymous reporting mechanisms can help uncover misconduct.
Board oversight and independent committees: Company boards should have independent audit committees that actively review financial records and transactions. Sherbacow was able to mislead both investors and board members—highlighting the need for deeper scrutiny at the governance level.
Investor protections and internal due diligence
Beyond internal controls, investors must also exercise due diligence before committing capital to a company. Sherbacow fabricated bank statements and financial records to lure investors into providing $15 million in funding. Stronger verification methods, such as third-party financial audits and direct bank statement verification, could have exposed the deception sooner.
Investors should:
- Request direct access to a company’s financial records rather than relying solely on documents provided by company executives.
- Look for inconsistencies in cash flow, particularly if a company’s financial performance seems too good to be true.
- Verify the background of key executives, checking for past financial misconduct.
Lessons for companies of all sizes
While Sherbacow’s fraud took place in a multimillion-dollar company, businesses of all sizes can learn from this case. Fraud, embezzlement, and financial deception are not limited to large corporations. Any organization without strong compliance measures is vulnerable.
To build a culture of compliance, companies should:
- Implement mandatory ethics and compliance training for all employees, including executives.
- Regularly review and update financial oversight policies to keep up with emerging risks.
- Foster an environment where accountability applies to everyone, regardless of position.
Sherbacow’s case is a cautionary tale that highlights the importance of corporate governance, financial oversight, and ethical leadership. No company leader should be immune to scrutiny. A robust compliance framework not only protects a company from fraud but also safeguards its reputation, investors, and employees.
For companies that want to thrive long-term, preventing fraud at the highest levels isn’t just a best practice—it’s a necessity.
