Charleston exec who stole $6M from DC fuel startup learns punishment (2024)

A longtime Charleston-based energy entrepreneur was sentenced to three years in prison on June 4 after being charged with embezzling nearly $6 million from a sustainable aviation fuel business he started five years ago.

Federal prosecutors also said Bryan J. Sherbacow, 55, defrauded investors in his former company out of more than $15 million.

The U.S. Justice Department recommended an incarceration period of 78 to 97 months, saying Sherbacow abused his position of authority at Alder Fuels for nearly two years and "stole to fund a lavish lifestyle."

According to Courthouse News, which was at the Washington, D.C., hearing, the judge overseeing the case gave him 36 months based on "significant issues with Sherbacow's family situation revealed only in sealed testimony." The report also said the ousted executive apologized and expressed remorse.

The amount of financial restitution will be determined later.

Sherbacow was the founder, president and CEO of Alder, which fired him from his $600,000 a year job in late 2022 after discovering financial improprieties it traced back to him. A grand jury charged him last year on three counts of wire fraud and two counts of acquiring property with funds derived from unlawful activities.

He agreed to plead guilty in February to one of the wire fraud charges.

Prosecutors said Sherbacow opened a bank account in Alder's name that only he controlled. Over nearly two years, starting in early 2021, he had about $5.9 million wired either to him personally or to "third parties to pay for, among other things, personal tax liens," according to the indictment.

He also tried to cover up the roughly 150 transfers by providing altered bank statements, falsified spreadsheets and other bogus financial documents to an accountant, employees, investors and Alder's board of directors, prosecutors said.

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Sherbacow used some of the stolen funds to pay for personal luxuries, including a vintage Mercedes-Benz sports car, a Range Rover and a deposit on a condominium. Company money also was spent on tax liens, credit card bills, rent, a beach club and a home audio-visual system that cost more than $64,000.

In addition to a South of Broad condominium on Chisolm Street, which was sold in January for $1.5 million, Sherbacow maintained a residence in the D.C. area. He has lived or owned several homes in downtown Charleston since at least 2004, according to public records.

Before he started Alder in 2019, Sherbacow was co-founder of a Kansas energy firm that was seeking to capitalize on the ethanol-fuel boom. His Washington-based startup later attracted financing from investors such as United Airlines Ventures and Honeywell International Inc.

The company, which has been renamed Alder Renewables, said in a written statement earlier this year that it was "keen to put this chapter behind us" and that it was "in a strong and stable position to grow."

William Coffield, Sherbacow's attorney, sought a punishment of home confinement, probation and community service for the former CEO.

The defense lawyer also pushed back against the government's argument that Sherbacow defrauded his investors. In a sentencing memorandum, Coffield said thiswas not "the story of a Theranos-style fraud," referring to the infamous blood-testing startup that was built on a web of lies.

He also described the theft at Alder as "a tragedy in that, unlike the classic embezzlement case, Mr. Sherbacow led the company through ever increasing value, with the intention of selling some of his shares later." But those plans were thwarted by an internal "Catch-22" investor policy that prevented the CEO from cashing in any of his stock, which Coffield said was valued at $46 million as of last month.

"Paralyzed by this reality, he delayed seeking permission to sell shares until it was too late," Coffield wrote.