The former chief financial officer for Seattle-area retail software company Fabric was sentenced in U.S. District Court in Seattle Thursday to two years in prison for a wire fraud scheme that involved the misuse of $35 million from his former employer.
Nevin Shetty, 42, of Mercer Island, Wash., was found guilty last November, after a nine-day jury trial, of four counts of wire fraud.
“The loss had significant and severe effects on the company,” Judge Tana Lin told Shetty at the sentencing hearing, saying that his actions cost the jobs of 60 people. “You almost put the company out of business. … You were playing with money that wasn’t yours.”
The United States Attorney’s office for the Western District of Washington was seeking a nine-year sentence, according to a sentencing memorandum ahead of Thursday’s court action.
Assistant U.S. Attorney Philip Kopczynski wrote to the court that “Shetty’s serious crime deserves stern punishment,” calling it “a calculated scheme motivated by greed and meticulously carried out over many months.”
Shetty was ordered to pay $35,000,100 and will be on supervised release for three years after prison. Judge Lin also imposed a special condition that he not serve as an officer or director of a company without prior permission from the probation office.
Shetty joined Fabric as CFO in March 2021. The company, led at the time by several former Amazon executives, had just raised $43 million in new funding, and Shetty helped draft a policy governing how the money raised should be invested conservatively while the company worked to grow its business. Four months later, Fabric raised another $100 million and in February 2022 raised a $140 million Series C round to reach a valuation of $1.5 billion.
Prosecutors said Shetty diverted funds in early 2022 to his own cryptocurrency business, HighTower Treasury, without authorization. Although he helped create the company’s policy limiting investments to low-risk accounts, he secretly moved the money into high-yield decentralized finance platforms that promised 20% returns.
According to records, Shetty’s plan was to pay his employer 6% interest and keep the rest of the profits through HighTower. In the first month, he and a partner made about $133,000, but by May 2022, the crypto investments had collapsed, wiping out nearly all $35 million.
After confessing to colleagues, Shetty was fired and the company reported the theft to the FBI.
Shetty was indicted in May 2023.
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