The former chief financial officer for Seattle-area retail software company Fabric was sentenced to two years in prison Thursday for a wire fraud scheme that involved misusing $35 million from his employer to fund unauthorized cryptocurrency investments that collapsed.
Nevin Shetty, 42, of Mercer Island, 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, according to the United States Attorney’s Office for the Western District of Washington. Lin said Shetty’s actions cost the jobs of 60 people, adding “You almost put the company out of business. You were playing with money that wasn’t yours.”
Prosecutors were 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 should be invested conservatively while the company worked to grow its business.
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. The case highlights the risks companies face when executives gain access to large amounts of capital without proper oversight, particularly during periods of rapid fundraising when startups amass significant cash reserves.
