FORMER FABRIC CFO CONVICTED OF $35 MILLION FRAUD
In a significant blow to the tech industry’s reputation, Nevin Shetty, the former chief financial officer of Seattle e-commerce startup Fabric, has been convicted of wire fraud after misappropriating approximately $35 million from his employer. Following a nine-day trial, a jury found the 41-year-old Mercer Island resident guilty on all four counts of wire fraud on November 7, 2025. The conviction highlights the devastating consequences of breaching corporate trust and the increasing scrutiny being placed on financial misconduct within high-growth technology companies. U.S. Attorney Neil Floyd didn’t mince words when he described how Shetty “exploited his position of power and trust” in a calculated attempt to profit personally while subsequently engaging in deception to hide his activities.
The case represents a stunning fall from grace for a once-respected financial executive who joined Fabric as CFO in March 2021. At that time, the company was actively raising capital to fuel its growth trajectory in the competitive e-commerce platform space. Ironically, Shetty himself played an instrumental role in drafting the conservative investment policies meant to safeguard the very funds he would later misappropriate. These policies were specifically designed to ensure the company’s capital would remain secure in low-risk investments while Fabric built its business foundations. The company has since relocated its headquarters from Seattle to San Francisco, perhaps in part to distance itself from the shadow cast by this financial scandal that threatened its very existence.
According to prosecutors, Shetty’s scheme began unfolding in early 2022 when he quietly diverted company funds to HighTower Treasury, his own cryptocurrency business venture, without obtaining any form of authorization from Fabric’s leadership or board. This unauthorized diversion represented a flagrant violation of the investment policies he had helped establish. Rather than adhering to the conservative approach mandated by company guidelines, Shetty redirected the funds into high-yield but extremely risky decentralized finance platforms that promised returns of 20% – precisely the type of speculative investment explicitly forbidden by Fabric’s policies. The audacity of the scheme was matched only by its brazen disregard for corporate governance and fiduciary responsibility.
The court records reveal the calculating nature of Shetty’s plan: he intended to pay Fabric a modest 6% interest on its own money while pocketing the difference between that amount and the much higher returns generated through the cryptocurrency investments. Initially, the scheme appeared successful, with Shetty and his business partner generating approximately $133,000 in profits during just the first month of operations. However, as is often the case with high-risk investments promising outsized returns, the situation deteriorated rapidly. By May 2022, the cryptocurrency investments had catastrophically collapsed amid broader market volatility, virtually eliminating the entire $35 million that had been entrusted to Shetty’s stewardship. The swift and comprehensive financial implosion left little chance of recovery and forced Shetty to confront the consequences of his actions.
When faced with the undeniable reality of the massive financial loss, Shetty eventually confessed to his colleagues at Fabric. The company responded decisively by terminating his employment immediately and reporting the theft to the Federal Bureau of Investigation, triggering the criminal investigation that ultimately led to his indictment in May 2023. The legal process culminated in the recent trial where jurors deliberated for approximately ten hours before unanimously finding Shetty guilty on all counts. The conviction represents not just personal accountability for Shetty but also serves as a cautionary tale for the technology industry about the importance of robust oversight mechanisms and the severe consequences that can result when financial controls fail or are deliberately circumvented by those in positions of trust.
As Shetty awaits his sentencing hearing scheduled for February 11, 2026, before Judge Tana Lin, he faces the sobering reality that each count of wire fraud carries a potential penalty of up to 20 years in federal prison. The case sends a powerful message to corporate executives that violations of fiduciary duty will be met with serious legal consequences. For startups and growing technology companies, Shetty’s downfall underscores the critical importance of implementing strong financial controls, conducting thorough background checks on key executives, and creating corporate cultures that value ethical decision-making over short-term gains. As the technology sector continues to attract significant investment capital, the Fabric case serves as a stark reminder that even innovative companies must remain vigilant against internal threats to their financial integrity and business reputation.
