ALDER RENEWABLES
PROFILE
The rise and fall of Bryan Sherbacow
Despite winning an award for pioneering SAF, Bryan Sherbacow’s career ended in a three-year prison sentence. Words: Oscar Henderson
ALDER RENEWABLES
The rise and fall of Bryan Sherbacow
Despite winning an award for pioneering SAF, Bryan Sherbacow’s career ended in a three-year prison sentence. Words: Oscar Henderson
PROFILE
BRYAN Sherbacow reached the peak of his mountain, but knew he was heading for a fall.
The sustainable aviation fuel (SAF) pioneer Sherbacow scaled his summit by winning the prestigious Advanced Bioeconomy Leadership Award in June 2022 after a decade leading the growth of the biofuel industry in the US.
But Sherbacow’s footing was precarious. The board of Alder Fuels, the company he founded, was on his case over what it suspected to be serious fraudulent activities and embezzlement. The company removed him as CEO and a criminal investigation was launched by the US Department of Justice
In February 2024, Sherbacow pleaded guilty in the US District Court for the District of Columbia. In June of last year, he was sentenced to three years in prison.
It was quite the descent for the man who began by co-founding AltAir Fuels, the first SAF and renewable diesel (RD) production facility in the world in Paramount, California in 2010. He stayed on as chief commercial officer when it was bought by World Energy for $72m in 2018 and then founded Alder Fuels in 2021.
Alder Fuels – now Alder Renewables – uses woody waste, agricultural by-products and next-generation energy crops to empower refiners to create low carbon to carbon negative biofuels, such as SAF. Honeywell UOP was an early investor, while it has also received funding from United Airlines, Avfuel and Directional Aviation.
Less sustainable were Sherbacow’s activities behind the scenes. According to court records, from January 2021 to December 2022 Sherbacow used company money for unsanctioned purposes 150 times. These included complex sleights of hand to conceal his fraud from the board, company employees and investors.
In December 2022, Sherbacow voluntarily surrendered his 31.6% share of company stock, totalling 1,292,482 shares of Alder Fuels’ ownership interest. “I have betrayed you and for that I am deeply sad and remorseful,” he said in a statement shortly after. “I have a proposal to pay the company back. It’s the next step after surrendering my shares.”
Sherbacow was replaced by aviation industry veteran Tim Obitts, who joined then Alder Fuels as chief legal officer in February 2022, excited to be at the forefront of a project with real purpose.
Bryan Sherbacow founded Alder Fuels.
“I joined then Alder Fuels because I felt like I could make a difference,” Obitts told CJI’s sister title, SAF Investor, on The SAF Podcast in 2023.
“There are very few times that you are presented with a job where you can say that I can make a transformative difference.”
Little did Obitts know what “ordeal” lay ahead when he first joined the company, courtesy of Sherbacow’s actions.
“There were a lot of sleepless nights,” he added. “I had to do a restructure and reduction of force and terminate people that I have been friends with for many years. That was tough, I cried.”
Sherbacow was indicted on three counts of wire fraud and two counts of engaging in monetary transactions in property derived from specific unlawful activity.
“Despite how tough it has been, I now see it as a blessing. I didn’t see it that way at the time. I was devastated.”
Tim Obitts, CEO, Alder Renewables
He had been sending an external accounting company doctored accounting records with his personal transactions removed and he had inflated company liquidity. He later admitted that three investors collectively invested $14,999,982.72 “in at least partial reliance” on the misrepresented company finances, according to court documents.
The embezzled funds were used to purchase a waterfront condo in South Carolina, a 1968 Mercedes Benz sports car, a Range Rover and a beach club, plus payments on personal tax liens, personal credit cards, rent on personal residences and payments to an art auction. Collectively this totalled at least $5.9m.
The prosecution argued at sentencing that total losses to the company were $22,945,982.22, a combination of the embezzled funds for personal use and investment attracted by fraudulent financials. It also argued that any shares Sherbacow possessed were worthless because at the time he surrendered them the company was insolvent.
In a statement at the time, the company said Sherbacow’s actions significantly harmed the company as his crimes “gutted financial resources, leaving the company insolvent and unable to meet its financial obligations. This put at risk the company’s ability to continue and complete time sensitive projects with several US government agencies.”
The company also said it had to lay off several employees because of troubles meeting payroll obligations and it sought additional funding to continue operations and avoid dissolution and liquidation. Against the odds, under Obitts’ and the board’s leadership, they met their targets and turned the business around, operating as Alder Renewables.
For Sherbacow’s part, he faced a jail sentence of six-and-a-half to eight years. In mitigation, his lawyers argued the company still possessed its process technology IP patent worth $3.75m. They also pointed out it was the recipient of a $2m Department of Energy (DOE) grant (an endorsement of the company’s novel technology won three weeks after Sherbacow’s removal) and had not filed for bankruptcy. The company has since won further DOE funding.
Sherbacow’s legal team also claimed the 31.6% share of stock he surrendered had a value of $46m. This was supported by communications between Sherbacow and senior company officials who acknowledged “these shares have significant value to the company”, his lawyers argued. Taking into account these considerations, Sherbacow’s sentence was reduced to three years.
It is testament to both Obitts’ resilience in leading a rebranded Alder Renewables through this period and the potential the company shows that all investors remain engaged with the company. The company has also added to its board, attracted more investors, expanded the team and instituted a series of financial measures to ensure Sherbacow’s malfeasance can be placed in the rearview mirror.
At home in the lab: Alder Renewables now calls Colorado home.
At home in the lab: Alder Renewables now calls Colorado home.
Sources close to the project have told CJI the promise of the technology is the real value proposition for the company, and that this was the basis for investments and continued support of the revived Alder Renewables. They also expressed optimism that Alder Renewables can move on from this period with no detrimental effect on additional capital raises.
The same technology proposition is now strengthening, as the company demonstrates the potential of low carbon fuels. The technical team has even produced an industry-first carbon negative SAF derived from energy crop miscanthus. Plus, the company has received new grants from the DOE, graduated from the National Renewable Energy Lab at bench scale to pre-pilot scale, and they opened their own facility in Colorado. Crucially, the organisation has retained its top technical talent despite the challenges – no small feat for a company that has faced these trials and tribulations.
Obitts, now CEO, Alder Renewables tells us: “Despite how tough it’s been, I now see it as a blessing. Believe me, I didn’t see it that way at the time. I was devastated. But now, I can see that it’s made the bonds within the team stronger. We’re more resilient, more focused. There’s also a transparency and openness to our operations now that is unique – and I’ve been in this sector for a long time.”
The experience is a reminder of the importance of people and relationships, he adds. “We’ve sustained these relationships and, in many cases, made them stronger. Ultimately, we’ve got a clear, purposeful mission that’s bigger than each of us – and that’s kept us going in the tough times. We know what matters. Building is our only focus now.”
Meanwhile, Sherbacow’s contributions to the renewables industry did not go unrecognised. During the presentation of Sherbacow’s Advanced Bioeconomy Leadership Award, former secretary of the US Navy Ray Mabus praised his visionary leadership. “Some people see things as they are and say why. Others dream of things that never were and ask why not?”
Without Sherbacow, the US Navy’s Great Green Fleet project to operate some ships on a combination of biofuels and diesel to reduce energy costs would not have been realised, said Mabus. The achievements, influence and respect that Sherbacow came to hold in the biofuels industry were significant. But Sherbacow’s downfall is proof, reaching the summit is not the end of the journey. You always need to watch your footing.
