Former co-founder of AirCo, Dr. Stafford Sheehan, has filed a whistleblower lawsuit against the company and its board, alleging serious ethical, financial, and national security violations.
AirCo, known for pioneering technology that converts atmospheric CO2 into valuable products including sustainable aviation fuel (SAF), has received federal backing in its mission to decarbonize critical industries. But the lawsuit alleges that this success has come at a cost.
Central to Dr. Sheehan’s complaint, which has been shared with the Carbon Herald, is the charge that AirCo’s holding company, ACH, improperly billed unallowable marketing expenses to federal contracts — which the lawsuit says is a direct violation of those funding agreements.
Dr. Sheehan claims he internally reported these discrepancies to Board Chairman Steven Jbara and other executives on April 30 and May 1, 2024, but says it was met with inaction.
National Security Breach Involving Foreign Nationals
The lawsuit also includes an alleged breach of federal security protocols. In September 2024, a delegation affiliated with the World Economic Forum (WEF) — including foreign nationals — was reportedly given access to AirCo’s 94 Scott laboratory in Brooklyn.
The lab housed Controlled Unclassified Information (CUI) and Export Controlled Information (ECI) tied to contracts with the Department of Defense (DoD) and NASA.
The visitors were allowed to take photos and video during the tour, allegedly approved by CEO Gregory Constantine, despite the sensitive nature of the facility.
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Dr. Sheehan claims he intervened to halt the documentation and raised concerns with company leadership and outside counsel. When his warnings went unheeded, he alerted the DoD’s Defense Innovation Unit.
According to documents provided to Carbon Herald by Dr. Sheehan’s legal team, the Defense Innovation Unit, quickly referred the case to the Air Force Office of Special Investigations, which in turn passed it to Homeland Security’s Export Enforcement Division.
“Dr. Sheehan was unlawfully terminated in retaliation for his whistleblowing activities – which included reporting several issues to the proper authorities – and he is defending his rights. As a stockholder, Dr. Sheehan continues to support AirCo and its mission. He hopes to resolve the dispute and put this matter behind him and AirCo,” a legal representative for Dr. Sheehan told Carbon Herald.
Alleged Chinese Tech Transfer and ITAR Violations
The complaint also alleges that sensitive engineering data was improperly disclosed to Chinese nationals and a Chinese state-linked firm, Wison Engineering.
Dr. Sheehan asserts that between 2023 and 2024, AirCo’s VP of R&D, Dr. Lubo Zhou, shared proprietary information that allowed Wison to produce cost estimates for AirCo systems— estimates that implied access to restricted data.
Such disclosures could constitute violations of International Traffic in Arms Regulations (ITAR) and defense contract provisions explicitly barring collaboration with Chinese-owned entities.
Despite repeated warnings, Dr. Sheehan claims the leadership took no action to prevent the disclosures or alert regulators.
Retaliation and Coerced False Statements
Following his whistleblower complaints, Dr. Sheehan was placed on involuntary leave and eventually fired “for cause” on December 30, 2024.
The lawsuit claims he lost tens of millions of dollars in vested stock as a result. Moreover, the suit alleges that company executives pressured him to issue false statements to federal agencies — specifically that he was on voluntary leave and supported the company’s new leadership, which he refused.
The case, filed in federal court, could have wide-reaching implications for AirCo’s current federal contracts including a $65 million contract with the Defense Innovation Unit.
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A spokesperson for the DoD’s Defense Innovation Unit commented on the situation: “DIU is aware of the civil proceedings involving ACH. DIU has a contract with ACH and the various mechanisms for addressing such concerns that go with it. If any of the allegations turn out to have merit we can address them accordingly.”
The DoD, NASA, and Homeland Security have all been informed of the incidents, and it remains to be seen whether any criminal or civil investigations will follow.
Carbon Herald reached out to AirCo but the company has not responded to the request for comment on the lawsuit by the time of publishing.
Disclaimer: The content of this article is based on publicly filed legal documents and statements attributed to the parties involved. The allegations described herein are part of an ongoing legal proceeding and have not been proven in court. AirCo and the individuals named in the lawsuit have not responded publicly to the claims at the time of publication. This article is provided for informational purposes only and does not constitute legal, financial, or professional advice. All parties are presumed innocent of any alleged wrongdoing unless and until proven otherwise through due process.
