Russell Sandiford, the former director of Reiwa-Capital, has been sentenced in the District Court of New South Wales to two years and 8 months imprisonment relating to dishonest use of investor funds.
The defendant pled guilty to two counts of dishonest conduct in connection with a financial product contrary to s1041G of the Corporations Act. The matter was prosecuted by the Office of the Director of Public Prosecutions (Cth) following a referral from the Australian Securities and Investments Commission (ASIC).
The maximum penalty for a conviction under s1041G is 15 years imprisonment or the greater of $945,000 or a fine of three times the total value of the benefits, or both.
Russell Sandiford was supposed to trade $440,909 on behalf of 74 clients
It was between January 2020 and June 2022 that Russell Sandiford contacted individuals using email addresses that he held from his previous employment as a market trader and analyst at brokerage firms in order to invite them to participate in one of two funds:
- A ‘Hedge Fund’ which offered, for a nominal one-off fee, a split of profits from a trading account operated by Mr Sandiford trading in foreign exchange products and commodities, and
- An ‘Income Fund’ where investors would pay a capital investment amount on the basis it would be paid into a larger pool of funds to be used to trade foreign exchange products and commodities for the profit of investors.
Over two and a half years, 74 clients paid $440,909 to Mr Sandiford for investing or trading via those funds, which he used primarily for personal expenses or purposes unrelated to trading including gambling and personal entertainment, rather than investing or trading as agreed.
“Brazen” crimes motivated by greed and addiction
According to ASIC, only $6,316 of the $440,909 received by Mr Sandiford was paid back to investors. No other amounts were repaid.
The Court noted that Mr. Sandiford’s crimes were ‘brazen’ and involved a ‘serious breach of the trust that he deliberately cultivated with his customers’. Judge O’Brien stated that Mr Sandiford’s crimes were motivated by greed and at the time of offending he had issues with alcohol, cocaine use, and gambling.
Russell Sandiford will serve his period of imprisonment by way of an ICO with the condition of a home detention order. The sentence was stayed until 27 September 2024 so as to enable Mr Sandiford’s suitability for home detention to be assessed.
