Russell Sandiford, former director of Reiwa-Capital, has been sentenced to two years and eight months’ imprisonment over misuse of investor funds.
Sandiford first appeared in the Downing Centre Local Court in March 2023 and pleaded guilty to two counts of dishonest conduct in connection with a financial product contrary to s1041G of the Corporations Act in February 2024.
The court heard Sandiford contacted individuals using email addresses that he held from his previous employment as a market trader and analyst at brokerage firms, inviting them to participate in two funds.
One was a hedge fund which offered a split of profits from a trading account operated by Sandiford trading in foreign exchange products and commodities, for a nominal one-off fee.
The other was 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.
Between January 2020 and June 2022, 74 clients paid $440,909 to Sandiford for investing or trading via those funds.
However, the funds were not used for investing or trading and were instead utilised by Sandiford towards personal expenses or purposes unrelated to trading, including gambling and personal entertainment.
Only $6,316 of the $440,909 received by Sandiford was paid back to investors. No other amounts were repaid.
In passing the sentence, the court described the crimes as “brazen” and highlighted they involved a “serious breach of the trust that he deliberately cultivated with his customers”.
It also noted the crimes were motivated by greed and at the time of offending, Sandiford had issues with alcohol, cocaine use, and gambling.
However, given the steps Sandiford took to rehabilitate after he was charged, the court determined he should serve his period of imprisonment by way of an Intensive Correction Order (ICO) with the condition of a home detention order.
The sentence was stayed until 27 September 2024 so as to enable his suitability for home detention to be assessed.
Reparation orders in favour of the victims were also made.
The matter was prosecuted by the Office of the Director of Public Prosecutions following a referral from the Australian Securities and Investments Commission.
