Russell Sandiford, formerly a Director of the investment firm Reiwa-Capital, has admitted guilt to two counts of dishonest conduct related to mishandling client investments. Out of the nearly $500,000 collected, only 1% was distributed to clients by the creator of the fake "hedge fund". The charges were brought by the Australian Securities and Investments Commission (ASIC).

Former "Hedge Fund" Director Pleads Guilty to Misusing Investor Funds

Between January 2020 and June 2022, Sandiford obtained over $440,000 from 74 clients under the pretense of investing their money in trading activities. However, the funds were used for his expenses unrelated to trading. The investments were marketed as a "hedge fund" that would trade foreign exchange and commodities, and an income fund that would pool client money for trading. Clients were contacted using email lists Sandiford had from his previous roles at brokerage firms.

In total, only $6,316 out of the $440,909 collected was returned to investors. At the time, Sandiford did not hold the proper licenses to provide financial advice or services. Sandiford entered his guilty plea on February 13, 2024 at the Downing Centre Local Court. The matter will now move to the Sydney District Court on March 15 where a sentencing date will be determined.

"Engaging in dishonest conduct in relation to a financial product or financial service in the course of carrying on a financial services business is an offense contrary to section 1041G of the Corporations Act with section 1311," ASIC explained.

The Commonwealth Director of Public Prosecutions is prosecuting the case on referral from ASIC . Sandiford faces up to 15 years in prison and fines of over $900,000, or three times the total investor funds obtained, whichever is greater.

🇦🇺 ASIC | Former Director of Reiwa-Capital Pleads Guilty to Dishonest Conduct • Former director of Reiwa-Capital, Russell Sandiford, has pleaded guilty to two counts of dishonest conduct in relation to a financial product. • Between January 2020 and June 2022, Sandiford…

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AISC Intensifies Crackdown on Fraudsters

ASIC is stepping up its efforts to combat fraud in the financial industry. A striking illustration of fraudsters' cunning tactics is the case Finance Magnates reported at the end of January. Despite a decade-long ban from participating in the financial industry, an Australian named Joshua David Fuoco, previously a financial services Director from Melbourne, managed to establish as many as five different investment firms during his prohibition period. He is now facing contempt of court proceedings initiated by ASIC.

In November, ASIC announced the implementation of its new “scam website takedown capability.” Since its introduction in July 2023, this initiative has significantly disrupted the operations of over 2,500 investment scam and phishing websites. To date, the regulator has successfully taken down 2,100 websites, with an additional 400 currently being dismantled.

Following up on this, ASIC has intensified its crackdown on illegal financial services platforms and impostors by releasing its first “investor alert list.” This list initially identified 52 unlicensed entities and 25 websites impersonating legitimate entities, marking a significant step in ASIC's ongoing battle against financial fraud.