Ex Reiwa-Capital Director Sentenced for Misusing Investor Funds in $440K Fraud

Russell Sandiford, the former director of Reiwa-Capital, has been sentenced to two years and eight months' imprisonment for dishonest use of investor funds, as determined by the District Court of New South Wales. The sentence, issued on September 6, 2024, will be served through an Intensive Correction Order (ICO) following Sandiford's guilty plea to two counts of dishonest conduct in connection with a financial product, violating Section 1041G of the Corporations Act.

The charges stem from events that occurred between January 2020 and June 2022, during which Sandiford contacted individuals using email addresses obtained during his previous employment as a market trader and analyst at brokerage firms. He offered these individuals two investment opportunities: a “Hedge Fund” that promised a split of profits from his foreign exchange and commodities trading, and an “Income Fund” where investors would contribute capital to a pool for similar trading activities.

A total of 74 clients were drawn into Sandifords schemes, collectively investing $440,909. However, rather than using the funds for trading as promised, Sandiford diverted the majority of the money for personal use, including gambling and personal entertainment. Of the total amount, only $6,316 was returned to investors, with the remaining funds lost. No other repayments were made to the victims.

In delivering the sentence, the Court described Sandiford's actions as a “serious breach of trust” that he had deliberately cultivated with his clients. Judge O‘Brien highlighted that Sandiford's motivation was greed, exacerbated by his struggles with alcohol, cocaine, and gambling at the time of the offenses. Despite these circumstances, the Court acknowledged Sandiford’s efforts to rehabilitate after being charged, which influenced the decision to allow him to serve his sentence through an ICO, subject to a home detention order.

The sentence was stayed until September 27, 2024, pending an assessment of Sandifords suitability for home detention. In addition to the prison term, reparation orders were made in favour of the victims to compensate them for their losses.

The case was prosecuted by the Office of the Director of Public Prosecutions (Cth) following a referral from the Australian Securities and Investments Commission (ASIC), underscoring the seriousness of financial misconduct and the legal consequences of such actions in Australias financial markets.