The founder of failed artificial intelligence start-up Metigy has been jailed for nine years for a sustained fraud that deceived investors out of $39 million and ended with him diverting $7.7 million of their money to buy two luxury homes.
David Fairfull, 59, was sentenced in the Federal Court on Friday after pleading guilty to making false and misleading statements to induce investors, and to dishonestly using his position as a director. Justice Wendy Abraham set a non-parole period of five years and four months, meaning Fairfull will be in prison until at least 2031. He was taken into custody.
Abraham found Fairfullβs offending was deliberate, premeditated and sophisticated, rejecting his argument that anxiety and depression had reduced his moral culpability. General deterrence was the primary consideration in the case, she said, because white-collar crime of this kind was difficult to detect, investigate and prosecute.
βHe acted on the premise that the means justified the ends,β Abraham said, describing how Fairfull repeatedly provided knowingly false information to persuade investors to part with money they would not have handed over had they known the companyβs true position.
Metigy, founded by Fairfull in 2015, marketed itself as a hi-tech platform that used machine learning to help small businesses with digital marketing. It attracted backing from Regal Funds Management, Five V Capital and Alex Waislitzβs Thorney Investments, and was valued at up to $1 billion before it collapsed into administration in July 2022, owing creditors about $39 million. About 75 staff lost their jobs.
The court heard the deception ran for nearly four years and escalated over time. Fairfull, who exclusively controlled the financial information shown to investors, forged bank statements and fabricated revenue figures across successive capital raises. The gap between reported and actual revenue widened steadily: by May 2022, as he sought to raise a further $50 million, he presented a profit-and-loss statement showing monthly net revenue of nearly $9 million and annual recurring revenue of $107 million. The companyβs actual revenue that month was zero.
To lend credibility to the false figures, Fairfull forged bank documents using PDF-editing software and uploaded them to the data room investors used for due diligence. The fraud unravelled only in July 2022, when Metigyβs chief financial officer told Regal the $107 million revenue figure was false. Confronted at his home by representatives of Regal and Five V, Fairfull admitted the accounts were fabricated and that he had doctored bank statements himself.
Separately, in November 2021, Fairfull withdrew $7.7 million from Metigyβs account, recording it as an unsecured loan to his private company. The money β almost entirely raised from investors through a convertible note issue β went towards a $10.5 million home in Mosman and a $7.7 million estate in Kangaroo Valley, both bought in the names of Fairfull and his wife. The administrator found the withdrawal rendered the company insolvent. Fairfull repaid about $2.94 million before the collapse.
Abraham was particularly critical of the diversion, which she said could not be explained by the financial pressures Fairfull cited for the broader fraud. He had taken the money, she found, βsolely for his personal benefitβ while knowing the companyβs true financial state. His own barrister conceded during the hearing that both offences were committed for Fairfullβs financial benefit.
The defence had argued the offending occurred in the context of a genuine operating business under commercial pressure, and that Fairfull was suffering from generalised anxiety disorder and major depressive disorder during the relevant period. A psychologistβs report supported a claim of reduced moral culpability, but Abraham gave the report limited weight, noting it failed to address the $7.7 million withdrawal at all and relied heavily on Fairfullβs own account of events. She found no evidence he had complained of anxiety or depression to a doctor at the time.
The judge accepted Fairfull was remorseful, had no relevant prior convictions, had pleaded guilty early β attracting a 25 per cent discount β and had good prospects of rehabilitation. But she said good character carried less weight in white-collar cases, given it was the trust attached to his position as a director and chief executive that had allowed him to commit the fraud.
In a victim impact statement, the co-founder of early investor CP Ventures described losses including $1.3 million which the firm invested across funding rounds in 2019, as well as reputational damage and a loss of trust among its own investors, among them βhard-working Australians saving for retirementβ.
The prosecution followed a long-running investigation by the Australian Securities and Investments Commission. Fairfull was declared bankrupt in November 2022, his second insolvency after an earlier bankruptcy following a business failure. Liquidators have since recovered funds from the sale of both properties, though creditors are expected to receive only a fraction of what they are owed.
The term of imprisonment began on Friday.
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David Swan is the technology editor for The Age and The Sydney Morning Herald. He was previously technology editor for The Australian newspaper.Connect via X or email.