The former chief executive of a Sydney start-up that falsely claimed to have built a revolutionary artificial intelligence platform is facing a prison term for fabricating financial records to swindle investors out of $39 million.
David Fairfull, 59, appeared in the Federal Court in Sydney on Friday morning, where he pleaded guilty to two charges under the Corporations Act: making false and misleading statements to induce investors, and dishonestly using his position as a director.
Breaches of the act attract a maximum sentence of 15 years in prison. Fairfull’s barrister said a custodial sentence of three years or less would be appropriate, while prosecutors argued Fairfull’s actions were “very serious offending towards the upper range”.
The prosecutor told the court that between 2018 and 2022, Fairfull orchestrated a “years-long calculated and escalating financial deception”. As the sole controller, director, and chief executive of the Metigy group of companies, he repeatedly forged and created fraudulent documents, resulting in the loss of $39 million from high-profile backers.
The prosecution outlined how the deception escalated over time, with the gap between actual and falsely stated revenue multiplying from 80 up to 200 times. In May 2022, while attempting to raise a further $50 million via a convertible note, Fairfull presented a profit and loss statement falsely claiming an annual recurring revenue of $107 million, despite the company’s actual revenue for that month being exactly $0.
The forgeries were not sophisticated: Fairfull produced the falsified documents himself, using Adobe software to alter bank statements and financial records before they were sent to investors. The manipulation was not detected during due diligence and unravelled only after a whistleblower raised concerns.
Fairfull also admitted to a separate charge of diverting $7.7 million from the company as a loan to himself in November 2021. The court heard he used these funds to purchase luxury real estate, including a $10.5 million Mosman mansion and a $7.7 million Kangaroo Valley estate. The prosecution described this act as turning investor funds into an “effective bridging loan for his own greed”.
Taking the stand on Friday, Fairfull told the court he now lives a “simple life” working as a gardener. He also testified that he takes five different medications to manage a lifelong heart condition. Under cross-examination, Fairfull admitted his actions were “not a rational thought process” but maintained he genuinely believed he could make the business succeed and eventually repay his investors.
“I wish I’d never done it. It was a bad decision and it was the wrong thing to do,” Fairfull said regarding the decision to obtain the properties.
Defence counsel Wali Shakoor submitted that a custodial sentence of three years or less would be appropriate, citing Fairfull’s lack of prior criminal history, his early guilty plea, his expressions of remorse, and his psychological state during the offending period. The defence argued Fairfull was suffering from high anxiety triggered by a “capital crunch”.
The prosecution contested this mitigation, however, noting the defence failed to produce any medical records, GP notes, or scripts to corroborate the claims of severe anxiety. The prosecutor, who argued Fairfull’s was “very serious offending towards the upper range”, also pointed out that Fairfull’s fraudulent conduct began well before the alleged 2019 capital crunch even occurred.
The maximum penalties for these offences have increased significantly, with the Corporations Act breaches now attracting up to 15 years in prison.
The spectacular collapse of Metigy in 2022 left 75 staff redundant and creditors chasing over $32.3 million. It also exposed the company’s core product – touted to elite investors like Regal Funds Management and Five V Capital as a revolutionary AI marketing tool – as a mirage. Metigy’s former chief financial officer Stephen Robinson previously testified that “there was nothing AI about it”, revealing it was merely a rules-based software platform built largely by an offshore team.
The prosecution was the result of a long-running investigation by the Australian Securities and Investments Commission, and the case has prompted scrutiny of the due diligence conducted by the institutional funds that backed Metigy during a period of cheap capital and rapid dealmaking.
Following Metigy’s collapse, Fairfull was declared personally bankrupt in November 2022, and his Mosman and Kangaroo Valley properties were subsequently sold off.
Justice Wendy Abraham granted Fairfull bail, with sentencing to occur in the coming weeks.
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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.
