A former financial adviser who lost $5.1 million of client funds, some invested via SMSFs, has been sentenced to 10 years’ imprisonment for engaging in dishonest conduct.
The adviser, Gabriel Nakhl of Illawong, Sydney, was sentenced in the District Court of New South Wales on 15 March after he was found guilty in June 2018 on eight charges of engaging in dishonest conduct with investor funds.
ASIC said the charges related to conduct in relation to 12 investors that occurred between March 2009 and March 2011 while Nakhl was an authorised representative of Australian Financial Services Limited, and from about March 2011 to about September 2013 while he was the sole director of SydFA Pty Ltd.
Australian Financial Services Limited and SydFA Pty Ltd have both gone into liquidation.
The corporate regulator added the court found Nakhl had advised clients to set up SMSFs and to invest in shares, managed funds and high interest rate bank accounts, but rather than investing the 12 investors’ funds in these products, he used these funds for his own purposes.
The case against Nakhl was brought by ASIC, which first took action against him in November 2013 when it accepted an enforceable undertaking that permanently prevented him from providing financial services. He also agreed not to manage a company for 15 years.
Prior to that action, ASIC had obtained orders to freeze his assets in early 2013 and began a criminal investigation soon after before charging him in August 2016.
ASIC commissioner Sean Hughes said: “Mr Nakhl deliberately misled his clients and used their savings as he pleased. Clients should be able to trust their financial advisers. In this case, Mr Nakhl dishonestly and deliberately breached his clients’ trust. ASIC welcomes the sentencing decision handed down today.”
