A financial planner who told his clients he would invest their superannuation but instead used millions of dollars of their money "as he pleased" has been sentenced to 10 years' jail.
Gabriel Nakhl was convicted by the District Court of New South Wales on eight charges, brought by ASIC, of engaging in dishonest conduct with investor funds, according to a statement. This is understood to be the heaviest sentence meted out to a financial adviser to date in Australia.
The court found that Nakhl advised clients to set up self-managed superannuation funds and to invest their superannuation and other funds in products such as shares, managed funds and high interest rate bank accounts.
Clients should be able to trust their financial advisers. In this case, Mr Nakhl dishonestly and deliberately breached his clients' trust"
Rather than investing the 12 investors' funds in these products, Nakhl used these funds "as he pleased" and for his own purposes, ASIC said. The clients lost about A$5.1m of the A$6.7m they had invested.
The offences took place when Nakhl was a representative of Australian Financial Services Ltd, which is now in liquidation, and as sole director of SydFA Pty Ltd.
ASIC's statement said Nakhl also tried to cover up his wrongdoing by having these 12 investors sign documents that supposedly authorised Nakhl to use the funds in the way he did.
"Nakhl deliberately misled his clients and used their savings as he pleased," ASIC commissioner Sean Hughes said.
"Clients should be able to trust their financial advisers. In this case, Mr Nakhl dishonestly and deliberately breached his clients' trust."
ASIC in 2013 banned Nakhl, of Illawong in southern Sydney, for life from providing financial services and obtained an undertaking from him that he not manage a company for 15 years.
At that time, ASIC issued a public statement saying Nakhl had spent client money "on his private sports car and motorbike hire business and himself".
ASIC froze Nakhl's assets in 2013, at which stage the assets were valued at $7.7m. He was subsequently declared bankrupt and SydFA was placed in liquidation.
Victims of Nakhl have sought to pursue him and associated entities through the civil courts to try to recoup their losses.