Former financial adviser, Gabriel Nakhl, has been convicted of eight charges of engaging in dishonest conduct after being found guilty in the District Court of New South Wales.
The conduct affected 12 investors while Mr Nakhl was a representative of Australian Financial Services Limited, now in liquidation, and as sole director of SydFA Pty Ltd, which is now deregistered, ASIC said in a public statement.
The court found Mr Nakhl advised clients to set up SMSFs and to invest their superannuation and other funds in products such as shares, managed funds and high interest rate bank accounts.
“Rather than investing the 12 investors’ funds in these products, Mr Nakhl used these funds as he pleased and for his own purposes,” ASIC stated.
“Mr Nakhl then lied to the investors, telling them that he had invested their funds in accordance with his advice and that their investments were performing well. Mr Nakhl also tried to cover up his wrongdoing by having these 12 investors sign documents that supposedly authorised Mr Nakhl to use the funds in the way he did.”
The 12 investors allowed Mr Nakhl to invest approximately $6.7 million on their behalf. Mr Nakhl lost approximately $5.1 million of these invested funds.
ASIC obtained orders against Mr Nakhl back in February 2013, freezing his assets. In April 2013, the amounts frozen in interim orders against Mr Nakhl were approximately $7.7 million.
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,” said Mr Hughes.
“ASIC welcomes the sentencing decision [that’s been] handed down.”
The headline read “losing $5.1 million”. This is an insult to the SMSFs involved. It should read “for stealing $5.1 million”. And it seems that, at last, ASIC and the legal system are getting serious. But this is not enough. Much more has to be done to educate trustees of SMSFs and the trustees involved in this case must look at their responsibility in the loss. What I mean is this: did they ask the bloke for written, third party, confirmation about where the money was invested? What was the auditor of each SMSF doing to verify the investments? Questions, questions. It is all very well to crucify the FP but, unless trustees are better educated, things like this will happen again. Who said “a fool and his money are soon parted?”.
So $7.7mil of “his” assets were frozen in 2013. He’d stolen $5.1 mil, I can only assume the investors got their money back (maybe along with $2.6 mil in earnings???? It would be nice to finish the article off with a positive note like the investors had their funds fully refurded !! Or are SMSFs not entitled to recourse under our rule of law. ie Frozen funds are liquidated/cashed up and cash returned to SMSfs-easy. He gets out of jail in 7-10 years, hopefully has to serve his bankruptcy from his release date, doesn’t ever get to earn enough to enjoy life or a comfortable retirement, then goes onto the Age Pension ie true justice.