David Fairfull, the cofounder and former CEO of failed marketing startup Metigy has pleaded guilty to two charges in a prosecution brought by the Australian Securities and Investments Commission (ASIC).
A year after first appearing in Federal Court in the ASIC case, and facing five counts of making false and misleading statements, plus one count of dishonestly using his position as a director to obtain a loan for personal benefit, Fairfull pleaded guilty to one charge of misleading investors and the dishonesty charge.
The plea comes a fortnight before the matter is due to return to court.
Metigy collapsed into administration in July 2022, just 20 months after raising $20 million in a Series B led by Cygnet Capital. The martech startup was seeking another $50m.
Its backers also included Regal Funds Management, OC Funds, Five V Capital, Alex Waislitz’s Thorney Investments, and CP Ventures.
Metigy developed software for small-medium businesses to use artificial intelligence for digital marketing strategies. It had raised $27.1 million in venture funding and was supposedly valued at $1 billion at one point, but ultimately, that was based on false information about the revenue and income Fairfull gave potential investors.
The dishonestly used his position as a company director plea relates to Fairfull to borrowing $7.7 million from Metigy for his personal use to buy two properties.
The ASIC case first appeared before the Federal Court in November last year, and the guilty plea relates to:
- three capital raises between October 2018 and October 2020 which raised approximately $23.4 million from investors
- a secondary share sale in July 2021 in which investors paid approximately $15.68 million for shares
- a planned capital raise of $50 million (just before the business collapsed).
The ASIC case follows a 2023 Federal Court investigation, instigated by administrators Cathro & Partners, which heard that the Metigy boss allegedly told an investor that he’d “doctored the statements” on the company’s revenue, which claimed to be in the millions, and “the bulk of the figures are fabricated”.
The actual annual revenue was just above $43,000.
Questioned by Cathro’s lawyers during that case, Fairfull admitted to providing false bank statements and knowing it was dishonest, but said he acted alone and used Adobe software to falsify bank statements.
Fairfull’s Kangaroo Valley property, Heggy’s, sold for $1.45m less than he paid for it. Photo: Raine & Horne
The matter came to a head in mid-2022 when Metigy’s chief financial officer looked to seize control of the business and raise funds as the money ran out, revealing the startup’s true financial state.
The Federal Court found that financial documents sent to investors by the Metigy CEO were “a charade” when proceedings between the company and investors were settled in 2023.
Fairfull was declared bankrupt in November 2022. His admissions in the previous court case could not be used in ASIC’s legal proceedings.
But while a Metigy director, Fairfull borrowed $7.7 million from the company as a personal loan to buy two properties — a $10.5 million six-bedroom house overlooking Sydney Harbour in Mosman, and a $7.7 million rural retreat in Kangaroo Valley in the NSW Southern Highlands region. He’d repaid $3.7 million of the loan before the startup collapsed.
Those properties were sold by Metigy’s liquidators in December 2022, making a $1.5 million profit on the Mosman house and a $1.45 million loss on the Kangaroo Valley one.
That property purchases led to him pleading guilty to the charge of dishonestly using his position as a director, in contravention of the Corporations Act.
