By Anthony Segaert and Nick Bonyhady
The boss of a failed billion-dollar AI start-up is facing six charges in a Sydney court after he used company cash to fuel an $18 million luxury property buying spree in the months before it collapsed.
David Ewan Frazer Fairfull – who ran the Sydney-based start-up Metigy from 2018 until its collapse in 2021 – faced Downing Centre Local Court on Friday, charged with five counts of making false and misleading statements, and one count of misusing his position as a company director.
Former Metigy chief executive David Fairfull leaves the Federal Court building in Sydney in August after previous examinations.Credit: Oscar Coleman
The charges, referred by company regulator ASIC, follow a series of stories in this masthead revealing allegations from Metigy’s liquidators that the company traded while insolvent after Fairfull signed off on a $7.7 million loan from the company to himself “as both lender and borrower”.
The loan went towards his purchase of a $10.5 million trophy home in Mosman and a $7.7 million luxury residence close to the Kangaroo Valley, with four bedrooms and bathrooms, a detached cottage, a tennis court, swimming pool, horse arena, two stables and a private rainforest waterfall.
ASIC alleged in a statement on Friday that Fairfull “provided false information about the revenue and income of the companies to potential investors and further used his position as a director to obtain a loan for his own personal benefit”.
Metigy had promised to help small businesses improve their social media presence through artificial intelligence, but the plan came unstuck after a whistleblower relayed their concerns about the company’s claims and financial position to an investor.
The start-up was valued at $1 billion by major Sydney VC fund Five V Capital, which poured in money into the business alongside Alex Waislitz’s Thorney Investment and Cygnet Capital.
The company’s former chief financial officer last year told an examination in the Federal Court that there was “nothing AI about” Metigy. Fairfull, who is yet to enter a plea to the six alleged offences, disputed that in the same hearings.
He repaid a portion of the loan before Metigy went under and has said he believed the loan would be only a short-term arrangement. ASIC referred questions about the exact nature of Fairfull’s alleged wrongdoing to the Commonwealth Director of Public Prosecutions, which did not respond to a request for comment.
David Fairfull and his wife purchased a $7.7 million property near Kangaroo Valley, south of Sydney.Credit: LinkedIn/realestate.com.au
The company’s sales, an administrator’s report said, were only $61,000 in 2021 and $17,299 the year before. When it collapsed, Metigy allegedly owed investors more than $20 million and left 75 people without work.
ASIC deputy chair Sarah Court said the regulator took on the case because directors’ duties were “an enduring priority”.
“Company directors play an integral role in overseeing governance in addition to both performance and compliance and as such have a responsibility to act with integrity and honesty,” she said.
The company’s liquidators, Cathro & Partners, declined to comment. Fairfull did not respond to this masthead’s texts or calls. A lawyer who had previously represented him declined to comment.
Fairfull is not the same person as the chair of accounting firm Hall Chadwick, who shares the name. The matter returns to court next month.
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