A former financial adviser (FA), cited for operating a “Ponzi scheme”, was on July 31 sentenced in the NSW District Court to six years’ in prison for misappropriating $1.86m of client funds.

The Commonwealth Director of Public Prosecutions prosecuted the matter after a referral from ASIC. After an ASIC investigation, Graeme Walter Miller, on April 14, pleaded guilty to six counts of dishonest conduct while carrying on a financial services business, in breach of the Corporations Act 2001. Miller will be eligible for parole after four years.

The charges relate to 10 clients who Miller encouraged to transfer from $50,000 up to $950,000 to the since liquidated financial services licensee CFS Private Wealth Pty Ltd, of which he was a director.

But instead of investing the funds, Miller used the money for his own benefit and to meet business expenses, including dividend payments to other clients. Four counts relate to funds Miller recommended CFS clients use to establish SMSFs that would invest in related company CFS Corporation, a now insolvent business of which Miller was also a director.

In sentencing Miller, Acting NSW District Judge Robert Woods described his operations as a “Ponzi scheme” involving a “significant breach of trust” and a “cruel and deceitful betrayal inevitably leading to financial disaster”.

Judge Woods also made reparation orders of about $1.8m in favour of the 10 clients who were subject of the charges against Miller.

ASIC deputy chair Daniel Crennan QC said Miller’s sentencing should send a strong message such conduct would “lead to individuals involved being brought before the court to face criminal charges”.

In January 2019, Miller was restrained from providing financial services for 25 years in Federal Court and also disqualified from managing corporations for three years.