David Ewan Frazer Fairfull, the former CEO of the once-promising AI startup Metigy based in Sydney, is now facing serious allegations in court. He appeared last Friday at Downing Centre Local Court, where he was charged with five counts of providing false and misleading statements to investors and one count of misusing his position as a company director for personal gain.

Fairfull’s legal challenges arise after it was revealed that he had spent $18 million on luxury real estate in the lead-up to Metigy’s collapse. This spending included the purchase of a $10.5 million high-end home in Mosman and a $7.7 million deluxe property near Kangaroo Valley, complete with a tennis court, swimming pool, horse facilities, and a private waterfall.

The Australian Securities & Investments Commission (ASIC) claims that Fairfull misled potential investors about Metigy’s financial health, falsely inflating the company’s revenue figures. Furthermore, he allegedly abused his directorial power to secure a $7.7 million loan for himself under false pretenses, presenting it as just a temporary measure.

At its height, Metigy was valued at $1 billion by notable venture capitalists like Five V Capital, and was intended to help small businesses boost their social media presence through AI technology. However, whistleblowers exposed doubts about these claims, leading to investigations. Despite Fairfull’s claims of legitimate AI use in the company’s products, the company’s financial downturn was stark, with sales dropping to only $61,000 in 2021 from $17,299 the previous year. When Metigy folded, it left behind over $20 million in debts to investors and 75 unemployed workers.

ASIC is emphasizing the significance of this case to underline the importance of corporate governance and the responsibilities of company directors to act with integrity and transparency. The regulator continues to prioritize the enforcement of directors’ duties as part of its broader mandate to ensure fair corporate practices.

Fairfull has not yet entered a plea, and there has been no recent comment from his legal representation. The matter is set to return to court next month, as this high-stakes legal battle unfolds.