An investigation on the part of Australia's financial watchdog has led to a former director of an unregistered investment scheme pleading guilty to intentionally causing detriment to his company.

A former director of an unregistered investment scheme has been jailed for four years after a probe by the Australian Securities and Investments Commission found that he had passed more than A$8 million ($6.1 million) of personal debt on to his company.

Frederick Hansen, of Clear Island Waters on Australia's Gold Coast, pleaded guilty to two counts of dishonestly using his authoritative position at Global Rule with the intention of causing detriment to the company.

According to ASIC, between 2008 and 2010 Hansen knowingly caused Global Rule to incur a personal debt amounting to A$8,423,333. During that period, he used A$5,721,424 of investors' funds to commence repayments.

Global Rule was described as a company that created wealth, provided outstanding financial benefits to its partners, and delivered humanitarian aid throughout Australia, while offering investors an unsecured loan agreement that would supposedly return 1.8% per month in interest payments.

Investment was available to individuals, trusts, businesses, and self-managed superannuation funds.

The liquidators of Global Rule estimated that around 170 individuals lent money to the company and approximately A$16.3 million was owed to lenders.

Hansen was prosecuted by the Commonwealth director of public prosecutions and will be eligible for parole after serving two years' imprisonment.