Two pre-insolvency advisers were recently sentenced to jail for illegally handling proceeds of crime. Stephen O’Neill and John Narramore, both of SMEs R Us, were sentenced to five years and four and a half years jail, respectively.
O’Neill and Narramore were approached in 2014 by the then director of Cap Coast Telecoms Pty Ltd, Richard Ludwig, for pre-insolvency advice. They then advised Ludwig to illegally remove assets of Cap Coast, to the detriment of creditors. This is known as an illegal phoenix transaction.
A total of $743,050 from Cap Coast was transferred to the advisers through a series of fictitious transactions and then channelled to Ludwig and his associates. Cap Coast, which owed creditors a total of $2,955,138, was placed in liquidation once the company’s funds were transferred and disbursed.
Ludwig was charged with one count of intentionally dealing in proceeds of crime, and ten counts of breaching his director’s duties.
O’Neill and Narramore were then charged with being accessories to these crimes and convicted and sentenced as above.
Are All Phoenix Transactions Illegal?
A phoenix transaction in itself is not necessarily illegal. We have on occasion previously helped our clients in arranging such transactions without breaking any laws. A transaction or business sale arrangement, when done legally, may in some circumstances be the best solution for you. However, it is important that you seek advice from qualified professionals to avoid possible criminal sanctions if you are considering this type of arrangement.
More information regarding phoenix transactions can be found here.
Contact Us For Assistance
If you require any pre-insolvency advice, our team of accountants is ideally placed to provide professional advice on alternatives to bankruptcy or liquidation. So, please get in touch with us on 1300 906 966 or send us an email at email@example.com to arrange a free confidential initial discussion.