Ralan Group founder William O’Dwyer has been jailed for four years following the $560 million collapse of the Sydney-based developer in 2019 as the former managing director admitted to deceiving apartment buyers into using their deposits to prop up his business.
O’Dwyer, who last year pleaded guilty to six charges of obtaining a financial advantage by deception, must serve at least two years and four months behind bars before being eligible for parole.
In sentencing O’Dwyer last Friday, District Court Judge Anderson said the financial advantage obtained was ‘enormous’ and that O’Dwyer’s conduct had been ongoing and deliberate, and a calculated fraud.
Following the sentence being handed down, ASIC’s deputy chair Sarah Court has described the jail term as ‘significant’.
Court says the penalty ‘emphasises the seriousness of fraudulent activities, together with ASIC’s commitment to investigate and prosecute such cases, and the importance of holding those responsible accountable for their actions’.
O’Dwyer’s development business, which he founded in 1998, began to unravel four years after Ralan Group announced plans for a $1.4 billion four-tower development on the Gold Coast, known as Ruby, in 2015.
Ralan, which had a development pipeline of 3,000 apartments including projects on its home turf in Sydney, was placed into receivership in 2019 and O’Dwyer was declared bankrupt in 2021.
A subsequent investigation by ASIC revealed that O’Dwyer had dishonestly obtained $251 million between about 17 April 2015 and 6 June 2018 to support his business operations.
These funds were advanced by buyers of apartments in the form of pre-sale deposits for Ralan projects in Sydney, Arncliffe, Turramurra and Gordon. The advances were represented to buyers as loan agreements.
O’Dwyer pleaded guilty to obtaining $251 million by deception via the loan agreements which ASIC says were required to be held in trust before drawdown on the loans could occur.
O’Dwyer was found to have deceived the lenders into believing that the pre-sale deposits were held in a trust account, when they actually had been loaned by the purchasers back to the respective development company for use as working capital.
About $132 million was drawn down via the facilities, with about $47 million repaid by the time Ralan Group companies were placed into administration in July 2019.
ASIC says a further amount is expected to be recouped by the lenders following their purchase and development of the Arncliffe property.
The inner workings of Ralan Group were exposed last year in a report by liquidator Grant Thornton, which found that the development group had been insolvent since 2014.
The Grant Thornton report alleged that the company manipulated financial records which it provided to third parties such as banks in order to conceal the liability it owed to purchasers for their released deposits.
In November 2019, the liquidator of the companies, Said Jahani at Grant Thornton, estimated that the Ralan Group owed unsecured creditors $323 million.
O’Dwyer pleaded guilty to the charges on 22 August 2023.
Ahead of his sentencing last week. O’Dwyer could have faced up to 10 years imprisonment for the charge of dishonestly obtaining financial advantage by deception or fraud under section 192E of the Crimes Act 1900 (NSW).
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