Failed developer William O’Dwyer – who built the Ruby tower in Surfers Paradise – used funds from the collapsed Ralan Group to buy cryptocurrency.
Alister Thomson, Business Editor, Gold Coast Bulletin Subscriber only|November 30, 2019 12:00am
FAILED developer William O’Dwyer – who built the Ruby tower in Surfers Paradise – used $1.7 million of funds from the collapsed Ralan Group to buy cryptocurrency, according to administrators.
The information, along with an allegation of insolvent trading since 2014, is contained in a report into the collapse of Ralan Group by administrators Grant Thornton released on Thursday.
Ralan Group’s 58 companies went into administration in July owing more than $500 million to creditors and employees.
According to the report, Mr O’Dwyer told administrators the group failed because the builder for the second and third Ruby towers in Surfers Paradise had increased its quotes by $96 million and $100 million respectively.
Due to this, the financier for the second, third and four stages of Ruby withdrew and Ralan did not have enough working capital to meet its liabilities.
Mr O’Dwyer is said to have placed his companies in administration in the belief that it would buy him time to secure alternative funding.
However, administrators say it was an “unsustainable business model” that relied upon a “partial Ponzi scheme” that led to its failure.
The Ponzi scheme relates to apartment buyers releasing their deposits to be used by Ralan on the promise of 15 to 20 per cent interest to be paid or deducted from the balance on settlement. These deposits were used to pay for the settlement of other unrelated Ralan developments.
Administrators say they found evidence that Mr O’Dwyer breached multiple sections of the Corporations Act and that the Ralan Group manipulated financial records provided to its bankers in order to conceal the deposits it owed buyers.
Mr O’Dwyer’s purchase of $1.7 million worth of Bitcoin is singled out as a voidable transaction – a payment made when the company was insolvent. He bought the Bitcoin in 2017 and 2018 from money taken out of the bank account of Ralan Property Services Pty Ltd and put the Bitcoin in his own name.
Administrators have issued Mr O’Dwyer with a demand to repay $19 million he took from the Ralan Group between 2016 and June 30 this year.