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Friday 3 December 2021

21-329MR Former telecommunications director sentenced to five years imprisonment for breaching directors’ duties and dealing with proceeds of crime

Former Cap Coast Telecoms Pty Ltd director Richard Ludwig, of Broadbeach Waters, Queensland, has been jailed for illegally removing assets from his company to prevent creditor access.

Appearing before the District Court of Queensland on 2 December 2021, Mr Ludwig was convicted of intentionally dealing with the proceeds of crime and breaching his directors’ duties. The Court imposed a five year prison sentence, with a non-parole period of 20 months.

ASIC Deputy Chair Sarah Court said, ‘A critical duty of company directors is to ensure creditor debts are properly paid. Not only did Mr Ludwig fail in this duty, he actively sought to dishonestly avoid these obligations, and denied funds to creditors to which they should have had access.

‘Directors duties are serious obligations which must be complied with. When directors knowingly breach their duties, this case demonstrates they risk significant jail time.’

While he was Cap Coast Telecoms director, Mr Ludwig sought advice from Stephen O’Neill and John Narramore of pre-insolvency firm SME’s R Us regarding a dispute with a Cap Coast Telecoms creditor.

From October 2014 to January 2015, Mr Narramore and Mr O’Neill facilitated Mr Ludwig’s removal of $743,050 of company funds by issuing fictitious invoices from companies under their control to Cap Coast Telecoms between October 2014 and January 2015. This was done to ensure creditors did not have access to these funds. Mr Narramore and Mr O’Neill then transferred the funds to Mr Ludwig or his associates.

Once the funds had been transferred, Cap Coast Telecoms was wound up. At the time, it owed creditors $2,955,128.

The matter was referred to ASIC by the liquidator of Cap Coast Telecoms, Mark Hutchins of Cor Cordis.

Mr Ludwig was charged on 1 March 2019, following an ASIC investigation (19-047MR). He pleaded guilty before the District Court of Queensland on 1 November 2021 (21-296MR).

The matter was prosecuted by the Commonwealth Director of Public Prosecutions.

Background

Mr Narramore and Mr O’Neill had previously each pleaded guilty to one breach of s400.4(2) of the Criminal Code Act (Cth) 1995 for intentionally dealing with the proceeds of crime.

In November 2019, Mr Narramore was sentenced to four and a half years prison, with a non parole period of 20 months (19-307MR).

In February 2020, Mr O’Neill was sentenced to five years in prison, with a non parole period of 22 months (20-050MR).

Intentionally dealing with the proceeds of crime is an offence under the Criminal Code Act (Cth) 1995 and carries a maximum penalty of 1200 penalty units or imprisonment for 20 years, or both.

Breaching director duties is an offence under the Corporations Act 2001 (Cth) and, at the time of the offending, carried a maximum penalty of 200 penalty units or imprisonment for five years, or both.

As a result of his conviction Ludwig will be automatically disqualified from managing a corporation for a further five years upon his release from prison.

Last updated: 03/12/2021 11:37