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Bankrupt businessman used deposits to pay off debts

Adam Zuchetti
Adam Zuchetti
11 June 2018 1 minute readShare
Masked businessman, thief

A now-bankrupt businessman who used customer deposits to keep his struggling business afloat has pleaded guilty in court to charging for goods that were never supplied.

Queensland-man John Frederick Waters was the sole trader behind Ocean Road Queensland, which created custom-built food trailers.

Between October 2015 and September 2016, Mr Waters took orders from two customers, one worth $40,000 and the other $116,000. He accepted initial deposits with pre-agreed completion dates, and subsequently took further payments from both customers.

In total, the customers paid a combined $132,000 to Mr Waters.

However the funds were instead used to keep the struggling business trading, rather than to fulfil the orders. After repeatedly pushing back the delivery dates, both customers requested refunds. One customer received only a partial refund of $3,600, while the other was left even more out of pocket by being forced to pay a third-party supplier.

Ocean Road Queensland ceased trading in early 2017, and Mr Waters was then declared bankrupt in June that year.

Facing court, Mr Waters pleaded guilty to breaching the consumer act by failing to provide goods that had been paid for.

The judge stressed that such behaviour demonstrated “unscrupulous” conduct of which Mr Waters “ought to be ashamed”.

Brain Bauer of Queensland’s Office of Fair Trading, which prosecuted the case, said it is a lesson for other business owners not to accept payments as a means of propping up a failing business.

“It is an offence for a business to accept payments from consumers if they cannot supply goods within a reasonable time,” Mr Bauer said.

“Consumers have a right to expect their purchases, and should be wary of paying large upfront payments for goods.”

Mr Waters was fined $50,000 and ordered to repay the customers $105,664 within two years, or face a six-month prison sentence.

Bankrupt businessman used deposits to pay off debts
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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