A South Australian butcher who could not secure a bank loan to repay a large business debt has escaped jail for money laundering a man's superannuation funds "in desperation".

Thirty-year-old Michael Kevin Cheney pleaded guilty to knowingly engaging in money laundering after his Paralowie butchery fell into debt in December 2018.

The District Court of South Australia heard he could not repay the debt or secure a bridging loan so he placed an advertisement for a loan on popular buy and sell site, Gumtree.

"You were carrying about $60,000 worth of business debts and, as a result, you could not afford to buy stock," Judge Paul Slattery said.

A man — who went by the name of Tom — contacted Cheney informing him of a scheme that would allow early access to his superannuation if he opened a self-managed superannuation fund.

Cheney took up the offer and withdrew his superannuation balances, along with that of his wife.

It was paid to him in cash in plastic Ikea bags.

'Not entitled to receive those funds'

The court heard Cheney did not receive as much money as he was promised, and the people behind the scheme — who have since been arrested — took a 35 per cent cut.

Cheney was later contacted by the same people and asked if he was interested "in making some money" which involved having a sum of money deposited into his self-managed superannuation account, which he would withdraw and pay to the individual in cash.

"You were not entitled to receive those funds and you were involving yourself in the laundering of those funds," Judge Slattery said.

"You then transferred the entire amount in your personal account and began to withdraw the money.

$50,000 spent on online gambling

The court heard Cheney had a gambling addiction and spent $50,000 of the $117,000 on online gambling in a "futile attempt" to make money.

He then moved interstate and disposed of his mobile phone before the men behind the scheme allegedly tracked him down.

In sentencing, Judge Slattery said only $38,000 of the $117,000 transferred into Cheney's account could be recovered as the rest had been spent on gambling and paying bills.

"You were not someone who was living an extravagant lifestyle, and your offending occurred as a result of desperation and an ill thought out decision to obtain money.

"You still owe about $15,000 of business debts and you have recently obtained employment at a supermarket."

Judge Slattery sentenced Cheney to one year and 10 months but suspended that sentence on a two-year good behaviour bond.