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Gabi Grecko and Dr. Geoffrey Edelsten at their apartment in Melbourne. Picture: Alex Coppel. Source: News Corp Australia
BUNGLING by the Australian Tax Office means it could stand to recoup less than half a million dollars of the $14.1m it says bankrupted businessman Geoffrey Edelsten owes in back taxes and penalties.
The ATO has been fighting to persuade the US Bankruptcy Court to cut them in on a settlement struck in late October between Mr Edelsten and his US business adversaries.
They argue despite being Mr Edelsten’s biggest creditor they have been ignored, and have already dropped their claim to $9 million.
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Businessman Geoffrey Edelsten leaving the Victorian Supreme Court in Melbourne. Source: NewsCorp Source: News Limited
But a lawyer involved in the deal claims the ATO has lost their chance and now stands to get as little as 5c in the dollar.
And while the debt stoush drags on the flamboyant businessman remains positive and with big plans.
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“I think things will turn out for me,†Mr Edelsten said. “This has been painful, mostly unfair, but this is the situation you face and you have to move on with life.â€
Mr Edelsten said he’s working again on designing new medical centres that he hopes will spring up in Victoria, Canada and California.
Of his tax troubles, Mr Edelsten claims he paid the ATO $4.5 million about 18 months ago and strongly disputes he owes closer to $14 million.
Geoffrey Edelsten and Gabi Grecko. Source: Getty Source: Supplied
“I would like to get them what they are owed, which I think is around $5m,†he said.
On Wednesday, the ATO attended a Florida hearing and won the right to attend mediation between the settling parties, where it will request to be part of the distribution of Mr Edelsten’s remaining assets.
But the US parties will be reluctant to deal the ATO in, because there’s little to go around after Mr Edelsten drastically overpaid for properties that are now worth little more than a few million.
The settlement over a bad joint venture between Mr Edelsten and Florida’s Marwadi family will leave the Australian all but broke.
Mr Edelsten claims he was solicited into spending more than $20m on distressed properties — including massive slum housing estates and a rundown Dominican Republic casino he never inspected before buying.
Flamboyant lifestyle ... Geoffrey Edelsten’s relationships keep him in the media’s eye. Source: Supplied Source: Supplied
The Marwadi’s lawyer, Robert Stok, said the ATO only had itself to blame. He said it knew that Mr Edelsten — who was bankrupted in Australia in the 80s — had sold out of his Allied super clinic business in Victoria in 2011, for which he collected around $30m.
“They should have acted like any taxing agency and enforced payment of the tax obligation by one of its citizens,†says Mr Stok.
“That’s what they should have done. They declared he owed them $10m on 2012 — it’s even on Wikipedia. Now they’re swooping in and trying to upset the applecart.â€
Furthermore, Mr Stok said the ATO was well aware of the US bankruptcy proceedings from the start of the year and failed to make itself a party to the proceedings.
Centre of attention ... Gabi Grecko and Geoffrey Edelsten arriving at the NewsCorp offices in Sydney. Source: NewsCorp Source: News Corp Australia
There are investigations underway to see if Mr Edelsten has any remaining assets, including his supposed $10m interest in an Indonesian coal mine that nobody is really sure exists.
If such assets were uncovered, the ATO could improve its chances of collecting more.
“But if they get 5c on the dollar on their $9m claim, that’s $450,000,†said Mr Stok. “And that’s very optimistic.â€
The ATO declined to comment but it is understood they could launch an investigation into Mr Edelsten, who has been accused of playing “shell games†by shifting money around in trusts.
However, the Federal Court in Australia has already confirmed that the US Bankruptcy Court has primacy in the Edelsten matter and any money that is uncovered would be distributed under the guidance of the Florida court.
Two Bankruptcy Court judges have already expressed surprise and delight that a settlement agreement was ever reached in the feud, and will be reluctant to interfere with it.