Let the lesser burghers of Double Bay fret over the intrusion of Garden Island in their sight lines. This is the smell of real money. In a town that prizes view above all else, the stretch from Rawson Road up towards South Head is the dress circle for wealth and power.
The family behind the nudie juice business has left its mark all over the suburb, from the family compound – adjoining residences on Rawson Road that brothers Erwin and Emil Binetter bought in the 1960s – to Erwin's son Michael, just metres away in Chamberlain Avenue, and his brothers Peter and Andrew side by side on New South Head Road.
The geography speaks powerfully of a major family fortune, much of which - it now appears - was built on tax fraud. And it underlines just what the family was prepared to do to hold on to that wealth.
The disaster that has overtaken the Binetters has been shaped by twin narratives of family and money.
Sydney is a town that relishes bitter family fights but the nightmare personal picture that emerges from the tax office's 12-year pursuit of the Binetters is staggering.
The courts have heard allegations of tax fraud, perjury, bribing officials, a bizarre plan to break into a bank to destroy documents, child kidnapping, a missing will and a disinherited son.
Michael, a lawyer who used to advise the Tax Office, and his youngest brother, Andrew, the former chief executive of nudie juice, signed a settlement with the ATO two weeks ago.
The Binetters aren't talking; despite multiple requests from AFR Weekend, family members declined to speak, some citing fears of reprisals from other relatives.
"I have absolutely no interest in talking to you or other media," Andrew's ex-wife Yvette Binetter said. "I just want to concentrate on raising my teenage daughter."
"It is incontrovertible that Andrew is a class-A arsehole," was the sole comment by another family member.
Given the silence, this account has been pieced together from documents and judgments from court cases in Australia, the US and Israel. They chronicle a giddy descent paved by family values.
Former nudie chief Andrew Binetter. LinkedIn
Secret accounts
Erwin and Emil Binetter were Holocaust survivors, born in southern Slovakia, which Hungary occupied in 1938, when Erwin was 14 and Emil 12. They ended up in a Hungarian labour battalion before escaping and going into hiding in 1944 as the Nazis sent 430,000 Hungarian Jews to Auschwitz-Birkenau, including many family members.
They emigrated to Australia in 1950 where they prospered, building a shoe factory at Marrickville and running import businesses along with property investments.
Given their traumatic history, it's perhaps not surprising they did not trust any government to safeguard their funds and their secret Swiss bank accounts eventually held more than $40 million.
In the 1980s, the brothers were in their prime. Erwin was the patriarch in the Binetter home on Rawson Road, next to Emil's house, constantly reminding his children of the importance of family.
Michael Binetter, far right, tax lawyer for Nudie.
Emil was more low key – his son Gary, born in 1958, worked as a Qantas steward and lived in Double Bay, his daughters Debbie and Lisa have not been active in the family business.
Erwin's family was a classic success story. The eldest son, Michael, born in 1955, the lawyer; Ron, born three years later, a doctor – a brilliant ophthalmologist who ran a string of clinics offering laser surgery; and Peter, born in 1961, an investment banker, today the chief operating officer of Investec Australia.
The baby of the family, Andrew, born in 1966, was harder to place.
"It is an understatement to say that Andrew Binetter has experienced success throughout his career," an online bio states, extolling "his entrepreneurial spirit, coupled with his business acumen and unbridled passion for innovation."
Gary Binetter in 2001. Justice Jacqueline Gleeson cleared him of claims by the liquidator. Nick Moir
After running shoe stalls at Sydney's Paddy's Markets he worked briefly for Malcolm Turnbull. Deborah Huber, a lawyer who was engaged to his brother Ron, secured a job for Andrew as an equity analyst at merchant bank Whitlam Turnbull, where Huber worked.
Erwin then backed Andrew in a string of minor businesses including a small juice outfit called Tamarama Fresh Juices in 1991.
While Peter Binetter built his career separate from the family, Ron found the demands of parents and siblings harder to avoid. His marriage to Huber had broken down in 1991 and the family's response was a determination to keep assets that might figure in a divorce out of his name.
In 1991, Erwin set up Ligon 268 Pty Ltd, the trustee of the Bankstown Eye Trust, which ran Ron's booming eye practice in return for a 15 per cent margin on costs.
Ostensibly, this was the family helping out Ron and keeping assets out of a divorce settlement. In practice, the family used the earnings as a cash cow, billing first-class air tickets and hotel suites to Ligon 268, and using surpluses as loans to other family companies.
But the family remained close. As for when the loans would be repaid, Ron testified that in 2007 or 2008 his father told him: "When nudie is sold, there will be millions of dollars in profit and I will give you a percentage of my share."
That was enough for Ron. At the end of the day, it was all for the family. Or, as it turned out, it would be for whoever ended up controlling the core family companies.
Erwin's children had their own homes, near their father's mansion. Even Ron had a modest Rose Bay property, though the only water view came from a tap. He and Huber remarried in 2006 and moved to Bellevue Hill.
"He [Michael Binetter] also said we have someone in Bank Hapoalim ... we have been giving money to for many years," Deborah Huber told the ATO. Bloomberg
Biggest shareholders
Nudie turned into a huge success. In 2001, entrepreneur Tim Pethick teamed up with Andrew, using the Tamarama factory to launch Pethick's idea for an innovative fresh juice product.
In 2004, private equity group CHAMP Ventures, together with Ten Network director David Gordon and Jeff David of Davids Holdings invested $20 million for a 25 per cent stake in nudie.
Pethick was soon pushed out, replaced by Andrew as CEO from 2005 to 2009. The Binetters were the biggest shareholders in nudie.
As Erwin's health declined in the lead up to his death in 2009, Andrew and Michael ran the family business.
In 2006, the tax office had begun auditing the family over foreign loans. It was a source of major stress that took its toll on Andrew and Michael. Andrew and Yvette separated in April 2010. The divorce was finalised in November 2011, and Andrew remarried.
Ron realised how much trouble the family was in when Andrew and Michael took him to Israel and Switzerland in 2010, to introduce him to the family's bankers.
"Michael and I are in charge of our dispute with the tax office," Ron later testified that Andrew told him. "If we cannot travel, because we have our passports taken, then we need you to know where we go."
When Ron asked them what the tax dispute was about they told him, "They say that those loans are based on deposits we have with banks overseas."
In 1991, Erwin Binetter set up Ligon 268 Pty Ltd, the trustee of the Bankstown Eye Trust, which ran Ron's booming eye practice in return for a 15 per cent margin on costs. Ostensibly this was the family helping out Ron, pictured with son David, and keeping assets out of a divorce settlement.
Ron didn't get it.
"We do have money overseas," he said.
"We have money overseas and it is used as part of the security for the loans," they told Ron.
They were called back-to-back loans. The family had money on deposit in Switzerland with Bank Hapoalim and Israel Discount Bank.
The banks would use this as security and make a loan of the same amount from Israel to Binetter companies in Australia. These companies would pay interest on the loan, at more than 7 per cent.
Of that 7 per cent, the banks kept 0.3 per cent, and forwarded the rest of the interest payments to the Binetters' Swiss accounts.
The Binetter companies in Australia claimed these interest payments as a tax deduction, without telling the tax office they were actually paying themselves.
The Binetters had been doing this since 1988, and the back-to-back loans totalled more than $75 million, saving millions in tax each year.
Ron Binetter with Deborah Huber. They gave evidence in a tax case against other Binetter family members. Supplied
The ATO caught on to this almost by accident. In February 2003, the Australian Crime Commission seized the laptop of Geneva financial advisor Philip Egglishaw, setting off the massive Project Wickenbytax investigation.
On the laptop they found a brief file note about a meeting that Egglishaw had in Sydney in February 1998 with Michael Binetter. Michael had asked about back-to-back loans.
Nothing came of it, but when Project Wickenby began looking at the Binetters in 2006, they found seven $2 companies with huge loans from banks in Israel.
The ATO slapped more than $60 million of assessments on these companies in 2009-10, convinced they were back-to-back arrangements. But proving it in court was difficult.
In March 2013, the ATO suffered a major defeat when the Court of Appeal ruled in favour of a Binetter company called Rawson Finance. The court accepted Andrew Binetter's testimony that a loan to Rawson from Israel Discount Bank was unsecured – that it wasn't a back-to-back loan.
Undeterred, the tax office switched its efforts to a Federal Court tax appeal by another Binetter company, BCI Finances. In 2012 the court sent a Letter of Request to Israel for documents from Bank Hapoalim about the loans, only to encounter a series of strange hold-ups.
High point
In 2014 the two narrative arcs – the money trail and the family drama – became hopelessly intertwined. By February 2014, the ATO had finally obtained a trove of documents from Israel that referred to cash deposits and to "BTB loans". The ATO thought it was game over for the Binetters. Then the family turned everything around again.
On March 5, the directors of BCI Finances – Andrew and Gary Binetter and Andrew's mother, Margaret – dropped the tax appeal. They immediately put BCI into administration. BCI was a $2 company with no assets. The family was not only walking away from BCI's tax bill. Dropping the appeal case automatically meant all of the evidence obtained from Israel under the Letter of Request was no longer needed and must be destroyed. And just like that, none of the documents the ATO had so painstakingly obtained from Israel could be used.
When Michael and his wife sold their Rose Bay house for $12.5 million in 2016, the courts froze Michael's half of the net proceeds.
In a preliminary report, the administrators advised creditors the likely return was zero: "Based on our investigations to date, the return to any class of creditor will be highly unlikely."
This was the high point for the Binetters. They were free and clear. For the Tax Office it was complete frustration. But the ATO wasn't finished. It made two crucial decisions. First it applied for indemnity costs in the BCI Finances case. A court file is never closed until the costs are finalised, and this would take another year. During that year, the Israeli documents remained accessible.
The second decision, on April 15, 2014, was to press for Adelaide insolvency firm Sheahan Lock to be appointed liquidators of BCI Finances. John Sheahan and Ian Lock found themselves administering a company with no assets – so they tried something new. They set out to build a case against the directors of BCI for breach of directors' duties.
They began by asking BCI's legal advisors, Signet Law, for all case notes related to the work they had done for BCI on the tax appeal and the Israeli documents. These were ostensibly protected by legal client privilege, but the privilege was held jointly by BCI Finances and other group companies – and its newly appointed liquidators.
"This was the turning point," Sheahan says. "Lawyers generally make comprehensive and accurate file notes about meetings they attend – perhaps without considering the fact that privilege will vest in a liquidator if their client company becomes insolvent".
The correspondence and meeting notes, later filed in US proceedings, show lawyers called a series of meetings to propose ways for Andrew to secretly block the Letter of Request process in Israel. Some of the meetings read close to panic.
The Binetter family, meanwhile, was coming unstuck, as Ron made an unwelcome discovery. Erwin Binetter had died intestate in August 2009. The estate had been in limbo since then, administered by Michael and Andrew. But in 2014, as the sale process for nudie juice began, they produced a will. It had been made in 1991, after Ron and Deborah Huber had split. Ron had been written out of Erwin's will, ostensibly over fears about claims that could be made by Deborah in a divorce.
Deborah and Ron had remarried in 2006, but it was the 1991 document that was now being recognised as the last will and testament.
Ron and his chain of clinics had earned millions, but much of that wealth had been siphoned off by the family. Now, despite his father's promise, it was clear he would get next to nothing. His chief inheritance would be the prospect of possible prosecution by the Tax Office for deals he knew next to nothing about. In that moment of realisation, something changed.
Gary Binetter had moved to Israeli in 2012 and Michael moved to New York in early 2014. In June 2014, the ATO slapped a Departure Prohibition Order on Andrew. Sheahan and Lock questioned Andrew at a liquidators' hearing in October 2014 when he again denied any back-to-back loans. But when Ron and Deborah went on the stand, the liquidators heard a different story.
Deborah said she and Ron had been on vacation in Israel in April 2012 just after the ATO had asked the Australian courts for the Letter of Request. Michael had called them and asked her to find him a lawyer in Israel. She was advised to see Amiram Gicelter: "He's a Mr Fix-It," she was told. She accompanied Michael to see Gicelter in late April when Michael described back-to-back loans, with deposits in Switzerland and loans from the Israeli branch.
"I recall this quite specifically," she testified under claim of privilege. "[Michael] said that the cash deposits are held by a bank which had a separate banking license and so they [the ATO] won't find it. I recall he was quite arrogant about it.
"He also said we have someone in Bank Hapoalim. There' s a man called Baruch Etzion ... we have been giving money to for many years and he will give evidence – well, he has given evidence that it was quite normal practice to give loans secured by personal guarantee alone."
Etzion had testified in the Rawson Finance case, providing what judges described as "compelling evidence" about unsecured loans.
Huber was asked to explain what she meant by giving money: "Privilege. Yes, it was quite clear that he was talking about bribes."
Michael was asking, "What can be done about the existence of documents at Bank Hapoalim?" she said. It was "something a little bit out of James Bond".
"It was a discussion about how we can get inside the bank," Huber testified. "Who do we know inside the bank?"
"Well, we are not talking about hard copy files," Gicelter allegedly said. "This is 2012 and it is going to be electronic files. They would have to be accessed at night."
"We want it destroyed," Michael said. "If it's a copy only, then we've got no control about what's – what is said in it."
Gicelter told them he knew someone who could help. It would cost $60,000. But the plan appears to have failed. Deborah's testimony, backed by Ron's account of explanations given to him by his brothers and father of the offshore finances, were explosive.
Freezing orders
On January 14, 2015, Sheahan and Lock launched its legal action for breach of directors' duties against Andrew, Gary and Margaret Binetter, and Michael Binetter as a shadow director, and sought wide freezing orders for assets. Two weeks later, the liquidators learnt by chance that the sale of nudie juice to Philippines-based multinational food giant Monde Nissin for $82 million plus GST would settle the next day.
Sheahan Lock rushed to court for freezing orders for $45.2 million – the Binetters' share of the sale proceeds. US court records show that two weeks later, Andrew began transferring other money offshore. The family's legal strategy was a series of appeals and motions to prevent Sheahan Lock and the ATO from using the incriminating evidence from Israel. Ron and Deborah again gave evidence when the case was heard in August-September 2015. Their testimony wasn't challenged.
The family rift widened. When Deborah demanded repayment of $410,000 she had transferred to a family company in 2010 at Andrew's request, Andrew said the entry in the company accounts showing it as a loan was an error. He told the Supreme Court it had been a gift which was not refundable.
In December 2015, the ATO lifted the DPO on Andrew after he placed $10.4 million in government trust accounts. What happened next is detailed in a June 2016 case that Yvette filed in the Supreme Court for the State of New York in Nassau County, later moved to the US District Court. The US court filings include a copy of a financial agreement Andrew reached with Yvette in mid-2014, during the period when Sheahan Lock was getting its hands on BCI's legal files and the family was finding Erwin's will.
While the combined Binetter family was worth more than $100 million, Yvette received just $200,000 cash plus 10 instalments of $2500. There was no ongoing maintenance. According to the US court filings, on January 1, 2016, Andrew emailed Yvette that he was "thinking of taking the boys on a holiday [to the US] in the second half of January".
The day the boys were due to return, Andrew emailed Yvette that he had decided to "relocate to the US at this time", and the boys had decided to stay with him. He counselled Yvette to agree to his removal of their sons so as not to distress their children.
"Yvette it is imperative for you and I to cease the acrimony, court filings and legal disputes" for the benefit of the children, Andrew wrote, because "neither of us" would ever wish them "emotional harm".
It was this email, obtained by AFR Weekend from US court records, that triggered a Binetter family member to comment: "Andrew is a Class-A arsehole."
Andrew has not returned to Australia. Yvette's child abduction case in New York went nowhere and was dropped in August after Andrew contested service of the writ. By now the older boy was 17, too old for the abduction laws to apply, while Andrew's legal challenges could wait out the 16 months until the younger brother turned 16.
"The Respondent's sole purpose is to delay this matter in an attempt to financially and emotionally drain the Petitioner-mother," Yvette's lawyer told the court. Court filings in another US case show Andrew, meanwhile, had moved $2.7 million in money transfers out of Australia in 2015 and 2016, according to Austrac records.
'Corrupted'
In November 2016, Justice Jacqueline Gleeson dropped the boom on the BCI Finances case, finding that the loans reported by the Binetter companies were "shams".
"Michael and Andrew Binetter went to extraordinary lengths to cause [BCI] to contest the revised [tax] assessments while failing to disclose the existence of the [Swiss] deposits that changed the whole picture," she found.
Andrew and Michael, who she found was a de facto director of the companies, "knew that the evidence [in BCI's tax appeal] was misleading at the time that it was served".
"Michael Binetter (then a practising lawyer) went so far as to try to arrange the destruction of documents which might have disclosed the existence of the offshore deposits and the terms upon which those deposits secured the advances to the applicants.
"The evidence of Deborah Huber . . . strongly suggests that Mr Etzion had been corrupted by one or more members of the Binetter family."
Justice Gleeson dismissed claims against Andrew and Michael's mother, Margaret, and cousin Gary Binetter, who were also BCI directors. It was a complete victory for Sheahan Lock and the ATO, as the bill for the Binetters headed towards $145 million. The liquidators have subsequently put freezing orders on Binetter properties worth about $30 million.
When Michael and his wife sold their Rose Bay house for $12.5 million in 2016, the courts froze Michael's half of the net proceeds.
Last April, the US Bankruptcy Court in New York granted Sheahan Lock status under Chapter 15 of the Bankruptcy Code – they were now free to act as BCI liquidators in the US, to subpoena documents and examine witnesses, to pursue the Binetters' offshore millions. It was another first for Australian liquidators. Sheahan Lock's international pursuit froze more than $70 million in cash and property through court action in Australia, Israel and the US.
It's at this point the tax office began settlement talks, which continued as the Binetters' appeal against Justice Gleeson's finding was heard in August. After 12 years, the ATO made the difficult call that it was looking at diminishing returns.
"Both sides eventually realised that the vast litigation was becoming unproductive for each of them," Andrew Binetter's lawyer, Malcolm Stewart of Speed and Stracey, told AFR Weekend. "Our clients reluctantly entered into the settlement, most of the terms of which were dictated by the ATO and its liquidators."
The conditions of the settlement are confidential but the Binetters – particularly Andrew and Michael who hold the purse strings – will not walk away destitute. One estimate puts the remaining family wealth, including inheritances and offshore accounts, somewhere between $10 million and $30 million. This is separate from the $70 million of assets frozen by the courts.
"This agreement marks a positive conclusion to a prolonged dispute and strengthens our resolve to pursue other significant matters," an ATO spokesperson said.
As for the allegations made against Andrew and Michael, "We will not be commenting on questions that concern untested allegations or allegations that have been the subject of discontinued appeal proceedings and a confidential settlement," Stewart said.
For outsiders, the great Binetter tax war is a stark demonstration of how hard it is for the Tax Office to bring wealthy taxpayers to book, and the complex strategies both sides deploy to win.
Estimates of how much the Binetters have spent fending off the tax office range from $10 million to $35 million. But the family isn't out of the woods. Sheahan Lock has settled a damages action in Israel against Bank Hapoalim. Crucially, the settlement with Andrew and Michael allows Sheahan Lock to proceed with a case against IDB. IDB, in turn, is free to launch a counter-suit against its former clients – which means Andrew and Michael's legal problems may not be over.
"There's been a huge effort put into this by the commissioner," Sheahan says. "Suddenly these $2 companies aren't as ring-fenced from ATO assessments as everyone thought. Clearly the tax net can now be cast much wider to capture other parties involved in such artificial transactions.
"This has been an excellent result for the tax office. The tax officers with whom we have worked have been extremely professional and dedicated to maximising recoveries for Australian taxpayers."
Family members in Australia have been rocked by the scandal. The deep scars from the conflict remain. For Michael and Andrew, not so much. Michael looks ensconced in his luxury unit in the Ritz Carlton in White Plains, New York. Andrew has a new food business in the US and a seven-bedroom house a block back from the water on Long Island. From the top of the roof, there's a view of the sea.
Neil Chenoweth is an investigative reporter for The Australian Financial Review. He is based in Sydney and has won multiple Walkley Awards. Connect with Neil on Twitter. Email Neil at nchenoweth@afr.com.au