Scale Facilitation boss hit with $5m tax bill over workers’ income tax, superannuation and GST

The Tax Office has taken a key lieutenant in Scale Facilitation founder David Collard’s troubled empire to court.

James Fatone and David Collard went to St Joseph’s College, Geelong, and eventually became business partners.

Embattled businessman David Collard’s Aussie lieutenant has been hit with a $5m tax bill run up by one of the key companies in his Scale Facilitation group.

The Tax Office has taken legal action seeking the money from James Fatone, who went to St Joseph’s College, Geelong, with Mr Collard and describes himself on LinkedIn as Scale Facilitation’s “chief of staff and director of industrial relations”.

Breaking his silence on the Scale Facilitation saga, Mr Fatone said he was surprised by the legal action, had been working towards cutting a deal with the ATO, and denied doing anything wrong.

It comes after assault charges against Mr Collard in New York were dropped and the former high-flyer blamed media coverage of Tax Office raids on Scale’s Geelong offices last year for his business empire’s collapse.

In documents filed with the Victorian County Court on Tuesday, the ATO alleges Sanitex Global, a failed Australian company at the heart of Mr Collard’s globe-spanning empire, has not paid GST and tax withheld from employee wages since October 2022 and has failed to pay superannuation since the start of last year.

James Fatone. Picture: Alan Barber

David Collard appears in Manhattan Supreme Court in New York City. Picture: Jefferson Siegel

It is pursuing Mr Fatone, a former fish and chip shop owner who lives in Geelong, personally because as a director of the company he is liable for its tax debts.

However, Mr Fatone said that Sanitex Global “was owed close to $12m and the refund was unreasonably withheld by the ATO”.

“We intend to work through the Liquidators now to recover this refund for the benefit of the former employees and creditors, including any offset to the ATO,” he said.

“I’m surprised by this escalation, as recently as 26 February 2024 the ATO agreed to allow me to submit a settlement proposal for consideration.

“I executed my duties as director based on the available resources, information, and deal flows.”

He said the ATO and Federal Police officers raided Scale Facilitation’s offices in Geelong in June last year before a deadline to give it information about Sanitex Global’s affairs expired.

David Collard with Deputy Prime Minister Richard Marles.

Mr Collard, who lives in New York, is also a director of the company but it is not known whether the ATO is also trying to hold him responsible for Sanitex’s debts.

“We affirm that we discharged our duties as directors and assert entitlement to ATO refunds to address current liabilities,” Mr Fatone said.

“Despite the damage created by the negative media coverage after the raid our global firm still retains significant value, which could be used to cover any owed amount and considered as part of a settlement.”

Mr Collard and Scale have previously denied any wrongdoing.

The Victorian Supreme Court appointed Scott Andersen, of Worrells, as liquidator of Sanitex Global in November after consulting firm Lake Social Enterprises took legal action over unpaid bills.

David Collard with Richard Marles and Peter Dutton at Scale’s New York office opening in December 2022. Picture: Supplied

In a report released on Friday, Mr Andersen poured scorn on claims in the company’s financial accounts that it made $1bn profit in the last financial year.

The accounts were “not a true and correct reflection” of the company’s financial position, Mr Andersen said in his report.

There was no money to pay staff owed $4.1m in unpaid wages and super, he said.

Scale made a splash when it launched in New York City in December 2022, with both Deputy Prime Minister Richard Marles and Opposition Leader Peter Dutton backing the company’s plans to help Australian companies expand into the USA.

But it was quickly mired in allegations that staff had not been paid, and the company’s financial turmoil has thrown into doubt plans to build a battery gigafactory in Geelong and take over British battery maker Gigavolt.