Cyber security company chief Dr Tony Castagna facing criminal charges

Anthony Castagna’s company helps protect the cyber secrets and detect financial crimes within the world’s most powerful institutions, including the Serious Fraud Office in Britain, US Homeland Security, the Australian defence force, ASIC, even the Office of the President of the US.

Now the Sydney-based co-founder and chairman of Nuix, majority owned by Macquarie Bank, faces a potential 20-year jail term after being charged with tax evasion and dealing with the proceeds of crime.

Dr Castagna, 70, has been the target of two of Nuix’s major clients: the Australian Federal police and the Australian Tax Office through Project Wickenby, their long-running tax probe.

The charges relate to payments from Macquarie Bank which were allegedly channelled into offshore companies controlled by his cousin Robert Agius, who was sentenced to a non-parole period of 6 years and 8 months’ jail in 2012 for operating unrelated tax avoidance schemes via his Vanuatu-based accountancy firm.

In addition to Dr Castagna’s criminal charges, the ATO is pursuing him for unpaid taxes and penalties in excess of $10 million.

For decades, the tech guru has been a rainmaker for Macquarie Bank. The bank has ploughed millions of dollars into his cyber security and forensic services company Nuix. A totally owned Macquarie Group subsidiary owns more than 70 per cent of Nuix and over the last year Macquarie advisors have been talking up a billion-dollar float of Nuix on the Australian stock exchange.

Nuix insiders expressed concern that Dr Castagna’s decision not to stand aside pending the outcome of his criminal proceedings could damage the company.

“With the sort of customers we have – intelligence agencies, police, government and taxation organisations – how could you have a chairman facing those charges?” said one insider.

However, the Nuix board is standing by their chief. “The charges against our chairman, Dr Tony Castagna, are totally unrelated to the company and date back to matters which occurred about 18 years ago, well before Nuix existed,” said the company in a statement.

“The board is aware of the impending proceedings and continues to fully support Dr Castagna, who has not been convicted of any offence and remains entitled to the presumption of innocence.”

The board also maintained that the charges “have had no bearing” on the company’s operations.

On the May 21, 2008, the AFP executed search warrants at Dr Castagna’s home in Gordon, on Sydney’s north shore, as well as at his Macquarie Bank office.

At the same time the AFP, in conjunction with Vanuatu police, raided the Port Vila home and office of then Vanuatu-based accountant Agius.

According to documents tendered in the Federal Court, for many years Dr Castagna, who has a PhD in finance from the University of NSW, has been on the payroll of Macquarie Bank.

An expert in technology start-ups, Dr Castagna was a director of Macquarie Technology Ventures from 1997 until 2013.

It is these payments by Macquarie Bank which form the basis of his criminal charges. Prior to 1998, when he returned to Australia, Dr Castagna was based in Silicon Valley in the US. Up until 2008 Macquarie Bank paid consultancy fees to Billbury Ltd, a UK company associated with his cousin Agius. Billbury in turn paid Dr Castagna.

Dr Castagna, who denies any wrongdoing and is vigorously defending the charges, claims in documents filed with the Federal Court that in 1997, when he was living in the United States, Macquarie Bank rejected his proposal that he be employed by the bank.

Instead Macquarie Bank, and later Macquarie Equities (USA), “reached an agreement with Billbury Ltd for the provisions of services,” claims Dr Castagna in court documents.

Dr Castagna maintains that he then reached an agreement with Billbury to be paid a fixed monthly amount, which Dr Castagna says he declared as assessable income.

The rest of the money from Macquarie Bank was paid by Billbury into Dr Castagna’s superannuation fund.

The tax years in dispute are from 1999 to 2008. The ATO claims Dr Castagna owes $5,677,329 with further penalties of $4,899,748.

Two senior Macquarie associates David Standen and Daniel Phillips are directors of Nuix, alongside former US ambassador to Australia Jeffrey Bleich. There is no wrongdoing alleged against these men or any of Nuix’s other directors.

Nuix started in the year 2000, when a group of computer scientists began working on a processing engine for unstructured data, the New Universal Intelligence eXchange. Dr Castagna set up the corporate entity Nuix in late 2005 with the ultimate holding company being a NZ company, Ferodale Ltd. Corporate records show Ferodale’s two directors were Dr Castagna and the now-disgraced NZ businessman Anthony Walpole Bowden.

In June 2012, only a month before Robert Agius was jailed here in Australia, over in New Zealand Bowden was struck off as an accountant and sentenced to nine months home detention after pleading guilty to charges relating to the $50 million collapse of NZ company Five Star.

A year after establishing Nuix, Dr Castagna stepped down from its parent company Ferodale and was replaced by his cousin Agius.

Ferodale has since been renamed Blackall Ltd and its current directors are Robert Agius’s son Daniel and Dubbo resident Roy Grady, 70. Mr Grady is also a current director of Nuix.

Blackall’s shareholding in Nuix is worth an estimated $26 million.

On paper Dr Castagna does not appear to have shares in Nuix, nor does he appear to be connected to the Ferodale/Blackall company.

But the company names appear to be derived from his holiday home at Ferodale near Port Stephens and an investment property in Blackall Street, Hamilton, a suburb of Newcastle. Both of these properties have been frozen under the Proceeds of Crime Act. Dr Castagna and Agius have also been charged over $4.5 million which Agius allegedly lent to Dr Castagna. The police are alleging that these loans were a sham and were established to return money back to Dr Castagna in Australia, and thereby avoiding tax.

Just before his arrest in Perth in April 2008, Agius lent $3.6 million to his cousin by way of mortgages over a number of properties in Dr Castagna’s extensive holdings.

The AFP is alleging that these loans form the proceeds of crime and as such they have frozen Dr Castagna’s sizeable property portfolio.

Among the assets frozen are the Castagna family mansion in St Johns Avenue, Gordon, which Dr Castagna purchased back in 1999 for $1.3 million.

He has also been restrained from dealing with a property in Carwarra Street, Gordon, as well as a string of townhouses and an industrial property in Newcastle. His holiday home at Ferodale, near Port Stephens, is also the subject of proceeds of crime order.

Dr Castagna has sought a delay on the ATO’s pursuit of back taxes and penalties until his criminal trial for tax evasion and dealing with the proceeds of crime is heard.

The trial of Dr Castagna and his cousin Robert Agius is due to be held in 2018.

Macquarie Bank, which is not accused of any wrongdoing, declined to comment on Nuix.

What is Nuix?

Nuix – the New Universal Intelligence Exchange – provides cyber security and forensic investigation services to law enforcement, defence, intelligence and security agencies around the world.

It is majority-owned by Macquarie Bank, via a totally owned subsidiary, and two senior Macquarie personnel David Standen and Daniel Phillips sit on the board.

Earlier this year, Jeffrey Bleich, the former US ambassador to Australia and onetime Special Counsel to President Barack Obama, was appointed to the Nuix board.

Keith Lowry, Nuix’s senior vice-president in the US served as Chief of Staff to the Deputy Under Secretary of Defense for Human Intelligence, Counterintelligence and Security at the Pentagon.

In 2009 Nuix chalked up the first of many impressive contracts when the US Security Exchange Commission used its software for digital investigation and analysis.

Last year, Nuix provided the investigative technology essential for 150 journalists across the globe to mine and analyse the world’s largest data leak – 11.5 million documents which became known as the Panama Papers.

Nuix’s technology enabled the International Consortium of Investigative Journalists to sift through the millions of documents from Panamanian law firm Mossack Fonseca.

Nuix has 1500 customers in at least 60 countries. Its clients include Interpol, the US Secret Service, United Nations, the US Department of Homeland Security, U.S. Securities and Exchange Commission, the Japanese Securities and Exchange Commission, ASIC, Australian Customs, the Australian Federal Police, the Australian Taxation Office, Australian Defence Force, the United States Department of Homeland Security, the Serious Fraud Office in the UK and the Office of the President of the United States.

The company’s clients also include many of the world’s leading advisory firms, financial institutions and leading pharma and technology companies.

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