Hot News
for your iPhone
for your iPad
Go to our forums to discuss this news
DATE News (chronologically)
Prosecution: Helio Castroneves cheated IRS
Brazilian Helio Castroneves -- two-time Indy 500 champ, TV's Dancing with the Stars winner -- believed in the ''land of opportunity,'' until it came time to pay his taxes to the U.S. government, a prosecutor said Tuesday.

Then the multimillionaire race car driver thought he was ''above the law,'' Assistant U.S. Matt Axelrod said during opening statements in Castroneves' tax-evasion trial in Miami.

Castroneves, who owns a mansion in Coral Gables, is charged along with his sister, Katiucia, and his Michigan attorney, Alan R. Miller in a conspiracy to evade paying taxes on more than $5 million from the driver's racing and licensing agreement with the Penske Team between 1999 and 2004.

''They thought that the rules that apply to taxes didn't apply to them,'' Axelrod told the 12-person federal jury. ``In this land of opportunity, these defendants didn't miss an opportunity to play by their own rules.''

But the defense team countered the prosecution's case was a ''fiction,'' fueled by the IRS' drive to target the 33-year-old celebrity.

''They have come up with a fiction,'' Castroneves' attorney, Roy Black, said in his opening statement, saying his client's tax obligation was legitimately deferred until May.

''When he won Dancing with the Stars [in 2007], that made him an even bigger target to the IRS,'' Black said. ``Even though he is wealthy and successful, he did nothing wrong.''

The trial, expected to last from six to eight weeks, could end Castroneves' dazzling racing career. If convicted, he and his co-defendants could face five to 10 years in prison, plus hefty fines.

The complex case hinges on whether Castroneves, as his racing career finally took off a decade ago, tried to dodge his tax obligations in the United States.

The defendants are charged with using an offshore shell corporation called Seven Promotions, set up in Panama, to carry out the tax-evasion conspiracy, according to the indictment.

In a 1999 deal with the Penske Team, Castroneves was to be paid $6 million as a driver and for the licensing rights to use his name, likeness and image, according to the indictment. Of that total, $5 million was initially supposed to go to the Panamanian corporation, which was controlled by Castroneves, the indictment says.

But that money was not transferred to Seven Promotions because the driver's attorney, Miller, realized that Penske was going to have to withhold 30 percent in taxes on any payments to the Panamanian company, Axelrod said Tuesday.

The result: Miller instructed Penske not to pay Castroneves through Seven Promotions, he said. Instead, the attorney told Penske to pay Castroneves through a Dutch entity called Fintage Licensing, in an attempt to avoid paying taxes, Axelrod said.

''The goal was for Fintage to hold on to the $5 million until Helio Castroneves moved out of the United States, so he wouldn't have to pay taxes on it,'' Axelrod said, suggesting Castroneves could move to Monaco, a no-tax haven for the rich.

Axelrod said the driver, his sister and the lawyer committed the crime when they lied about Castroneves' ownership of Seven Promotions in Panama. That was critical, he said, because by claiming Castroneves didn't own the Panamanian company, the defendants could arrange for Penske not to send his income to Seven Promotions but instead to Fintage in The Netherlands.

That move, in turn, prevented Penske from being required to withhold 30 percent of Castroneves' income for taxes owed to the IRS.

''They lied because it was the only way to salvage their scheme against the United States,'' Axelrod said.

But Castroneves' attorney, Black, argued there was nothing criminal about the change of plans by Castroneves' lawyer, saying, ''It wasn't a tax dodge.'' He said that Castroneves -- only 23 in 1999 and barely able to speak English -- rushed into his contract with the Penske Team to replace driver Greg Moore after Moore was killed in a race that year.

Black said Castroneves' father, a businessman who had largely financed his son's career until his big break with the Penske Team, was the actual owner of Seven Promotions. He also said that Fintage was a sensible alternative for the young driver because it set up an annuity for Castroneves to defer his Penske income and tax liabilities.

Black said Castroneves will soon be paying taxes on the $5 million to the IRS.

''You can defer your income,'' Black said, noting that professional athletes routinely set up annuities so they can rely on a flow of cash later in life.

''This is not a man who is hiding his money around the world,'' he said. ``This is not the case of someone not paying his taxes. This May -- two months from now -- he will have to pay the taxes on the $5 million.''  Miami Herald

Hot News Archives
2000 2001 2002 2003

Search Hot News
Search Help
AutoRacing1 Inc. BBB Business Review