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DATE News (chronologically)
03/13/09
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Caught in lie, 90% chance Castroneves gets convicted  UPDATE #4 A top official with Penske Racing says it would be horrible for business and the sport if race car driver and TV dance celebrity Helio Castroneves is convicted on tax evasion charges. Penske Racing general counsel Lawrence Bluth (Blooth) called the prospect “terrible” in testimony Friday. Bluth said the 33-year-old Castroneves is Penske’s most popular driver and one of the world’s best.

Bluth was called as a prosecution witness and provided other testimony that could be damaging to Castroneves.

The two-time Indianapolis 500 winner and “Dancing With the Stars” champion is on trial in Miami on conspiracy and tax evasion charges along with his sister and lawyer. All three could get more than six years in prison if convicted. Indy Star

More evidence on that issue came Friday from Miami banker Guido Chipy, who was involved in a 2001 mortgage taken out by Castroneves. In documents provided by Miller, Castroneves is identified as being the sole owner of a company in which the $5 million in Penske money will be deposited.

But Chipy also acknowledged that nearly all the mortgage application information came from Miller and that he had no contact with Castroneves during the process.

"The only thing he did was sign it?" asked Castroneves attorney David Garvin.

"That's correct," Chipy said.

[Editor's Note: The prosecution is driving more nails in Helio's coffin.  If Penske's attorney, Bluth, was so concerned about the damage Helio hiding his taxes would do to racing should he be caught with tax evasion, Penske would have never agreed to pay or defer Helio's money to an off-shore location.  Bluth and his legal staff are no dummies, they know exactly what was going on and the scheme that appears to have been in play.  And you wonder why the IRS gets a better than 90% conviction rate in these cases?  The evidence against the perpetrators is usually quite damaging. And if Castroneves was sole owner of the off-shore company he had to sign those papers at some point too.  He didn't know he was signing to be sole owner of a company?  Just call us dumb.]

03/11/09 Kevin Savoree, now an executive at Andretti Green Racing, gave conflicting testimony today in defense of Helio Castroneves.  Savoree handled accounting work for Castroneves in 1999 and 2000.  Savoree said when he handled accounting work for Castroneves in 1999 and 2000, the plan was to set up a legitimate deal in which much of the two-time Indianapolis 500 winner's income would be deferred. That meant his taxes owed to the IRS also would be deferred until he actually got the money.

"Helio Castroneves never suggested that you do something improper, right?" asked Castroneves attorney David Garvin.

"Absolutely not," Savoree replied.

But Savoree acknowledged helping draft a memo describing the ultimate goal as having Castroneves "maintain a residence in a tax haven, such as Monaco."

Asked by prosecutor Jared Dwyer how much U.S. tax Castroneves would have paid on the $5 million if he had made that move, Savoree answered, "Perhaps zero."

Savoree said Castroneves had minimal involvement in his financial dealings, but he also said the race car driver got "mad as hell" at one point as discussions dragged on in 2000 about the deferred income account. "He was upset. He wanted the matters resolved," Savoree testified.

The original plan was for Penske to transfer the money to a Panamanian company called Seven Promotions. But Savoree said he balked at that because Panama's status as a tax haven meant Penske would deduct 30% for U.S. taxes from the $5 million before making the deposit.

"I wasn't comfortable with Panama," he testified.

Prosecutors say Castroneves secretly controlled Seven Promotions and therefore is liable for taxes on the entire $5 million, even though it eventually wound up with the Dutch firm Fintage.

So the bottom line is that Savoree was aware that Castroneves wanted to set up a plan to defer his taxes and he acknowledged helping to draft a memo describing the goal of Castroneves was to maintain a residence in a tax haven such as Monaco. Well duh.....He would then take his money out of Fintage once he moved to Monaco and, would therefore, not have to pay any income tax on it.  How convenient is that? So although Savoree was brought on by the defense team to help Castroneves, he may have actually hurt the cause and it appears from our non-legal eyes that the government's case against Castroneves is getting stronger.  Information for this article came form this AP article.

03/11/09 Brazilian race car driver Helio Castroneves said he owned a Panamanian company now labeled a tax dodge by the U.S. government, according to a lawyer who testified at his Miami tax evasion trial. Attorney Peter Yanowitch testified Tuesday that he was involved in contract talks between Castroneves and the Hogan racing team in 1999. Yanowitch says Castroneves wanted his money to go to a Panamanian entity that he owned.  Prosecutors say the company was created to hide income from the IRS. Lawyers for Castroneves say he didn't own the Panama company and that it was created by his father.  Castroneves is a two-time Indy 500 winner who also won TV's "Dancing With The Stars" competition. His tax trial is expected to last several more weeks. Miami Herald

03/10/09 This article by SI.com legal analyst Michael McCann does the best job yet of analyzing the Helio Castroneves case.  McCann is a law professor at Vermont Law School and the distinguished visiting Hall of Fame Professor of Law at Mississippi College School of Law. He is a former chair of the Association of American Law Schools' Section on Sports and the Law.  "He writes, based on data the chance of Castroneves succeeding is slim. Prosecutors obtain convictions in over 90 percent of tax evasion cases, with some estimates claiming a prosecutorial success rate as high as 97 percent."

03/09/09 To this day, race car driver and "Dancing with The Stars" winner Helio Castroneves hasn't seen a single dime of $5 million in licensing money he was promised under a 1999 contract with Penske Racing. It's either been parked at Penske or is still idling in a Dutch investment account.

But the Internal Revenue Service says Castroneves owes U.S. income taxes on the money anyway, contending the 33-year-old driver can't avoid tax by simply refusing cash to which he's entitled. A complex concept known as "constructive receipt" is at the heart of the prosecution's case against the two-time Indianapolis 500 winner.

Testimony resumes Tuesday in the tax trial of Castroneves, his business-manager sister Katiucia Castroneves - both originally from Sao Paulo, Brazil - and his lawyer Alan Miller of Birmingham, Mich. All are charged in a seven-count federal indictment with conspiracy and tax evasion from 1999 to 2004.

The three defendants are facing more than six years behind bars if convicted. Trial is expected to last about a month.

Experts say jurors will have to decide if the Castroneves deal was real or contrived to make it appear he didn't have control of his Penske money.

"What the government is saying is, if you are entitled to some cash, and you leave it in your mother's bank account, it's still your cash," said Chas Roy-Chowdrey, a tax expert with the global industry group Association of Chartered Certified Accountants.  More at AP article

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