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The case against Helio Castroneves

The case against driver Helio Castroneves

Penske Racing driver Helio Castroneves has won the St. Petersburg Grand Prix twice along with two Indianapolis 500 trophies. He will miss this year's grand prix because he is on trial in Miami on tax evasion and conspiracy charges.

Who's on trial

Castroneves, his sister/former business manager Katiucia Castroneves, and their lawyer, Alan Miller.

The allegation

Prosecutors contend Castroneves helped mastermind an elaborate tax fraud scheme involving companies in the Netherlands and Panama.

How it worked

Castroneves' original contract with Penske Racing, signed in 1999, paid him $1 million directly as a race car driver. It also was to pay $5 million from a marketing deal to a Panamanian company, Seven Promotions. The prosecution contends that Castroneves, his sister, and at least one other family member created and controlled Seven Promotions, which under Panamanian law was set up without producing a public record of the incorporating party's name or identifying shareholders. Prosecutors also say Miller, the lawyer, later helped devise a scheme to keep Penske from withholding taxes from the $5 million by having it instead paid to a Dutch company. They allege Castroneves planned to move to a tax haven such as Monaco after his career and accept the money at that point without paying taxes.

The defense

Led by well-known criminal defense attorney Roy Black (former counsel to William Kennedy Smith), the defense insists Seven Promotions was created and controlled by Castroneves' father, Helio Sr., who had financed his son's early racing career, and that money received by Seven Promotions is not taxable to Helio Jr. The defense contends the driver was concentrating on his career and didn't understand the financial dealings. To prove tax evasion, the prosecution must prove Castroneves willfully evaded taxes.

At stake

Castroneves, 33, could face up to 6 1/2 years in prison and because he is not a U.S. citizen could be deported upon release from prison. A conviction would ruin his racing career and cost him millions in endorsements.

Outlook

According to Sports Illustrated, prosecutors obtain convictions in more than 90 percent of tax evasion cases. But Castroneves is an affable celebrity who became broadly known through racing and his victory on Dancing with the Stars and he has a high-profile defense team that has had success in celebrity cases. The prosecution rested its case on Monday.

Information from the Miami Herald, New York Times, South Florida Sun-Sentinel and Sports Illustrated was used in this report.

The case against Helio Castroneves 04/02/09 [Last modified: Thursday, April 2, 2009 7:42pm]

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