Partial verdict reached in Castroneves tax trial

[URY914]

By The Associated Press

Published: April 16, 2009

A federal jury reached a partial verdict Thursday in the tax evasion trial of Brazilian race car driver and "Dancing With The Stars" champ Helio Castroneves, but was hung up on several counts.

Federal Judge Donald Graham said he would not immediately read the verdicts on two tax evasion counts against Castroneves and told jurors to continue deliberating on four other tax evasion counts and one conspiracy count. Thursday was the fifth day of deliberations. Castroneves, 33, is charged with conspiring with his sister and lawyer to evade more than $2.3 million in U.S. income taxes.

The jury said it also reached a partial verdict against Katuicia Castroneves, 35, who is her brother's business manager, and a full verdict against Michigan motorsports attorney Alan Miller, 71. Those verdicts also remained sealed.

All three faced more than six years in prison if convicted of conspiracy and tax evasion between 1999 and 2004. The case mainly revolved around income from a $2 million sponsorship deal Castroneves had with the Brazilian firm Coimex and his $5 million licensing deal he reached with Penske Racing in late 1999.

As the notes were read to the jury, Castroneves sat bent over at the defense table with his fists clenched to his eyes and his sister's arm wrapped around his shoulder. When court recessed, he dabbed his eyes with a handkerchief.

Castroneves, a two-time Indianapolis 500 winner and one of the Indy racing circuit's most popular drivers, was temporarily replaced on Team Penske by Australian Will Power pending the outcome of the case. Castroneves won the TV dance competition in 2007.

Central to the case is the ownership of a Panamanian company called Seven Promotions. Prosecutors called it a shell corporation set up primarily so Castroneves could dodge U.S. income taxes, but Castroneves' father testified he created Seven to boost his son's image in Brazil. The elder Castroneves said his son never owned it.

Prosecutors called that a lie, showing jurors numerous documents in which Castroneves claimed Seven as his own. An Internal Revenue Service agent testified that if it belonged to Castroneves, he owed U.S. taxes on the full $5 million from Penske even though he has never actually received the money.

Instead, the Penske payments were eventually invested in a deferred compensation deal with the Dutch firm Fintage Licensing B.V.

Castroneves attorney Roy Black told jurors in closing arguments that such deals are common — and perfectly legal — for athletes who have relatively short careers and face injury or worse at any moment.

Black also said Castroneves had only a slight understanding of his financial affairs and relied on professionals to deal with them.

"Does anybody really think Helio Castroneves really made a financial decision? All he did was drive — and drive he did," Black said.

Prosecutor Matt Axelrod, however, said it made little sense for Castroneves to sign away $5 million to Seven if he had no control.

"You don't send millions of dollars to a company you don't own or control," Axelrod said.

Besides the Penske and Coimex money, Castroneves was charged with claiming thousands of dollars in improper tax deductions and failing to disclose as income Hugo Boss clothing and airline tickets he received.

[URY914]

Brazilian race car driver and "Dancing With The Stars" champ Helio Castroneves was acquitted Friday of most charges that he worked with his sister and lawyer to evade more than $2.3 million in U.S. income taxes.

A federal jury acquitted Castroneves on six counts of tax evasion but hung on one count of conspiracy. The jury also acquitted Katiucia Castroneves, 35, who is her 33-year-old brother's business manager, on the tax evasion counts but also hung on the conspiracy. Michigan motorsports attorney Alan Miller, 71, was acquitted on all three counts of tax evasion and one count of conspiracy.

The jury deliberated six days after a six-week trial.

Castroneves, speaking in his native Portuguese, expressed profound relief.

"I just want to thank God, and my fans, and all of the people who prayed for me," he said outside the courtroom, still fingering a rosary.

"It has been a very difficult place to be in," he said, but added that his faith had seen him through. He said he planned to leave Friday night for Los Angeles.

All three faced more than six years in prison if convicted of conspiracy and tax evasion between 1999 and 2004. The case mainly revolved around income from a $2 million sponsorship deal Castroneves had with the Brazilian firm Coimex and his $5 million licensing deal he reached with Penske Racing in late 1999.

Castroneves, a two-time Indianapolis 500 winner and one of the Indy racing circuit's most popular drivers, was temporarily replaced on Team Penske by Australian Will Power pending the outcome of the case. Castroneves won the TV dance competition in 2007.

Central to the case was the ownership of a Panamanian company called Seven Promotions.

Prosecutors called it a shell corporation set up primarily so Castroneves could dodge U.S. income taxes, but Castroneves' father testified he created Seven to boost his son's image in Brazil. The elder Castroneves said his son never owned it.

Prosecutors called that a lie, showing jurors numerous documents in which Castroneves claimed Seven as his own. If it was, an Internal Revenue Service agent testified that Castroneves owed U.S. taxes on the full $5 million from Penske even though he has never actually received the money.

Instead, the Penske payments were eventually invested in a deferred compensation deal with the Dutch firm Fintage Licensing B.V. Castroneves attorney Roy Black told jurors in closing arguments that such deals are common — and perfectly legal — for athletes who have relatively short careers and face injury or worse at any moment.

Black also said Castroneves had only a slight understanding of his financial affairs and relied on professionals to deal with them.

"Does anybody really think Helio Castroneves really made a financial decision. All he did was drive — and drive he did," Black said.

Prosecutor Matt Axelrod, however, said it made little sense for Castroneves to sign away $5 million to Seven if he had no control.

"You don't send millions of dollars to a company you don't own or control," Axelrod said.

Besides the Penske and Coimex money, Castroneves was charged with claiming thousands of dollars in improper tax deductions and failing to disclose as income Hugo Boss clothing and airline

[Zeke]

Great! I hope he gets to Long Beach and they have a car for him to qualify tomorrow. And not at Will Power's expense. The Captain can afford a third car.

[AndyK!]

Great news!! Screw the IRS and high taxes.

[Britwrench]

Quote from AndyK:
" Great news!! Screw the IRS and high taxes"

I think you might find that it was not paying taxes at all.. it's called evasion.
Nothing to do with tax rates or the IRS.

[Zeke]

Well, he was acquitted. You conducting your own trial?

[Aerkuld]

Maybe he has a future in politics?

[Britwrench]

Quote from AndyK:
" Great news!! Screw the IRS and high taxes"

Response by me:
"I think you might find that it was not paying taxes at all.. it's called evasion.
Nothing to do with tax rates or the IRS"

Quote from Milt:
"Well, he was acquitted. You conducting your own trial?"


No, I was not conducting a trial. It was a comment on AndyK's response and inference that it was great news, because it was the fault of the IRS and "high" taxes that the trial even started.

Did he actually pay taxes or not?

[Zeke]

I have no idea what he and his sister did. All I do know is that he is in LB and will drive today. That's big new for the IRL.

[m21sniper]

Originally Posted by Britwrench

Quote from AndyK:
" Great news!! Screw the IRS and high taxes"

Response by me:
"I think you might find that it was not paying taxes at all.. it's called evasion.
Nothing to do with tax rates or the IRS"

Quote from Milt:
"Well, he was acquitted. You conducting your own trial?"


No, I was not conducting a trial. It was a comment on AndyK's response and inference that it was great news, because it was the fault of the IRS and "high" taxes that the trial even started.

Did he actually pay taxes or not?

It was the fault of the IRS that the trial started at all.

Or do you blame Bugs Bunny instead?

[m21sniper]

Originally Posted by URY914

Instead, the Penske payments were eventually invested in a deferred compensation deal with the Dutch firm Fintage Licensing B.V. Castroneves attorney Roy Black told jurors in closing arguments that such deals are common — and perfectly legal — for athletes who have relatively short careers and face injury or worse at any moment.

THIS is the whole key and motivation for the gov'ts case.

They OBVIOUSLY want to go after all atheletes that invest this way so they can get a cut of that money.

That's my take on it.

Greddy governmental scum.