Overheard in St. Pete – 2 (Prosecutors say Castroneves guilt clear)
04/09/09 Indy race car driver Helio Castroneves, his sister and his lawyer engaged in an intricate "pattern of deception" to avoid paying U.S. income taxes on millions of dollars over a five-year period, a prosecutor, Assistant U.S. Attorney Jared Dwyer, said Thursday in closing arguments at the trio's tax evasion trial.
"These defendants attempted to skip out on taxes that all must pay, regardless of how rich, regardless of how famous, " said Dwyer. "We have proved that beyond a reasonable doubt."
"Castroneves and the others tried to conceal his control of a Panamanian shell company called Seven Promotions and lied to tax lawyers and accountants about his true income," Dwyer said. "Since 1999, the defendants have engaged in a pattern of deception."
04/06/09 Although some media outlets think Helio's tax evasion case is going well, AR1.com readers know that may not be the case. Using informed sources, AR1.com broke this rumor in the St. Pete paddock this weekend and reported it on Saturday (see below). Now the Miami Herald newspaper has picked up on it and reports – The Miami trial of Indy 500 champ Helio Castroneves has spotlighted his alleged failure to pay taxes on a $5 million marketing deal with Penske Racing.
But evidence that he may have skirted his tax obligations on far less income from a Brazilian sponsor poses another threat to his career — and his freedom.
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| Federal prosecutors are painting the picture to the jury that Castroneves is a chiseler, who avoided paying taxes on more than just the $5 million |
Castroneves, a U.S. resident in Miami since 1997, received $530,000 from a Brazilian trading company that sponsored him just before he hit the big time a decade ago as an IndyCar driver with Penske.
But Castroneves, who owns a Coral Gables mansion, paid U.S. taxes on only $50,000 of his total earnings from Coimex Internacional — income that he diverted to his Panamanian shell company's bank account in New York and then to a Swiss bank with help of his sister, according to prosecutors and court records.
That would mean the Brazilian race car star allegedly avoided paying taxes on $480,000 from Coimex in addition to the $5 million from Penske. Bottom line: He owes $2.3 million to the Internal Revenue Service — ''everything that should have been on the tax returns but wasn't,'' IRS agent Joann Levitt testified in March at Castroneves' tax-evasion trial.
Castroneves' lawyers maintain he owes no taxes on the Coimex earnings because the payments were made to his father, who lives in Brazil and once supported his son's career. As for the racer's Penske income, the money went to a Dutch annuity account — income that Castroneves will start receiving next month, when he intends to pay his taxes.
The Coimex sponsorship in Brazil, which predates Castroneves' relationship with Miller and Penske, was orchestrated by the driver, his father and sister, prosecutors say. That contract, signed in March 1999, presents perhaps a greater challenge for Castroneves.
Under the deal with the Brazilian trading company, Castroneves was paid $600,000 less $70,000 in commission for a businessman who brokered it, according to court records. Castroneves, who received the sponsorship income in 1999, 2000 and 2001, wore a Coimex logo on his racing uniform in those seasons.
Castroneves paid taxes on only $50,000 in 1999, the rest — $480,000 — going to a Swiss account that his father said he controlled under a different corporate name from Seven Promotions.
But there's another troubling issue hanging over the Brazilian race car driver: Assistant U.S. attorneys Matt Axelrod and Jared Dwyer have introduced bank records showing that his Coimex contract was really for $2 million in each of the three years.
They accuse Castroneves and his sister of kicking back $1.8 million of that income yearly to Coimex executives at a New York bank.
The prosecution's portrayal of Castroneves as a chiseler could undercut his charismatic profile — he's also known for winning the Dancing With the Stars reality TV show — in the eyes of 12 federal jurors. As his trial wraps up this week, they will soon decide the fate of Castroneves, 33, his sister/manager, Katiucia Castroneves, 35, and his attorney, Alan R. Miller, 71, of Michigan.
They're charged with conspiring to evade paying taxes on $5.5 million in income between 1999 and 2004. If convicted, they could each face five to 10 years in prison.
In addition AR1.com hears that if Helio is convicted here, the Brazilian government will have to pursue him because it would make them look foolish and preferential to the wealthy. We hear that if he gets off here, the Brazilian government will not likely pursue anything, even if there might be cause, because in fact, the wealthy do get preferential treatment…they just can't be blatant about it of course. However, perhaps Emerson Fittipaldi, who maintains he was screwed by Castroneves and Miller when Helio signed the Penske deal, is very influential in Brazil and may see to it that the government goes after Castroneves, regardless of the outcome in the USA.
Maybe they can make a soap opera out of all this someday, but it may give crooks some good ideas.
04/04/09 We hear that longtime racing reporter, and all around nice guy, Mike Harris of AP, is retiring in July after 40 years covering the sport. We wish him well……..Word in the St. Pete paddock is that regardless of what happens to Helio Castroneves in the USA tax evasion case he is currently defending himself against, the Brazilian government is going to come after him next for money laundering. Coimex, his longtime personal sponsor may be involved, but we're are not privy to the details……We hear Helio's excuses might now be in trouble because his defense team, led by Roy Black, went on record at the beginning of the trial saying Helio was going to pay taxes on the money all along and would do so this coming May when the annuity comes due. However, yesterday his father testified that he set up the Panama company that the money was supposedly being laundered through, so if his father owns the company and Helio put the money there to pay back his father for helping him with his career, why does he owe taxes on it? They'll have to explain that one…..Word is that Roy Black charges $500K per week to defend these high profile cases and with the 6 week trial, Helio is already out $3 to $4M regardless if he wins or loses – in other words that $5M he may have been putting away to avoid taxes is being eaten up at a fast rate. If the Brazilian government goes after him next, that defense may wipe out his life savings. And the $5M is not the only item the federal government is charging Helio with not paying taxes on. Apparently there were free first class airplane tickets for many years from Trans Brazil and a rumored to be annual $20K in Hugo Boss personal sponsorship since 2000 that the USA government says he never paid taxes on……And why did the USA government wait until March 2nd to start the 6-week trial? We hear because April 15th (6 weeks from March 2nd) is the tax deadline for filing and the government, in their closing arguments, is going to remind the jury that they all have to pay their taxes by April 15th yet Helio didn't think he had to….Word is that Helio's sister is in even more trouble than he is, because she moved monies from the Panama account to the Swiss account……And the last rumor we heard on this case is that other drivers that attorney Alan Miller represents might be the subject of close scrutiny by the USA government next.