CASTRONEVES AND HIS SISTER
Every year the IRS, your buddy and mine, files a case against a high profile person just in time for it to end up on Tax Day. This year was no exception and this year it was Helio Castroneves. Castroneves, a two-time Indianapolis 500 winner and one of the Indy racing circuit's most popular drivers, was temporarily replaced on Team Penske (our man Roger out of Detroit) by Australian Will Power pending the outcome of the case. The IRS said that he, his business-manager sister and his lawyer tried to cheat the government out of $2.3 million in taxes.
I love it when it doesn’t work out for the IRS. A federal jury acquitted Castroneves on six counts of tax evasion but hung on one count of conspiracy. Also acquitted were is sister, Katiucia, and his Michigan motorsports attorney Alan Miller. The jury deliberated six days after a six-week trial. 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 he had with the Brazilian firm Coimex and his $5 million licensing deal he reached with Penske Racing in late 1999.
The case hinged on 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 he owed U.S. taxes on the full $5 million from Penske even though he has never actually received the money. The IRS should lose the case right there. How does that sound to a jury that you have to pay even though you don’t get the money. The Penske payments were eventually invested in a deferred compensation deal with the Dutch firm Fintage Licensing B.V., all perfectly legal. “Deferred compensation,” the government does it…look at Social Security…you pay taxes on it, you don’t get it in your hand and it is “deferred” until you retire. You have to remember that now days these drivers are all done by the time they are 38.
Besides the Penske and Coimex money, he 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, the government says…yeah, yeah…the government always “says.”
So how did he do after six weeks of pressure...he flew from the courthouse to California...came in a respectable 7th place.