October 3, 2008 / 5:36 AM / 10 years ago

U.S. charges racer Castroneves with tax crimes

MIAMI (Reuters) - Brazilian race car driver Helio Castroneves and his sister and lawyer were indicted on Thursday on charges of conspiring to defraud the United States of taxes on $5.55 million of income, prosecutors said.

Driver Helio Castroneves of Brazil, pole sitter for the 91st Indianapolis 500, watches his crew work on his car during practice time at the Indianapolis Motor Speedway in Indianapolis May 16, 2007. REUTERS/Brent Smith

The two-time Indianapolis 500 winner and his sister, Katiucia Castroneves, were also charged with six counts of income tax evasion for the years 1999 through 2004.

Castroneves won fame outside the auto racing world last year when he beat out English pop singer Melanie Brown to win “Dancing with the Stars,” a hit ABC television show in which celebrities compete in ballroom dancing contests.

Castroneves, 33, lives in the Miami suburb of Coral Gables. He and his sister are both Brazilian citizens.

“Whether you make a living parking cars or racing them, paying taxes is a responsibility that everyone shares,” U.S. Attorney Alex Acosta told a news conference.

Castroneves’ attorney, Mark Seiden, called the charges disappointing and said the auto racer had done nothing wrong.

“Helio relied on the advice of competent professionals, accountants and tax lawyers, in preparing his returns. He followed their advice in good faith,” Seiden said. “We believe that once the facts are presented to a jury he will be exonerated.”

The indictment alleged the Castroneves siblings and attorney Alan Miller used a Panamanian shell corporation to fraudulently conceal from the Internal Revenue Service income that Castroneves earned as a racer.

Miller, 71, was charged with conspiracy and three counts of tax evasion.

The indictment said Castroneves received $6 million over three years under a driving and licensing agreement with Penske Racing, but only reported $1 million on his tax returns.

The driver, his sister and the lawyer allegedly schemed to divert the other $5 million from a Panamanian shell corporation called Seven Promotions to a “deferred royalty plan” that required Penske to send the payment to a company in the Netherlands.

Katiucia Castroneves allegedly helped prepare false income tax returns and transferred money to a Swiss bank account.

The indictment also alleged Castroneves collected $600,000 over three years from a sponsorship contract with the Brazilian import-export company Coimex Internacional SA, but reported only $50,000 on his tax returns.

All three defendants were to appear before a magistrate on Friday.

Prosecutors said Castroneves and his sister faced a statutory maximum of up to 35 years in prison if convicted on all charges, while Miller could face a maximum of 20 years. However, actual penalties were expected to be much less and were tied to the amount of unpaid tax.

Writing by Jane Sutton, editing by Alan Elsner

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