Castroneves court requests denied, tax trial will begin in March

Brazilian racecar driver Helio Castroneves was in court again in early February and yet another hearing will take place on February 16th. In the latest courtroom drama, Castroneves and his codefendants were hoping to derail the government's tax evasion case against them. Unfortunately for them, the federal judge wasn't buying their arguments, and the March 2nd trial will proceed as planned.

Castroneves is accused of carrying out various schemes designed to evade the taxes on $5,550,000 in fees he earned for racing and for the use of his name in endorsements in 1999-2002. His sister Katiucia and his attorney Alan Miller are accused of participating in and facilitating the schemes. According to the prosecutors, the racecar driver was paid $6 million by Penske Racing, but paid taxes on only $450,000. The rest of the money was supposed to be paid into a Panamanian corporation controlled by Castroneves. But, prosecutors say Miller directed Penske to send the balance instead to a Dutch company in order to avoid the associated taxes.

Castroneves told the Miami Herald that the more he learns about the government's evidence against him, the more confident he is that he will prevail. "They're trying to show something that doesn't exist. We're ready. Kati and I are innocent."

Back in the Courtroom Again

The hearing last week included several requests, all of which Judge Donald Graham denied. Among the requests was an attempt by Miller to have his trial separated from that of the Castroneves siblings, and a dismissal of the charges against him. Miller is represented by Robert Bennett, the same attorney who defended Bill Clinton when he was accused of sexual harassment by Paula Jones. Bennett told reporters there was "no way" the three defendants broke U.S. tax law.

The February 16th hearing will focus on a separate motion to dismiss by the Castroneveses. They base their motion on the claim that the statute of limitations for the tax evasion charges in 1999, 2000, and 2001 have expired.
The attorneys for the siblings – David Garvin, Howard Srebnick and Scott Srebnick - said the statute of limitations was up before the October 2008 indictment.

In spite of that contention, the government case is going forward, which means that Castroneves's racing career remains on hold. Concessions by a previous judge allowed him to participate in some races in and out of the country in 2008, over the protests of prosecutors.

In January, Tim Cindric, the president of Penske Racing announced he was replacing Castroneves as the driver of the #3 Penske car with Will Power for the preseason testing. Cindric added that, if Castroneves is available when the IndyCar racing season begins on April 5th, he will be their driver.

If the pendulum swings the other way and Castroneves and his sister are convicted on all counts, they could each spend as much as 35 years in prison, while attorney Miller could spend a maximum of 20 years behind bars. In each case, if they lose their battle with the IRS, the actual sentence is expected to be less than the maximum.

Related articles:

You may like these other stories...

IRS audits less than 1 percent of big partnershipsAccording to an April 17 report from the Government Accountability Office (GAO), the IRS audits fewer than 1 percent of large business partnerships, Stephen Ohlemacher of the...
Legislation coming out of Washington just might reduce homeowners' burden for disaster insurance. It's a topic very much on everyone's minds since the mudslide in Oso, Washington. The loss of human life was...
Divorce is hard, and the IRS isn't going to make it any easier. The IRS generally says "no" to tax deductions that might ease the pain of divorce. In certain circumstances, however, you might be able to salvage...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.