Press Release
RACE CAR DRIVER, SISTER AND LAWYER INDICTED ON TAX EVASION SCHEME
October 2, 2008
FOR IMMEDIATE RELEASE
R. Alexander Acosta, United States Attorney for the Southern District of Florida, Nathan J. Hochman, Assistant Attorney General of the Justice Department's Tax Division, Doug Shulman, Commissioner, Internal Revenue Service, and Michael E. Yasofsky, Jr., Special Agent in Charge, Internal Revenue Service, Criminal Investigation ("IRS-CI"), announced that defendant Helio Castroneves, 33, a U.S. resident and two time winner of the Indianapolis 500, was indicted by a grand jury today on charges of conspiracy to defraud the United States of income taxes and with six separate counts of income tax evasion for tax years 1999, 2000, 2001, 2002, 2003, and 2004. Also charged in the Indictment were Helio Castroneves's sister and business manager, Katiucia Castroneves, 35, of Miami, and his attorney, Alan R. Miller, 71, of Michigan.
U.S. Attorney Alex Acosta stated, "Whether one makes a living parking cars or racing them, paying taxes is a responsibility that everyone shares. Our tax laws apply equally to everyone, regardless of status, class, and income, and the U.S. Attorney's Office will prosecute these cases vigorously."
"Taxpayers, small and large, famous and not famous, should be aware of the enormously severe consequences they face if they fraudulently use offshore accounts to hide income, including potentially going to prison, paying back all their taxes plus interest and penalties, and being branded a felon for the rest of their lives," said Nathan J. Hochman, Assistant Attorney General of the Justice Department's Tax Division.
"Using offshore corporations for the purpose of evading taxes is a crime. This case sends a clear message that the IRS is committed to vigorously enforcing the lax laws and stopping offshore tax evasion," said IRS Commissioner Doug Shulman.
"It is a legal requirement for individuals to accurately report all income and pay their tax liabilities," said Michael Yasofsky, Special Agent in Charge, IRS-CI, Miami Field Office. "IRS will investigate and hold accountable those who conspire to intentionally evade their responsibility in complying with the tax laws."
Count 1: The Coimex and Penske Income Tax Evasion Conspiracy
Count 1 of the Indictment charges defendants Helio Castroneves, Katiucia Castroneves, and Alan Miller with conspiring to defraud the United States, in violation of Title 18, United States Code, Section 371, by using an offshore Panamanian shell corporation, Seven Promotions Corporation ("Seven Promotions"), to fraudulently conceal from the Internal Revenue Service income received from two sources, Coimex Internacional SA ("Coimex") and Penske Racing, Inc. ("Penske").
More specifically, Count 1 alleges that Helio Castroneves entered into sponsorship contracts with Coimex, a Brazilian import and export company, for 1999, 2000, and 2001. Each year's contract required Coimex to pay Helio Castroneves $2,000,000. Pursuant to an unwritten side agreement, however, Helio Castroneves returned $1,800,000 each year to certain Coimex executives, keeping $200,000 for himself. Of the $600,000 Castroneves retained from the Coimex contracts, he reported only $50,000 on his federal income tax returns.
As to the Penske income, the indictment alleges that Helio Castroneves joined Penske as a race car driver in November 1999. Defendant Alan Miller negotiated the deal with Penske and drafted the resulting contracts. Under the terms of the contracts, Helio Castroneves' $6,000,000 three-year (2000, 2001, and 2002) compensation package would be split between a "Driver Agreement" ($1,000,000) and a "Licensing Agreement" ($5,000,000). Pursuant to the Licensing Agreement, the Panamanian shell corporation Seven Promotions was to receive $5,000,000, in exchange for the licensing rights to Castroneves' name, likeness and image. The Indictment specifically alleges that Helio Castroneves, Katiucia Castroneves, and Alan Miller engaged in a scheme to avoid paying taxes on the $5,000,000 in Licensing Agreement income by creating a "deferred royalty plan" that required Penske to send the $5,000,000 payment to an offshore company, named Fintage Licensing B.V. ("Fintage"), in the Netherlands, instead of to Seven Promotions.
The defendants engaged in this deferred royalty plan despite the advice of outside tax counsel that Helio Castroneves would not qualify for the deferred royalty plan and would owe income tax on all payments under the Licensing Agreement if Castroneves or any member of his family owned or controlled Seven Promotions. Accordingly, Miller and Helio Castroneves falsely represented to tax counsel that neither Helio Castroneves nor anyone in his family had any interest in, or control of, Seven Promotions. Based on these misrepresentations, the deferred royalty plan was executed between Penske and Fintage; Penske paid Fintage the $5,000,000 originally due to Seven Promotions under the Licensing Agreement, and no income tax was ever paid by Helio Castroneves on the $5,000,000 in Licensing Agreement payments.
Counts 2 - 7: Tax Evasion (1999, 2000, 2001, 2002, 2003, and 2004)
The Indictment also charges defendants Helio Castroneves and Katiucia Castroneves with six substantive counts of tax evasion based on the false federal income tax returns filed by Helio Castroneves for years 1999 through 2004, in violation of Title 26, United States Code, Section 7201, and Title 18, United States Code, Section 2. Defendant Alan Miller is charged with three substantive counts of tax evasion, in violation of Title 26, United States Code, Section 7201, based on the false federal income tax returns filed by Helio Castroneves for years 2000, 2001, and 2002, in violation of Title 26, United States Code, Section 7201, and Title 18, United States Code, Section 2.
If convicted, the defendants face a maximum penalty of five years' imprisonment on the conspiracy to defraud the United States, and five years' imprisonment on each of the tax evasion counts.
Mr. Acosta commended the investigative efforts of the Internal Revenue Service. Acosta also noted the assistance and cooperation in this investigation of the Brazilian Federal Police, the Dutch Federal Police, and the Brazilian Federal Public Minister's Office in Sao Paulo. The case is being prosecuted by Assistant United States Attorneys Matthew Axelrod and Jared Dwyer
Attachments:
Indictment (PDF)
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
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