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Tuesday, March 10, 2009
Breaking Down Helio Castroneves Tax Evasion Case

I have a new column on -- it is on the government's tax evasion case against Penske Racing's Helio Castroneves, who won the Indianapolis 500 in 2001 and 2002 and Dancing with the Stars in 2007 with dancer/country music singer Julianne Hough. Here is an excerpt:

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The key for Castroneves, however, is whether the government can prove, beyond a reasonable doubt, that Castroneves had any material role in Seven Promotions. [Roy] Black -- Castroneves' lead counsel -- argues that Castroneves did not organize the corporation, possess its shares, or serve as an officer. Instead, according to Black, Helio Castroneves, Sr. owned and operated Seven Promotions, without any role played by his son or daughter. The cloaked nature of the bearer share corporation may advance Black's case.

More generally, Black maintains that Castroneves -- focused on his career rather than his money -- lacked awareness as to his finances and did not appreciate far-away business dealings in Panama and the Netherlands. Black also claims that even when presented with opportunities to learn about his finances, Castroneves apparently lacked the interest and capacity to understand them. As a result, Castroneves signed papers without understanding their meaning.

Bolstering this defense is that other drivers, including Eliot Sadler of Sprint Cup, have complained about convoluted verbiage found in racing contracts. Keep in mind, if the jury concludes that Castroneves lacked financial understanding, he would be poised to escape conviction: tax evasion requires the prosecution to prove that Castroneves willfully evaded taxes; if he was unaware that certain payments must be treated as taxable income, then he could not have committed tax evasion.

Based on data, however, the chance of Castroneves succeeding is slim. Prosecutors obtain convictions in over 90 percent of tax evasion cases, with some estimates claiming a prosecutorial success rate as high as 97 percent.

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To read the rest of the column, click here.


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