Race car driver Helio Castroneves goes on trial today in South Florida in a case filed by prosecutors who apparently don’t know that juries are incapable of convicting a celebrity. The IRS claims Castroneves conspired to commit tax fraud and, among other things, agreed to funnel money through a Swiss bank account, which, for the ultrarich, is known simply as banking.
To this day, race car driver and “Dancing with The Stars” winner Helio Castroneves hasn’t seen a single dime of $5 million in licensing money he was promised under a 1999 contract with Penske Racing. It’s either been parked at Penske or is still idling in a Dutch investment account.
But the Internal Revenue Service says Castroneves owes U.S. income taxes on the money anyway, contending the 33-year-old driver can’t avoid tax by simply refusing cash to which he’s entitled. A complex concept known as “constructive receipt” is at the heart of the prosecution’s case against the two-time Indianapolis 500 winner.
Testimony resumes Tuesday in the tax trial of Castroneves, his business-manager sister Katiucia Castroneves — both originally from Sao Paulo, Brazil — and his lawyer Alan Miller of Birmingham, Mich. All are charged in a seven-count federal indictment with conspiracy and tax evasion from 1999 to 2004.
Experts say jurors will have to decide if the Castroneves deal was real or contrived to make it appear he didn’t have control of his Penske money.
“What the government is saying is, if you are entitled to some cash, and you leave it in your mother’s bank account, it’s still your cash,” said Chas Roy-Chowdhury, a tax expert with the global industry group Association of Chartered Certified Accountants.
Castroneves attorney Roy Black said the driver, who lives in a $2.2 million home in Coral Gables, never schemed to hide money from the IRS. He said in opening statements that the driver knows nothing about U.S. tax laws and relied on experts to handle his finances.
“They’ve come up with a fiction,” Black said.
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