Castroneves' Father Testifies in Tax Evasion Trial

By: AP Email
By: AP Email

The father of race car driver Helio Castroneves testified Friday that his famous son did not own a Panamanian company at the heart of a federal tax evasion case - and that documents indicating otherwise were riddled with mistakes.

Establishing who controlled Seven Promotions is a key issue in the trial of Castroneves, a Brazilian who twice won the Indianapolis 500 and was champion in 2007 of TV's "Dancing With The Stars." Katiucia Castroneves, the driver's business-manager sister, and his Michigan lawyer Alan Miller, are also being tried on charges the three conspired for the driver to avoid paying taxes on $5.5 million in income.

Helio Castroneves Sr., 61, said Seven Promotions was created by
himself and a Brazilian lawyer to promote his son's image and as a
vehicle to pay the elder Castroneves for his work. The father said
his son had no ownership or control over the company, even though
the driver's 1999 contract with Penske Racing and other documents
indicate he did own it.

"It's a mistake," said the father, testifying in Portuguese. "No, he's not the owner."

The younger Castroneves signed one document on behalf of Seven,
but his father said only he, the Brazilian lawyer and Katiucia had that authority.

"Did Helio have any authority to do anything for Seven?" asked defense attorney David Garvin.

"No," the elder Castroneves replied.

Prosecutors say Castroneves secretly controlled Seven and should
have paid taxes on $5 million from the Penske contract because it was supposed to go to Seven's accounts. They also say Seven was used in an illegal shell game to help the younger Castroneves avoid paying taxes on a lucrative sponsorship contract from the Brazilian firm Coimex.

Defense attorneys counter that if the younger Castroneves didn't own Seven, he doesn't owe any U.S. taxes.

The elder Castroneves said he kept some of that money as repayment for more than $1.5 million he had spent on his son's racing career beginning with go-kart circuits in the 1980s. The father formerly ran a company that supplied tubing for sugar cane processors and also owned several rental properties.

"It was to pay part of the investment that I had put on him since he was young," the father said. "I was working for Helio and he was starting to pay me back."

The Penske money ultimately wound up in a Dutch deferred income
account, where it remains today. Castroneves' lawyers insist he always planned to pay U.S. taxes once he actually receives the
money later this year.

U.S. District Judge Donald Graham said testimony in the five-week-old trial should end Monday. The 12-person jury could begin deliberating the case sometime next week.

If convicted, all three defendants face more than six years in prison. The Internal Revenue Service says Castroneves owes more than $2.3 million in U.S. taxes.


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