Race car driver Helio Castroneves, who has won the Indianapolis 500 twice, as well as "Dancing with the Stars," couldn't speed away from tax evasion charges after a grand jury indicted him Thursday.
Castroneves, 33, is facing conspiracy charges and six counts of tax evasion for failing to pay more than $5 million in taxes between 1999 and 2004. If convicted, he could be sentenced to as much as 35 years in jail.
The Brazilian driver won the Indianapolis 500 in 2001 and 2002. He and his dancing partner, Julianne Hough, were also the champs in the reality TV dance series last year.
However, he is now facing music of a different sort. Castroneves, his sister and business manager Katiucia Castroneves, and his attorney Alan R. Miller were charged with using an offshore Panamanian shell corporation known as Seven Promotions to conceal income he received from his racing sponsors Coimex Internacional and Penske Racing.
According to the Justice Department, the driver entered into sponsorship contracts with Coimex, a Brazilian import and export company, in 1999, 2000 and 2001. Each year's contract required Coimex to pay him $2 million. However, they had an unwritten side agreement under which he returned $1.8 million each year to certain Coimex executives and kept $200,000 for himself. Of the $600,000 he retained from the Coimex contracts over the three years, he reported only $50,000 on his federal income tax returns.
Castroneves joined Penske as a race car driver in November 1999, signing a $6 million three-year contract for 2000, 2001 and 2002. The compensation package was to be split between a $1 million driver agreement and a $5 million licensing agreement. Seven Promotions was to receive the $5 million in exchange for the licensing rights to Castroneves' name, likeness and image.
However, the indictment alleges that he, his sister and Miller engaged in a scheme to avoid paying taxes on the $5 million in licensing agreement income by creating a "deferred royalty plan" that required Penske to send the $5 million payment to a company in the Netherlands instead of to Seven Promotions.
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