Jurors reach verdict on 2 of 7 counts

Updated: April 16, 2009, 4:58 PM ET
Associated Press

MIAMI -- A federal jury reached a partial verdict Thursday in the tax evasion trial of Brazilian race car driver and "Dancing With The Stars" champ Helio Castroneves, but was hung up on several counts.

Federal judge Donald Graham said he would not immediately read the verdicts on two tax evasion counts against Castroneves and told jurors to continue deliberating on four other tax evasion counts and one conspiracy count.

The jurors left without taking further action at the end of their fifth day of deliberations. They were expected to return Friday to continue deliberating.

Castroneves, 33, is charged with conspiring with his sister and lawyer to evade more than $2.3 million in U.S. income taxes.

The jury said it also reached a partial verdict against Katuicia Castroneves, 35, who is her brother's business manager, and a full verdict against Michigan motorsports attorney Alan Miller, 71. Miller's verdict was placed under seal until the deliberations are over.

As the notes were read to the jury, Castroneves sat bent over at the defense table with his fists clenched to his eyes and his sister's arm wrapped around his shoulder. When court recessed, he dabbed his eyes with a handkerchief.

All three faced more than six years in prison if convicted of conspiracy and tax evasion between 1999 and 2004. The case mainly revolved around income from a $2 million sponsorship deal Castroneves had with the Brazilian firm Coimex and his $5 million licensing deal he reached with Penske Racing in late 1999.

The case against Miller relates to the deal with Penske.

Castroneves sat in the courtroom in a crisp, blue striped shirt and dark gray suit. As the notes were read to the jury, he bent over at the defense table, his fists clenched to his eyes and his sister's arm wrapped around his shoulder. When court recessed, he dabbed his eyes with a handkerchief.

Castroneves, a two-time Indianapolis 500 winner and one of the Indy racing circuit's most popular drivers, was temporarily replaced on Team Penske by Australia's Will Power pending the outcome of the case. Castroneves won the TV dance competition in 2007.

Central to the case is the ownership of a Panamanian company called Seven Promotions. Prosecutors called it a shell corporation set up primarily so Castroneves could dodge U.S. income taxes, but Castroneves' father testified he created Seven to boost his son's image in Brazil. The elder Castroneves said his son never owned it.

Prosecutors called that a lie, showing jurors numerous documents in which Castroneves claimed Seven as his own. An Internal Revenue Service agent testified that if it belonged to Castroneves, he owed U.S. taxes on the full $5 million from Penske even though he has never actually received the money.

Instead, the Penske payments were eventually invested in a deferred compensation deal with the Dutch firm Fintage Licensing B.V.

Castroneves attorney Roy Black told jurors in closing arguments that such deals are common -- and perfectly legal -- for athletes who have relatively short careers and face injury or worse at any moment.

Black also said Castroneves had only a slight understanding of his financial affairs and relied on professionals to deal with them.

"Does anybody really think Helio Castroneves really made a financial decision? All he did was drive -- and drive he did," Black said.

Prosecutor Matt Axelrod, however, said it made little sense for Castroneves to sign away $5 million to Seven if he had no control.

"You don't send millions of dollars to a company you don't own or control," Axelrod said.

Besides the Penske and Coimex money, Castroneves was charged with claiming thousands of dollars in improper tax deductions and failing to disclose as income Hugo Boss clothing and airline tickets he received.


Copyright 2009 by The Associated Press

ALSO SEE