Is Helio moving to Monaco?

Posted by Iannucci | 3/09/2009 | 7 comments »
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There's an AP story out today regarding the Helio Castroneves Tax Trial of the Century that resumes tomorrow, the crux of which is that Helio is being tried for money he never received. That's right - we're talking about paying taxes on the equivalent of an uncashed check. A very large check, the likes of which you or I may never see, but still money (or "monies") left unclaimed.

As Sandwedge points out, this is a bit of a Pandora's Box of a claim to charge someone, basically saying the taxpayer is obligated to pay taxes on money they should have received and not funds of which they actually took possession. The deal here is that Helio was advised (and presumably authorized) to allow for Team Penske to pay a significant portion of earnings to a separate entity, an entity that would hold the money for him for a period of time so that he wouldn't spend it all as foolish young men are often prone to do. In fact, as the defense argues, this is not unlike a 401(k) that you or I might have.

And in the realm of law this seems like a sound basis for a legal argument. Was Helio acting responsibly under advisement in delaying the receipt of these funds or was he attempting to skirt tax laws? That's a fair question for lawyers to sort out, but there's one point the prosecution keeps making that seems entirely nonsensical to me.

Castroneves planned to pay the IRS when the "deferred royalty agreement" - a way of delaying income described as similar to a 401(k) - at Fintage comes due to him in May of this year, defense lawyers say. It's not unusual for athletes to receive some compensation at later dates, they say.

"Athletes ordinarily have a short period of economic productivity in their youth, and they may not be responsible enough to manage the money for a lifetime if they receive it all at once," Bennett said.

(U.S. Attorney Matt) Axelrod, however, said the whole arrangement is fictional, with Castroneves' ultimate goal to move out of the U.S. to a tax haven such as Monaco where he would eventually get the Penske money tax-free.
Alright, hold the phone. I suppose it's entirely conceivable that Helio might one day move to a tax-free nation, but if the taxation on these funds is, as the defense holds, due in May, I'm pretty certain there's no way Helio is going to bail on the opportunity to continue his driving career THIS YEAR and head off to Monaco. I mean, I can say with reasonable certainty based on his projected income that this May he'd be somewhere in Indiana and not across the Atlantic Ocean. And by reasonable I mean 100% chance he'd be at Indianapolis Motor Speedway.

There are other issues in the trial that need to be addressed, including charges of giving false statements to the U.S. government, but if the prosecution agrees that this taxable income was due - at least on paper - this year, then making the argument that Helio was a going to flee the country to claim $5M, while he had so much earning potential ahead of him, seems, well, ridiculous.


In a related note, Paul Page is offering to pass along messages of encouragement to Helio. You can send them to Paul via his own email listed at his blog if you so chose.

7 comments

  1. Mike // March 09, 2009 11:54 PM  

    At the very least, the accusation(s)/charges against Helio seem 1)speculative, 2)frivilous, and 3) assume a motive which could only result in guilt if it manifests according to the prosecutions allegations, which are hearsay at best. On WT the other night Robin Miller and Dave Despain were contemplating the potential that this has happened because of Helio's celeb status only, while the blatant issues surrounding U.S. politicians such as Tom Daschle and others just seem to get ignored by the IRS and the Tax Courts. Talk about a double-standard.

  2. pressdog // March 10, 2009 6:08 AM  
    This comment has been removed by the author.
  3. pressdog // March 10, 2009 6:10 AM  

    Sorry, I screwed up and had to delete. Trying again ... Hold up there, Chief. You can "move" to Monaco without actually being physically located there. Helio lives in Miami, sort of, but I bet you won't find him there in May. So does that mean he lives in Indianapolis? No. Just visiting. This all gets down to intent. Did Helio set this whole thing up to evade taxes? That's what the prosecution has to prove. I hope the jury makes the decision based on the evidence provided, not how fun-tastic they think the accused or the accusers are.

  4. Joe // March 10, 2009 8:04 AM  

    Originally I saw it reported that Castroneves was hiding the money until he could move back to Brazil, which made absolutely no sense.

    I mean, Miami's got crime, but ask these Brazilian drivers about the crime they & their families face when they go back to Brazil. There's a reason they're here now.

  5. The American Mutt // March 10, 2009 8:44 AM  

    Mike,

    There's a very big distinction between potentially hiding five million dollars, and not realizing you had to pay taxes on a limousine. It's not exactly a double standard. They did however fail to pay some of their taxes, and were given the opportunity to pay them back. I'm just saying Daschles a bad example when you actually look at what he did when compared to what Helio is accused of.

    Putting that aside. How exactly can you charge someone with tax evasion if the taxes haven't come due? Can they prove he was setting up a residence somewhere other than the US? I assumed until last night they had a good case against him, but after reading that AP article I'm really starting to wonder.

  6. Robert // March 11, 2009 6:44 AM  

    Does anyone else think it is odd that yesterday Treasury Secretary Tim Geithner was preaching about illegal tax sheltering at the hearings - the same time as Helio's trial.

    Timing is always everything and sure seems as if Axelrod is trying to make a name for himself for higher office..... just a thought

  7. Sarah Fan // March 11, 2009 5:19 PM  

    Considering that this case was filed 2 months before the election, I don't see where the prosecutor is using it for upward career movement. Kevin Savoree testified today that in 1999 onward Helio did talk about moving to Monaco, among a lot of other testimony he gave.

    I also don't buy into the "the government is only doing this because Helio is a celebrity" thing either, since the government's been putting this case together since 2004. While Helio was a celebrity to all of us at that time, he certainly wasn't a blip on the general public radar. If Helio hadn't been on Dancing, I believe the same case would be in trial right now - we just wouldn't be hearing about it every day.

    One other comment - a lot of people think that if Helio did do this, he was only hurting the government. But he wasn't. If he truly did what the government is alleging, he was hurting all of us. Just food for thought.