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Friday, October 3, 2008
Updated: October 9, 12:50 PM ET
Castroneves pleads not guilty in tax case, released on $10M bail

Associated Press

MIAMI -- Race car driver and "Dancing With The Stars" winner Helio Castroneves pleaded not guilty Friday to federal tax evasion charges and declared outside the courtroom that he would treat the case like a race against the Internal Revenue Service.

Helio Castroneves
Helio Castroneves, shown Friday outside federal court in Miami, was released on $10 million bail. His sister-business manager and attorney also face charges.

"I'm a race car driver," the two-time Indianapolis 500 winner told reporters. "This is a very difficult situation. I'll be strong and I'll win this race."

Castroneves, 33, spoke after his release on $10 million bail following a court appearance in which he was shackled in handcuffs and leg chains and was visibly weeping into a wad of white tissue. Outside, Castroneves acknowledged he was overwhelmed by the weight of the moment.

"It's been a long day. It's been an emotional day, obviously," he said. "I am not guilty."

With that, Castroneves hopped into a waiting car and headed for a flight to Atlanta to participate in this weekend's Petit Le Mans race. Terms of Castroneves' release allow him to travel for work in the United States but not abroad, meaning he will likely miss a race later this month in Australia, said his attorney, Mark Seiden.

A grand jury on Thursday indicted Castroneves on charges of conspiracy and six counts of tax evasion for purportedly failing to report to the IRS about $5.5 million in income between 1999 and 2004, according to court documents. Each count carries a maximum five-year prison sentence.

Helio Castroneves

This is a very difficult situation. I'll be strong and I'll win this race.

-- Helio Castroneves

Also facing charges are Katiucia Castroneves, the driver's sister and business manager, and attorney Alan R. Miller of Birmingham, Mich. They did not enter pleas Friday but were ordered released on bail of $2 million and $250,000, respectively.

Another Castroneves attorney, David Garvin, said he was disappointed that the tax dispute could not be resolved without criminal charges.

"Helio has always done the appropriate thing and hired accountants and attorneys he relied upon," Garvin said. "We are of the strong belief that he did not do anything wrong. We're looking forward to going to court."

Castroneves, a native of Sao Paulo, Brazil, has won the Indianapolis 500 twice and finished second this year in the IndyCar Series points standings. He and partner Julianne Hough won the 2007 "Dancing With The Stars" reality show competition on ABC.

Miller's attorney, Michael Tein, sharply criticized federal prosecutors for bringing the case. Tein contended that Castroneves' fame was the main reason the three were charged with crimes.

"This case is the height of overreaching," Tein said.

The indictment charges that Castroneves illegally concealed income from Penske Racing Inc. and the Brazilian firm Coimex International S.A. Neither company is charged with any wrongdoing.

In Penske's case, prosecutors say Castroneves was to be paid $5 million in exchange for rights to use his name, likeness and image. The money was initially supposed to go to a Panamanian shell corporation, but then was diverted to a Dutch entity called Fintage Licensing.

Fintage was set up as a "deferred royalty plan" in which U.S. tax payments can be delayed, which is only legal if Castroneves had no relationship or control over it. Prosecutors say he did have control and that false statements were made to Penske about the relationship.

Coimex paid Castroneves $600,000 between 1999 through 2001 for sponsorship contracts, but he only paid taxes on about $50,000, prosecutors said.

Katiucia Castroneves transferred some of the hidden money to a Swiss bank account she controlled with her brother, court documents show.