Like most American kids that grew up in the 80's I watched the Indy 500 every year and became interested in motorsports thanks to that race, but I didn't really get hooked until I started watching Formula 1 racing in the late 90's. My favorite era were those years with the great Mika Hakkinen/Michael Schumacher battles. (I was a Mika Hakkinen fan) So my fondness for Formula 1 waned once Mika retired and Schumacher started winning everything, even at the expense of his teammate Rubens Barrichello. My interest in F1 has only been lukewarm since.

Then I turned to Champ Car racing here in the US for my motorsports fix. However that was quickly extinguished once Champ Car and Indy Car merged and we were stuck with Tony George and his many foibles. (It was entertaining to watch the Hulman/George drama I'll admit.) My interest has been less than lukewarm with Indy Car lately, even without Tony George at the helm.

Over time however, the excitement I once had for motorsports has slowly gone. Maybe it has to do with my age, I don't know. But I think I will pour my efforts into my Trooper and my interests in the outdoors to add excitement to my life.

Thanks for checking out my blog, I hope you enjoy it. I will still post racing news when I find something interesting or noteworthy.

Tuesday, March 31, 2009

Five IndyCar drivers to watch in 2009

(by John Oreovicz 3-31-09)

In one form or another over the past couple of months, has featured most of the drivers scheduled to compete in the 2009 IndyCar Series. Here are the ones who fell through the cracks:

Dario Franchitti
Danica Patrick might be the IndyCar Series' poster girl, and Scott Dixon is the defending champion. But on a worldwide basis, Franchitti is Indy racing's biggest star.

Franchitti receives his share of notoriety in America because he is married to actress Ashley Judd. He also is known as the winner of the 2007 Indianapolis 500. But for the most part, he prefers to stay out of the spotlight and focus on the job at hand -- winning races and championships.

The question now is whether those tasks will be easier or more difficult in his return to open-wheel competition after a half-year sojourn in the world of NASCAR. On the one hand, Franchitti now is driving for Target Chip Ganassi Racing, which seems to have emerged as the IndyCar Series' top team over the past three years. However, he'll have to beat his new teammate, two-time series champion (and defending Indy 500 winner) Dixon, who is indisputably the hottest driver in Indy racing since mid-2007.

After one exhibition race and two open tests, it appears Franchitti is picking up right where he left off with Indy cars at the end of 2007: as the series champion. He has been right on pace on the Surfers Paradise street course, the Homestead-Miami Speedway oval and the Barber Motorsports Park road course. We're about to see whether his racecraft matches his pace over one lap.

"I think the good thing for me is that the Target cars are really quick, and that helps me," Franchitti said. "I know we don't have to work on the car so much for speed. I've just got to get myself back up to the level that I need to be at.

"They're really tightening up the testing rules, and there's not really any private testing, which makes things more difficult. The first 20 laps at Homestead, for example, things were really coming at me fast. But we had a good test at Barber, where we were able to try some extreme setups, and I'm happy with the way things are going. It's a strong team, and we should be in a good position to be very competitive. I'm excited about the chance to get in the Target car and run in the unified series, and I'm looking forward to getting started with the season."

Dan Wheldon
Franchitti's opportunity to run for Target Chip Ganassi Racing opened up when Wheldon was unable to agree to terms for a return to the team for which he drove from 2006 to 2008, winning six races. Within days of the announcement that he wouldn't be back with Ganassi, Wheldon revealed he had secured a multiyear deal to drive for Panther Racing, the team with which the Englishman started his IndyCar Series career back in 2002.

The most successful phase of Wheldon's American career came when he drove for Andretti Green Racing, culminating in his winning the 2005 Indianapolis 500 and IndyCar Series championship. He's optimistic he can regain that form in Panther's one-car operation, which last tasted victory with Tomas Scheckter in 2005.

"Rejoining Panther is something I'm very excited about," Wheldon said. "The team seems to have a good energy right now and seems to be heading in a very positive direction. They've come off a couple of lean years, but I think everything is there, with some additions that have been made over the winter period, to be hopefully what I would consider a very competitive year."

Wheldon is acknowledged as perhaps IndyCar Series' bravest and most skillful driver on 1.5-mile superspeedways. But he often has struggled over the past four years on road and street courses, somewhat surprising given his road-racing background.

"I think we're going to get better as the season progresses," he said. "Our program really ramped up at Homestead, and we've done some testing at Sebring, so I think you're going to see us get better and better. The team has shown that they can win championships before, and so have I, and I think with the combination of hard work and determination, we can definitely do it. I wouldn't be here if I didn't think we could do it."

Hideki Mutoh
This 26-year-old from Tokyo is considered the best prospect yet from Japan to compete in American racing. Mutoh won the IndyCar Series rookie of the year award in 2008, highlighted by a second-place finish at Iowa Speedway. He's the latest "junior partner" in Andretti Green Racing's traditional four-driver lineup, and he'll be looking to avoid the sophomore slump most IndyCar ROYs have endured. The most successful follow-up in that regard belongs to Wheldon, who finished second in the IndyCar championship in 2004 for AGR during his second full season in the series.

Mutoh managed to avoid getting caught up in the backbiting among AGR's three other drivers (Tony Kanaan, Marco Andretti and Patrick) in 2008, and team boss Michael Andretti believes that continuity in the driver lineup could be the key for his organization to regain the form that won three IndyCar championships between 2004 and 2007.

"We have a lot of incentives for all four guys to be running up front, and we're going to do everything we can as a team to make it happen," Andretti said. "We want to give Hideki his first win; we feel it would be really huge for our team if we were able to achieve that, be able to get the first Japanese driver to win a major open-wheel race."

Mutoh came away pleased with his preseason test program and believes he has a chance to give his more experienced teammates a run for their money in 2009.

"The Formula Dream team has worked really hard during the offseason, and I feel good about going into the first race of the year," he said. "I think we had an overall good test at Barber, and we will be able to use all the information that we got throughout the season."

E.J. Viso
To say Viso was a polarizing force in his rookie IndyCar season would be an understatement. He thrilled fans with his daring on-track exploits (although he certainly did not often endear himself to his fellow drivers), and he entertained the media with his colorful quotes. One thing is certain: With a year of oval experience under his belt, the 24-year-old Venezuelan ended the season a more polished and less erratic driver. But no less confident or outspoken …

"That's the way I've raced all my life," Viso said. "Racing is a risky sport. I didn't mean to piss anybody off, but I feel I don't need to give up anything to anybody here. You need to get that respect. Yes, in some cases, on the ovals, I was still learning and they made some comments. But, for sure, I was not trying to make anybody angry, and I think sometimes the drivers here complain too much."

Viso finished 18th in the IndyCar standings in 2008, earning top-6 finishes at St. Petersburg and Infinieon Raceway. He is certain his results will be better in 2009, especially if HVM Racing is able to field a second car for an experienced driver like Ryan Hunter-Reay.

"I'm starting this year in a much better position," Viso said. "Finishing in the top eight of the championship is realistic and would be a good achievement for us. Obviously some podiums are possible. A teammate would be beneficial for everyone; last year, I had nobody to compare data with, and it was hard to progress."

Justin Wilson
Few drivers have endured more difficult times than Wilson. With the help of a group of investors, he clawed his way into Formula One, only to see his Jaguar team fold. He switched to the Champ Car World Series and developed into a race winner, only to see RuSport Racing cease operation.

Wilson finally got what seemed to be his big break by signing with Newman/Haas/Lanigan Racing, and he entered 2008 as the firm favorite to win the Champ Car World Series title. Then the series shut down, and Wilson and NHLR pretty much started from scratch in the IndyCar Series. By the end of the year, though, he was a winner again, after an outstanding drive to victory in the Detroit Belle Isle Grand Prix. His reward was a pink slip, as Newman/Haas/Lanigan was forced to look to drivers who brought sponsorship.

Now Wilson is pretty much starting over again. He's set to race for Dale Coyne Racing this season. That might seem like a big step back, but if anyone is capable of delivering Coyne his long-sought first win, it's the lanky, soft-spoken Englishman.

"I thought we made progress last year," Wilson said. "We got a win at Detroit and we were getting stronger at all of the other tracks. It was such a learning year, and I thought with the stuff we would be doing in the offseason, we should be right at the front and challenging for wins every weekend come this season. Obviously, we don't have that opportunity now.

"If you look back on it, you think we've been hard done to, but it's just how it is. If you live in the past, you won't go forward. So, we've got to start with a fresh sheet of paper. We're starting completely fresh and just working it out for ourselves and moving forward."

Wilson's chances of achieving a victory for Coyne were enhanced when the team signed experienced race engineer Bill Pappas. If he does manage to win for DCR, the result will be popular vindication for one of American open-wheel racing's classic underdogs.

"It's going to be a tough year, but hopefully we can get stronger and be competitive on the road circuits," Wilson said. "On the ovals, it will be just like last year, where we slowly got better and better. I'd like to get a couple more top-5 finishes. You just never know. If we can take another victory, that would be a fantastic result for us. Right now, it's just keep our heads down, keep progressing, and if we do that, we'll be happy."

Tuesday, March 24, 2009

One turbulent ride for Castroneves

(by Ryan McGee 3-24-09)

MIAMI -- At 7:40 a.m. on a damp weekday morning, Helio Castroneves and his sister Katiucia sat together on a bench outside the U.S. Federal Courthouse downtown, just the two of them. Kati quietly checked her phone for e-mails while Helio, never one to sit still, jumped to his feet and launched into stretching exercises to try to burn off some nervous energy.

Three weeks earlier this same municipal courtyard was the sight of a small media circus, a waiting mob that included television stations from Miami, Indianapolis and South America, newspaper reporters, sports writers, even "Entertainment Tonight" and TMZ. They came to watch the two-time Indy 500 winner and "Dancing with the Stars" champion make the walk of shame up the sidewalk to face charges by the IRS that he had failed to report and pay taxes on more than $5 million.

But now, little more than a week away from being handed their fate by a jury of their peers, the racer and his sister/co-defendant sat together in the misty morning rain, totally alone.

"It is like being on an airplane," the 33-year-old Brazilian said as the members of their eight-person legal defense team began to arrive. "There are moments when you climb, moments when you dive and moments of turbulence. It has not been a fun flight."

Then, as he turned to enter the building, Castroneves paused and dug deep for one of his trademark smiles.

"The good news is that this plane will be landing soon."

Now the question is where. As the trial resumed Monday morning for this its fourth and likely final week, that answer will be here soon. And while the national media may no longer be interested in the day-to-day details of the case, there is no shortage of people who are, scattered from Sao Paolo, Brazil, to Mooresville, N.C., and from the back lots of Hollywood to paddocks and locker rooms across the entire American sports landscape.

The basics

The lack of national media attention has been blamed by print and digital assignment editors on the excruciating minutiae of a tax law case. A general lack of, as one Indianapolis sports writer put it, "sexiness."

The titillation of an initial witness list that included three-time NASCAR champion Jimmie Johnson and American business mogul Roger Penske (neither is expected to testify) has given way to a month of tedious testimony from accountants, bookkeepers and IRS investigators.

But buried beneath the doldrums of overexamined paperwork and contracts involving two languages over three continents is what boils down to a relatively simple case.

The United States believes that Castroneves -- with the aid of co-defendant Kati Castroneves -- founded and secretly ran a Panama-based shell corporation for which the only real purpose was to protect income earned in the U.S. from being taxed by the IRS. Then, with the aid of the third co-defendant, Michigan sports attorney Alan Miller, they schemed to bog down the delivery of a $5 million deferred royalty payment from Penske Racing, buying time to devise a more ironclad plan for tax-free delivery of the money.

In total, the United States is seeking tax payment on roughly $5.5 million earned between 1999 and 2004, including the deferred check from Penske plus assorted income earned while Castroneves drove for Hogan Racing in '99.

Prosecutor Matt Axelrod told the jury, "When it came time to pay taxes on the millions of dollars that [Castroneves] made, he turned his back. He didn't pay."

The defense contends that what has been labeled a shell corporation was in actuality a legitimate business never owned or managed by Castroneves, but rather by his father and a Brazil-based attorney. The defense also claims that the racer fully intends to pay taxes on the $5 million payment when he receives the money in May 2009. (Deferred royalty payments are common with large sports contracts, described by witness and tax attorney Fred Feingold as being "like a retirement fund.") Furthermore, the defense has argued that the racer -- like most professional athletes -- has long remained detached from the details of his financial affairs, concentrating on competing while leaving the paperwork to others.

It is hardly the image of a criminal mastermind.

"God bless him, but he's clueless," one of the driver's attorneys, David M. Garvin, said in a very candid conversation with late last week. "He may very well be the best driver in the world at Indianapolis, but he's not going to be doing anyone's tax returns soon. If I threw the Internal Revenue Code at him and said, 'OK, figure this out,' it wouldn't matter if I came back in an hour, a week or a month. He'd still be at the same place. Page 1."

How did we get here?

In 1999 Castroneves wasn't a racing or dancing star. In fact, he was barely recognizable among even the most dedicated fans of his sport.

He was simply a sophomore racer in CART, the now-disbanded open-wheel racing series, driving for second-tier owner Carl Hogan and a team that existed in the long shadows of motorsports powerhouses such as Chip Ganassi Racing and Marlboro Team Penske.

His mentors were his father, Helio Castroneves Sr., and Brazilian racing legend Emerson Fittipaldi, a former Indy 500 and Formula One champion who had taken young Helio under his wing. The elder Castroneves, who sold cars in Sao Paolo and industrial pipe in rural Brazil, had nearly bankrupted himself while bankrolling his son's early racing career, from go-karts in Brazil to F3 in Europe, and eventually Indy Lights in the United States.

Fittipaldi eventually offered up a management agreement with the family and helped the racer land his first rides in CART, first with Bettenhausen Racing and then with Hogan. The latter ride was arranged on the condition that Fittipaldi would secure $3 million in sponsorship for the team.

Unfortunately, the legend was not a salesman: The money was never raised, and Hogan stopped paying Castroneves a salary, though Hogan promised to keep him in the car as long as he paid his own way. Desperate for income, Helio once again turned to his father -- and now also his sister -- for help. They approached Brazilian attorney Osiris Correa, who formed a company that would go out and recruit sponsors for Castroneves and Hogan.

That company, titled Seven Promotions, was incorporated in March 1999 in Panama, presumably to avoid Brazil's high inflation, legendary crime rate and shaky tax laws, and to sidestep Helio Sr.'s credit problems incurred during years of overextending his finances to underwrite his son's racing. Upon its creation, Seven Promotions quickly inked a licensing agreement with Castroneves, its only client.

Ten years later, the true purpose of Seven's creation and the identity of its actual owners make up the central debate on which United States v. Helio Castroneves now hinges.

The IRS believes that the company was in fact owned by Helio Jr. all along. If not directly, then indirectly through Controlled Foreign Corporation laws, which can tie someone to corporate ownership if: (A) the person owns 50 percent or more of the stock, or (B) that same amount of stock is owned by a parent, spouse or child.

The defense argues that because Castroneves has no children, is not married and has parents who are not U.S. citizens, he cannot be tied, even indirectly, to ownership.

"The government never dotted the I's here," Garvin says. "They made a mistake and ended up indicting the guy. And instead of admitting the blunder, they are now trying to jam it down everybody's throat."

Tragedy + Opportunity = Confusion

On Halloween in 1999, CART ran its season finale at the then-called California Speedway. Castroneves went to Fontana with Hogan Racing and finished 20th out of 27 entries, thanks to a blown engine in his unsponsored Lola-Mercedes. As he walked to his rental car to leave the track, the racer believed that his big league career might very well be finished. All major rides for 2000 were filled; Hogan had decided to shut down his team; and Castroneves had ended his management agreement with Fittipaldi due to lack of results.

Then, as he made his way across the parking lot, Castroneves was stopped by representatives of Penske Racing. In one of the greatest tragedies in recent open-wheel memory, promising young Canadian racer Greg Moore had been killed during the race in an ultraviolent backstretch crash.

Moore had already signed on to drive for Penske in 2000, a marriage being touted as open-wheel racing's Dream Team, but now Moore was gone and Penske management wanted to talk to Castroneves about taking over its coveted No. 3 car.

Upon returning to Miami, Castroneves asked his attorney Mark Seiden to follow up with Penske about doing a deal. Seiden suggested that they contact Alan Miller, a former Oakland Raiders fullback and well-respected sports attorney who had negotiated contracts within the motorsports community for more than 30 years. In fact it was Miller who had spent the previous six months hammering out the Moore-Penske contract negotiations.

Miller, still in a state of deep grief over the loss of his friend and client, returned from Moore's funeral and was told that, due to sponsorship pressure, the deal with Castroneves needed to be completed by Nov. 5, 1999, only five days after the California race. To get it all completed in time, Miller's office simply rewrote the Moore-Penske deal, replacing all references to Moore with the name of Castroneves.

This created problems on a couple of fronts when it came to taxation. First, Moore was a Canadian citizen residing in the Cayman Islands and Castroneves was a Brazilian citizen living in Miami. The promotions company that held Moore's licensing rights, Greg Moore Enterprises, was wholly owned by Moore and that was OK because he did not live in the United States.

In the new contract, Miller's office claims that it simply replaced the name of Moore Enterprises with the name of Seven Promotions, which in essence identified Helio Castroneves as the owner of the company, and, because he was a resident of Florida, placed any income sent to Seven Promotions within the jurisdiction of American tax law.

On the afternoon of Nov. 4, 1999, the four-document deal was signed. Helio and Kati Castroneves focused purely on the bottom line ($1 million over three years plus a percentage of prize money won on the track, with a $5 million deferred bonus payment) and chose not to go point-by-point through the deal, merely turning to the last page and signing. Had they read through the agreement, and perhaps had Miller's office not been in such a hurry to have the deal done, they would have seen that Helio was listed as the owner of Seven Promotions.

The defense claims that it was all merely a clerical error, a misunderstanding. The U.S. says that it is evidence of the truth -- that Helio Castroneves owned and managed Seven, and thus is responsible for what the government believes was the company's role as a tax shelter.

That night, everyone involved describes the scene of the racer bouncing up and down on one bed of his hotel room while his sister jumped up and down on the other. To them, the new contract was a dream come true. Ten years later, it would have them living a nightmare, one that might end with six-plus years behind bars.

New deal, new problems

Six weeks later, with clearer heads and nongrieving hearts, Miller and Castroneves sat down to go back through the paperwork and talk about their future together. It was during this meeting that Miller's representatives say that Miller realized a mistake had been made in the contracts and that his client was not the owner of Seven as the pushed-through paperwork reflected.

As Miller dug deeper, he says that he realized that the driver's '99 agreement with Seven was neither designed nor equipped to handle a contract as massive as the new Penske deal. He also had reservations about sending $5 million to a newly formed company located in Panama that was created by a Brazilian layer whom he had never met. Furthermore, Miller had uncovered an issue that was described in court Wednesday as "a giant hole" in the contract. There was no specific date spelled out for Seven to deliver the deferred payment to Castroneves. To Miller it all seemed very dicey, or, in his words, "scary."

The IRS believes that those problems, while valid, were not the primary source of Miller's growing concern. Rather, the IRS claims that Miller was motivated to change the deal because he realized that his client would lose 30 percent of the payment to taxes, which would be taken out by the accountants at Penske Racing if the check were to be sent to a corporation in Panama.

Miller immediately wrote a letter to Penske telling the team not to send any money to Seven Promotions or anywhere else until he got back to them with a new plan. On June 5, 2002, less than two weeks after winning his second consecutive Indy 500, Castroneves traveled with Miller to New York and met with tax attorney Fred Feingold, a specialist in deferred compensation deals, and met for more than three hours. "About half" of that meeting was dedicated to discussing the driver's relationship with Seven. Feingold testified that Castroneves told him that he did not own Seven.

The defense says this admission is proof that the driver has been telling the truth all along. The prosecution points to it as yet another moment when the racer lied to yet another person about his role.

In the fall of '02, Feingold and Miller drafted a new deal with Dutch-based Fintage Licensing and informed Penske Racing that Fintage should now receive the $5 million payment, payable in May 2009.

Why did it take nearly three years to make the switch from Seven to Fintage? The defense claims it was because the initial Seven deal was so poorly executed that it took that much time to sort through the roadblocks. Plus, Fortis Bank, the financial institution backing the deal, put a one-year hold on all new deferred royalties while it mulled over a possible sale of Fintage.

Confused? The IRS says not to be embarrassed if you are, claiming that you have been driven to that point by an elaborate two-part scheme. First, a design to create confusion around who indeed owned and controlled Seven Promotions. Then a stall tactic to keep the money frozen until a plan could be devised to have the cash delivered to a location well outside the long reach of U.S. tax law.

Prosecutor Axelrod claims that even though Castroneves has yet to receive the disputed Penske royalty check, he should have already paid taxes on it under claims of "constructive receipt," which does not require actual possession of taxable money, only the promise of it. The government believes that the racer's ultimate goal was to leave his home in Coral Gables, Fla., to reside in a tax haven such as Monaco, already home to multiple open-wheel racers from around the world.

Axelrod told the jury during his opening statement, "It was the only way they could achieve their goal of having Helio Castroneves illegally get his money tax-free."

Paging Sugar Ray

Castroneves' fate may very well lie in the hands of, believe it or not, late boxing great Sugar Ray Robinson. While negotiating a fight at Madison Square Garden in 1957, Robinson asked to have his payment broken up into halves and delivered over the following two years. The IRS balked, but the six-time world champion claimed that the U.S. tax code actually allowed the practice as long as the payment schedule was spelled out before the services were rendered. Soon thereafter, his claims were upheld in U.S. tax court.

It was the beginning of deferred payments in the sports world, now a highly common practice. But the general lack of understanding of how it actually works -- in particular, among the Castroneves jury -- is an admitted source of great stress for the racer's defense team as it argues that the largest chunk of money in question was set up for payment well after the Seven Promotions deal was broken off.

A second case being invoked by the Castroneves defense dates back to 1967, involving former Chicago Cubs catcher Randy Hundley (eventual father of another big league catcher, Todd). Upon signing his first pro contract in 1960, Hundley sought to give half of his earnings to his father, who he argued was his manager and agent and who had given up so much of his own life to support his son's career. Again, the IRS balked when Hundley tried to write it off as a deductible expense, but again the tax court ruled in an athlete's favor.

"Same problem here," Garvin explained. "They want to tax Helio on money he paid his father. But as far as we are concerned he could never pay his father enough for what he did."

You are not alone

While the defense team looks to athletes of the past for help, athletes of the present and future are monitoring the Castroneves case with great anticipation, particularly within the motorsports world, even as national media coverage has been hard to come by.

In Mooresville, Penske Racing continues to prepare Helio's cars as if he will be back in them when the IndyCar season takes the green flag in St. Petersburg, Fla., on April 5. For now, Australian Will Power is behind the wheel as a substitute, but the Team Penske members continue to text, e-mail and phone in their support for Castroneves, though he rarely calls them back for fear of saying something that might find its way back into court.

"Between the team and the fans, I spend a lot of time going through e-mails and texts," Castroneves said during a break in Wednesday's proceedings. "It has been overwhelming. I hope they understand that I am reading them, I just can't respond during the trial."

In Speedway, Ind., the people who run and market the IRL contemplate a potential month of May without their second-most-recognizable star behind Danica Patrick.

In Hollywood, the producers of "Dancing with the Stars" are constantly inviting back former contestants and winners to sit on the front row and work the entertainment show circuit to promote their wildly popular show. The one face missing from the first three weeks has been arguably their most popular winner. Again, the texts and calls come in, especially from former dance partner Julianne Hough. But again, he can't call them back.

At the Rolex 24 at Daytona in early February, racing stars from around the world talked about the absence of the driver who finished third in the event one year earlier. What's more, they admitted that to a man they were each going back through their own contracts and licensing agreements, scared that their financial lives might also contain another "giant hole."

In the Sprint Cup garage many are doing the same, especially the numerous clients of Alan Miller, including team owners, sponsors, crew chiefs, media members and a long list of drivers that includes Clint Bowyer and Jimmie Johnson. Johnson, who has publicly supported the attorney throughout the trial, has been handing over his financial affairs to Miller since he was a preteen.

"You spend 40 years building a reputation in this business," Miller said during a break in Wednesday's proceedings. "And it takes one accusation like this to potentially tear it all down. It's unbelievable."

Fourteen miles north, at Dolphin Stadium, even those in town for the World Baseball Classic talked about the trial taking place just down I-95. Mets first baseman Carlos Delgado, in the WBC with team Puerto Rico, remembered what it was like to come to the United States in 1992 as a 19-year-old kid who spoke little English, much as 20-year-old Castroneves did when he arrived from Brazil to race Indy Lights.

"One day you are a teenager living at home with no money," the 15-year MLB veteran said as he shook his head. "The next day you are sitting in a big office building with lawyers and agents and executives and they are all talking about things that you have no idea about, and it's about you. You just want to play your sport and so you hand those things off to these people that don't speak your language and you now trust your life with. If they don't do it right, no one blames them. They blame you and it is your name that ends up on ESPN. It is scary. And we all go through it in every sport."

White flag

On Monday morning the trial resumed its fourth week following a four-day break. Axelrod and the prosecution expect to rest their case by midweek, and most involved anticipate the case to be in the hands of the jury as early as Friday.

Though it might not rate high on the sexiness meter, the impact of a guilty verdict would be felt throughout the sports world. And not just in the IndyCar and NASCAR garages, where a scramble would no doubt ensue to fill one of the most sought-after rides in all of motorsports. The absence of Alan Miller would create a chasm on at least one side of literally every boardroom negotiation within the sport, and in some instances, on both sides.

Even a declaration of innocence likely won't be enough to remove the stain from the reputations of Miller and his clients. The close-knit, sometimes high school-ish racing community is a forgiving place, but only so much.

In the meantime, Helio Castroneves and his sister will continue making their lonely 15-minute drive every morning, from the racer's mansion in Coral Gables to the courthouse on North Miami Avenue, the same sparkling new tower where the U.S. government tries the most notorious drug dealers in the world. The pair has no idea if the media circus will roll back into the courtyard to greet them when that fateful judgment day finally arrives.

Truthfully, they don't care. They just hope they can greet the paparazzi with a smile.

"Every day we get back on that plane," the racer says with a shrug, returning to his metaphor of flight. "Up and down, turbulence, whatever the day brings we just keep hanging on. Hanging on until it finally lands."

Monday, March 16, 2009

Driver Helio Castroneves on a detour at tax trial

(by Jay Weaver 3-15-09)

Helio Castroneves was born with a car-racing gene.

He sped from go-karting to Formula Three to IndyCar, his big break coming in late 1999 when Penske Racing signed him. He won the Indy 500 two years straight and finished second in 2003 -- milestones for the celebrated race.

''He had the ability to do things that human beings can only dream of,'' his powerhouse lawyer, Roy Black, told a jury in Miami earlier this month. ``This has taken him to the heights of athletic stardom.''

Now the Brazilian driver's soaring career, fueled by the fame of also winning the reality TV show Dancing with the Stars, is at risk of crashing in the most unlikely place: a federal courtroom. Castroneves, 33, stands accused along with his sister and business manager, Katiucia Castroneves, and his Michigan sports lawyer, Alan R. Miller, of cheating the IRS.

In a seven-count indictment, Castroneves is charged with conspiring with them to evade paying taxes on more than $5 million from a Penske contract dating back a decade. Ironically, Castroneves, who owns a Coral Gables mansion decorated with his trophies, has yet to receive any of that income from Penske.

But that's the point of the U.S. government's case against the trio, because prosecutors say Castroneves should have already paid taxes on that income -- regardless of whether he has actually received it. The three defendants are accused of masterminding a tax dodge across two continents so that Castroneves wouldn't ever have to pay the IRS -- especially if he were to move to a tax haven such as Monaco for retirement.

How the 12-person jury will view the charges amid a crumbling economy remains to be seen. But for Castroneves -- a fun-loving guy known for leading cheers with racing fans -- the outcome could not be more serious.

Now at the peak of his sport, Castroneves is either going to be back in the driver's seat of racing's most prestigious team -- or he's going to prison for several years.

''Any prison time would destroy his career,'' said Indianapolis-based sports writer Robin Miller, who does commentary for Fox's Speed Channel. ``As much as Helio is part of Penske, how do you overcome putting a convicted felon on his team? It's a kiss of death.

``Now if he's acquitted, you celebrate. He's good for racing. You go ahead and put him back in the car.''

Although Castroneves is still featured on Penske Racing's website -- including in the gift store, selling his images on a 2009 calendar -- he hasn't been on the track since January. Penske has replaced Castroneves with driver Will Power in the No. 3 car during preseason testing and, if necessary, in races this season. The IndyCar season opens April 5, when the federal jury in Miami might be deciding Castroneves' fate.

The root of Castroneves' tax troubles reach back to his breakthrough contract with Penske Racing in November 1999. Roger Penske, the owner, recruited Castroneves immediately after the horrific racing death of Canadian driver Greg Moore, who had just signed with his team. Castroneves' sports lawyer, Miller, had represented Moore, too.

''One man's tragedy, unfortunately, turns into another man's opportunity,'' Black, the criminal defense attorney, told the jury.

At a crossroads, Castroneves dumped his manager, legendary racer Emerson Fittipaldi, and joined Penske Racing. (The split with Fittipaldi would lead to a bitter legal battle in Miami.)

When Castroneves signed the Penske deal in November 1999, he was to be paid $1 million as a driver and $5 million for licensing rights to his name, likeness and image. Marlboro was the team's main sponsor.

Penske paid the $1 million to Castroneves directly over the next three years, in 2000, 2001 and 2002. The other $5 million was supposed to be paid to a Panamanian corporation, Seven Promotions, over the same period. Prosecutors said the company, started in March 1999 to promote the driver's career, was owned by Castroneves.

But that licensing income was not transferred to Seven Promotions because the driver's attorney, Miller, realized that Penske was going to have to withhold nearly one-third in taxes on payments to the Panamanian company, prosecutors said. Under federal law, 30 percent of a person's income sent to a tax shelter in Panama must be withheld to pay the U.S. government.

''We were ready to make payments to Seven Promotions,'' Penske's general counsel, Lawrence Bluth, testified. ''We were told not to'' by Miller.

At that point, Miller consulted with tax lawyers in New York, who proposed that Penske pay Castroneves through a Dutch entity called Fintage Licensing. It would set up a deferred annuity account so that he could receive the money later.

In 2002, the New York lawyers told Miller that sending Castroneves' Penske income to the Netherlands firm would be fine on one condition -- as long as the driver didn't own the Panamanian company, Seven Promotions. If he did, then he would already be responsible for the taxes on the Penske income because it was supposed to be sent to Seven Promotions under his contract.

''The Castroneveses and Alan Miller faced a big choice,'' federal prosecutor Matt Axelrod told jurors. ``They lied.''

They told the New York lawyers that Castroneves didn't own the Panamanian company, he said. Black and other defense lawyers have maintained that the driver's father, who goes by the same name, owned Seven Promotions and set it up to help his son's career.

But earlier this month, Penske's general counsel, Bluth, testified that Miller had told him back then that the Panamanian company was controlled by the younger Castroneves. Prosecutors also produced a 1999 agreement between Castroneves and Seven Promotions saying the driver owns all shares of the Panamanian company.

Despite Castroneves' ownership of the business, prosecutors said, Miller arranged to have Penske pay $5 million from Castroneves' licensing deal to the Dutch company starting in January 2003.

This past week, Castroneves' former accountant testified that the Dutch annuity was legitimate.

''Helio Castroneves never suggested that you do something improper, right?'' asked another defense lawyer, David Garvin.

''Absolutely not,'' said the accountant, Kevin Savoree, an executive with Andretti Green Racing.

But Savoree testified he helped write a memo indicating Castroneves' ultimate goal was to ``maintain a residence in a tax haven, such as Monaco.''

Another prosecutor, Jared Dwyer, asked the accountant how much Castroneves, who has a work visa to live in the United States, would pay in taxes if he were to move to the European principality.

Said Savoree: ``Perhaps zero.''

With that testimony, the prosecution sought to show that paying no taxes was Castroneves' plan all along.

But Castroneves' defense lawyer, Black, scoffed at the government's tax-evasion theory, calling it a ''fiction.'' He said Castroneves relied on his sports lawyer, Miller, who has handled the careers of many pro athletes, to legally set up the Dutch annuity so that Castroneves could draw income later.

Under a U.S. treaty with the Netherlands, Fintage could defer paying Castroneves, delaying his tax liability until he receives the money -- none of which has been paid to him yet.

''It wasn't a tax dodge,'' Black told jurors, assuring them that Castroneves will start paying his taxes in May, when he starts receiving the annuity payments.

The jurors must soon decide whether Castroneves should have paid those taxes in 2001 and 2002, when he was posting back-to-back victories for Penske's team at the Indy 500.

''It would be a terrible thing to lose one of the great drivers in the world, and probably our most popular driver,'' Penske's Bluth testified last week.

Wednesday, March 11, 2009

IZOD's rideless driver

(by Robin Miller 3-10-09)

IZOD is poised to launch one of the largest advertising and promotional campaigns in the Indy Racing League's 14-year history.

Beginning in a few weeks there will be a national television spot, promo trailers in movie theaters, ads in major magazines and newspapers and in-store promotions at Macy's stores across the country that will also include a special Indy 500 clothing line.

It's estimated several million dollars in media value has been budgeted for this project. But there is a little snag in clothing line's plan to take Indy-car racing to the mainstream. No, make that a big snag. The guy they put all the promotion behind, the guy in the TV commercial, the guy in the print ads and the guy on the 90-foot billboard in Times Square doesn't have a ride for the 2009 season.

Ryan Hunter-Reay, signed last summer as the face of the IRL for IZOD, is still unemployed 25 days before the season opener at St. Petersburg.

"I'm told that I don't have to worry, although I don't know what that means yet," said Mike Kelly, the president of marketing for Phillip Van Husen, the parent company of IZOD. "I know the the IRL is as concerned as I am and we speak about it daily.

"I do know we will have a significant problem if Ryan is not in a car."

If Kelly sounds concerned he's got a right to be. It's been a long time since any major companies outside of motorsports jumped into the open wheel game like IZOD and they hung their hat on a fast, handsome, articulate American because the IRL hand-picked the 28-year-old native of Boca Raton, Fla. By the same token, it's not the IRL's fault that Ethanol bailed as Rahal/Letterman's title sponsor and and RHR was left by the side of the road.

Because of Tony George's history of paying for drivers, cars, engines and teams, this situation needs to be rectified. Soon.

Terry Angstadt, president of the IRL's commercial division, understands the ramifications and is working hard to get RHR in a car. "I think we're going get there, we're hitting it from every angle," said Angstadt. "It's a massive opportunity for all of us. We have three different B to B opportunities they've (IZOD) already actively engaged which could help Ryan."

As it stands today, it would appear that RHR could be placed in the second seat with Keith Wiggins' HVM squad or possibly George's Vision Racing or KV Racing. Kelly, who had never seen an IndyCar race until last summer when Hunter-Reay pulled into victory lane at Watkins Glen, remains gung-ho about the product.

"It's got young drivers, unification, great racing and there's a lot of sexy stories about the IRL that we want to take to the masses through fashion and pop culture," said Kelly. "We're going to launch that clothing line at major department stores across the US and Canda. In Toronto, we're going to have trolley cars wrapped like Indy cars and we've got a huge publicity event planned for Macy's Herald Square in May.

"We want to create as much hoopla as possible. It's our first venture into motorsports and we want it to be a success." But getting the star of IZOD's promotions into a competitive car is front and center right now. Asked if IZOD considered being RHR's sponsor, Kelly replied: "No, our spend is outside the car space because our role as a partner is to leverage the sport into mainstream culture.

"And we feel like we've got a lot of avenues to do just that."

Accountant: Castroneves didn't seek tax evasion

(by Curt Anderson AP Legal Affairs Writer 3-11-09)

MIAMI -- Race car driver and TV dance celebrity Helio Castroneves never sought to break the law in his financial affairs but could have avoided all U.S. tax on about $5 million if he had relocated from south Florida to Monaco as envisioned, an accountant testified Wednesday at Castroneves' tax evasion trial.

Kevin Savoree, now an executive at Andretti Green Racing, said when he handled accounting work for Castroneves in 1999 and 2000, the plan was to set up a legitimate deal in which much of the two-time Indianapolis 500 winner's income would be deferred. That meant his taxes owed to the IRS also would be deferred until he actually got the money.

"Helio Castroneves never suggested that you do something improper, right?" asked Castroneves attorney David Garvin.

"Absolutely not," Savoree replied.

But Savoree acknowledged helping draft a memo describing the ultimate goal as having Castroneves "maintain a residence in a tax haven, such as Monaco." Castroneves, a Brazilian citizen in the U.S. on a work visa, currently lives in Coral Gables, Fla., just south of Miami.

Asked by prosecutor Jared Dwyer how much U.S. tax Castroneves would have paid on the $5 million if he had made that move, Savoree answered, "Perhaps zero."

Savoree said Castroneves had minimal involvement in his financial dealings, but he also said the race car driver got "mad as hell" at one point as discussions dragged on in 2000 about the deferred income account.

"He was upset. He wanted the matters resolved," Savoree testified.

Castroneves, his sister-manager Katiucia Castroneves and Michigan attorney Alan Miller all face more than six years in prison if convicted of conspiracy and tax evasion charges involving about $5.5 million in income. The years in question, 1999-2004, were well before Castroneves won TV's "Dancing With The Stars" competition in 2007.

The deferred income account was eventually set up in 2003 when Penske Racing, which had signed Castroneves in 1999, deposited $5 million in the Dutch firm Fintage Licensing B.V. Penske also directly paid Castroneves $1 million over three years, on which he paid U.S. taxes.

The original plan was for Penske to transfer the money to a Panamanian company called Seven Promotions. But Savoree said he balked at that because Panama's status as a tax haven meant Penske would deduct 30 percent for U.S. taxes from the $5 million before making the deposit.

"I wasn't comfortable with Panama," he testified.

Prosecutors say Castroneves secretly controlled Seven Promotions and therefore is liable for taxes on the entire $5 million, even though it eventually wound up with the Dutch firm. Defense lawyers contend the company was formed by the driver's father, meaning no taxes are owed.

Monday, March 9, 2009

Keep an eye on Graham Rahal

(by John Oreovicz 3-9-09)

Graham Rahal is just 20 years old, yet he enters the 2009 season as the lead driver for the second-most successful team in Indy-style racing's modern era. His Newman/Haas/Lanigan Racing teammates will include one driver who has never competed in a race on an oval track (in a series in which two-thirds of the events are staged on ovals) and a perennial back marker who has been the subject of scorn and ridicule from every corner of the sport.

Yet if there is any upcoming driver in any form of motorsport who is up to the challenge, it's young Rahal, who possesses skill and maturity well beyond his years. The son of three-time CART champion (and 1986 Indianapolis 500 winner) Bobby Rahal is as polished in and out of the car as most drivers twice his age and appears destined for a long and successful career in Indy car racing -- and possibly Formula One.

It's a credit to the senior Rahal (and his ex-wife, Debi) that Graham was clearly ready to graduate to American open-wheel racing's top level when he was just 18 years of age. Thrust into the Champ Car World Series in 2007 with Newman/Haas Racing as teammate to multiple series champion Sebastien Bourdais, Rahal held his own, notching five top-five finishes on the way to fifth place in the championship.

The learning curve only got steeper for Rahal in 2008 when Champ Car folded and the renamed Newman/Haas/Lanigan Racing made the last-minute jump to the IndyCar Series. A testing crash forced Graham to miss the first race of the season, but a week later, he stood in victory circle after a heady drive in changing conditions at St. Petersburg made him the youngest-ever winner of an IndyCar Series race -- in his very first start.

The fairy tale didn't last. The rest of Rahal's season was a mixture of flashes of brilliance and rookie mistakes as NHLR sometimes struggled to come to terms with the IndyCar Series' Dallara-Honda spec car and preponderance of oval races. Still, he did enough to convince observers that he could definitely win more races in 2009 and possibly emerge as a dark-horse championship candidate.

"I think that the expectations that are put in place aren't necessarily because of my role in the team, but more because of the fact that I want to go out there and win races and be successful," Rahal said prior to the first IndyCar open test of the 2009 season. "Coming from a situation like Champ Car and transitioning here last year, it's all building blocks of leadership skills and a lot of learning that has taken place. Basically every step of my career has been a learning year for me. So this season I think the entire team comes into it with a lot more confidence, knowing that we ought to have a much better shot at being successful and winning races.

"That's the biggest thing, and for me it's exciting to be in the position that I'm in," he continued. "I want to go out there and win races and prove that I deserve the role that I've taken in this team. I feel like I've done a good job of building the team around me in the past couple of years and now hopefully that will all show through."

Although Newman/Haas/Lanigan Racing ranks second only to Team Penske in terms of Indy racing wins and championships, the team struggled to find adequate sponsorship until female racer Milka Duno stepped forth with what is reputed to be an eight-figure package from Citgo and Arctic Ice energy drink.

While many observers believe NHLR would be more successful in 2009 had it been able to carry over its driver pairing of Rahal and Justin Wilson (also an IndyCar race winner in 2008), it was only the arrival of Duno and Robert Doornbos (who also is bringing funding to the team) that allowed it continue as a multicar effort.

In effect, what looks like one step back for the team in terms of IndyCar experience could result in two steps forward for Rahal's personal progress.

"For such a long time it looked like it was just going to be me in the team, and there was going to be a lot more pressure because I was going to be the one holding things together," Rahal said. "It's exciting that we've got a few cars here now and something that we can really build upon. We've got good financial backing, which is important for us to develop the cars as we go forward and hopefully do some more testing. That will hopefully make us more competitive in the end."

Rahal said he's not worried about Doornbos' total lack of oval experience and Duno's perceived lack of skill and added that he is open to helping them along -- to a point.

"I'm the type that if they come and ask, I'll give them an honest answer," he said. "But I'm not going to go out there and share it. If you're new to a series, then you should be asking questions. Obviously I'm willing to help out in any way I can. Robert will catch on quickly and Milka's got experience. At the end of the day, the racing here will be a completely new experience for [Doornbos], but he will be quick -- there's no doubt about that -- and that's something that we as a team can build upon.

"For me it's good just to have the extra data," Rahal continued. "On a road course it's a different situation because there is a lot for Milka to learn, and we're going to try to help her along there. But on the ovals it's going to help just to have a couple extra cars to try different things on. Last year Justin and I were both learning the oval thing, we were both learning the cars, and the team was learning the cars. So it was pretty tough to have a strong comparison between one another. This year I think we again kind of find ourselves in the same position because Robert obviously has a lot to learn. But it's always a bonus if you can have more than one competitive car to learn from, and that's what we're hoping to have this year."

Doornbos noted that he will certainly rely on his young teammate as a resource as he gets to grips with the IndyCar Series.

"Graham is a great guy," Doornbos said. "I know him from Champ Car in 2007 and obviously he has a big name in the U.S. There is maybe some pressure on him to perform, but I think we should have a strong team this year."

One interested observer outside the Newman/Haas/Lanigan team who believes that Graham will have a breakout season is somebody who should know -- his father, who competed against NHLR for most of the past 25 years as a driver or team owner.

"From what I know, [NHLR] had some very good tests at the end of the year at Richmond and Texas," Bobby Rahal said. "That's a very strong team, particularly from an engineering standpoint, and it's one year later with a little bit more experience for everybody.

"This will be the first time in Graham's career that he's driven the same car for more than one year," Rahal added. "Every year it has been a new car and a new learning experience. This is the first year he'll be sitting in the same type of car and going back to the same tracks and everything else. I think he certainly had some good runs last year, so I suspect he and the team will be more competitive."

$5 million key to Castroneves trial

(by the Associated Press 3-9-08)

MIAMI -- To this day, race-car driver and "Dancing with the Stars" winner Helio Castroneves hasn't seen a single dime of $5 million in licensing money he was promised under a 1999 contract with Penske Racing. It's either been parked at Penske or is still idling in a Dutch investment account.

But the Internal Revenue Service says Castroneves owes U.S. income taxes on the money anyway, contending the 33-year-old driver can't avoid tax by simply refusing cash to which he's entitled. A complex concept known as "constructive receipt" is at the heart of the prosecution's case against the two-time Indianapolis 500 winner.

Testimony resumes Tuesday in the tax trial of Castroneves, his business-manager sister Katiucia Castroneves -- both originally from Sao Paulo, Brazil -- and his lawyer Alan Miller of Birmingham, Mich. All are charged in a seven-count federal indictment with conspiracy and tax evasion from 1999 to 2004.

The three defendants are facing more than six years behind bars if convicted. Trial is expected to last about a month.

Experts say jurors will have to decide if the Castroneves deal was real or contrived to make it appear he didn't have control of his Penske money.

"What the government is saying is, if you are entitled to some cash, and you leave it in your mother's bank account, it's still your cash," said Chas Roy-Chowdhury, a tax expert with the global industry group Association of Chartered Certified Accountants.

Castroneves is a top Indy Racing League driver, winning the Indy 500 in 2001 and 2002 and finishing second in 2003. In 2007, he gained even greater fame by winning TV's "Dancing with the Stars" competition.

Issues at trial have their origins in the final event of 1999 of the Championship Auto Racing Teams, or CART -- at the time a rival of the Indy Racing League. On Oct. 31 of that year in Fontana, Calif., Castroneves was driving in the final race for his soon-to-be-disbanded Hogan team and Greg Moore was about to sign a lucrative new contract with Penske Racing.

Moore crashed and was killed. In less than a week, Penske signed Castroneves, using Moore's contract by simply crossing out the old names and amounts and replacing them in handwritten notations. Miller negotiated that deal for $6 million -- $1 million in paid directly to Castroneves and $5 million to license Castroneves' name and image.

At first, the $5 million was supposed to flow to a Panamanian corporation called Seven Promotions.

In mid-December 1999, Miller sent a letter to Penske asking that the transaction be halted, according to trial testimony. Penske's general counsel, Lawrence Bluth, said the company held onto the Castroneves cash until January 2003, when it was invested with Netherlands firm Fintage Licensing B.V., where it remains today.

"We were ready to make payments to Seven Promotions. We were told not to," Bluth testified.

The IRS and federal prosecutors charge that arrangement was a tax dodge.

They contend Castroneves secretly controlled Seven Promotions -- disputed vigorously by the defense -- and should have paid U.S. taxes under the "constructive receipt" doctrine as soon as Penske was ready to start cutting checks.

"The individual's wishes do not control," said Assistant U.S. Attorney Matt Axelrod. "A taxpayer may not deliberately turn his back upon income and thereby select the year for which he will report it."

Miller, a former professional football player and architect of the Castroneves contract, contends the IRS is wrong. In court papers, Miller attorney Robert Bennett said Castroneves never had control of the $5 million and therefore owes no tax.

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.

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.

Castroneves attorney Roy Black said the driver, who lives in a $2.2 million home in Coral Gables, never schemed to hide money from the IRS. He said in opening statements that the driver knows nothing about U.S. tax laws and relied on experts to handle his finances.

"They've come up with a fiction," Black said.

Friday, March 6, 2009

So many reasons to doubt U.S. in F1

(by Ed Hinton 3-6-09)

When pigs fly, or Ferrari slashes its racing budget by 85 percent -- whichever comes first -- then a competitive Formula One team will be based in the epicenter of the NASCAR industry, Charlotte, N.C.

And even then, it wouldn't be something Americans necessarily would be proud of.

Still, even NASCAR fans and journalists are getting caught up in this notion of an American F1 team, floated last week by veteran British F1 executive and journalist Peter Windsor and American engineer Ken Anderson.

Wildfire fantasy has ensued in the chats, blogs, conversations and news stories. In essence:

I know! We'll have Kyle Busch as one driver! Yeah, that's the ticket! And -- and -- and -- Danica Patrick as the other! Or -- or -- or -- maybe AJ Allmendinger, star of the last days of Champ Car, would work! Or Scott Speed! Marco Andretti! Graham Rahal! Hey -- try this one -- what about Juan Pablo Montoya in a comeback?

To understand why the NASCAR community is abuzz, you have to recognize the undercurrent of fascination with F1 within NASCAR. In the motor-coach compounds at the NASCAR tracks on Sunday mornings, drivers and crew members turn on their satellite TV systems and watch F1.

The crewmen and engineers marvel at the technology, and the drivers just want to drive the magnificent little cars.

The greatest envy of Jeff Gordon I have ever heard from the mouth of Tony Stewart had nothing to do with Gordon's four Cup championships and three Daytona 500 wins. It was all about the fact that Gordon once got to test-drive a Williams F1 car, and Stewart didn't.

For years, I've sensed a sort of "We could do that" wishful thinking.

Now Windsor and Anderson are singing the song of the NASCAR mindset, touting the technological resources around Charlotte that were developed for the NASCAR industry and later Indy cars, and are now in critical oversupply because of the free-falling economy.

Minds, machines and materials are bargains around Charlotte nowadays.

So Windsor and Anderson reckon this is precisely the time to get in on a new bottom floor of F1, much as Jeremy Mayfield, Tommy Baldwin and Scott Riggs have seized opportunity to rush in at the bottom of a deflated NASCAR economy.

Windsor and Anderson say they've set a budget of $65 million (although they haven't made clear where that money will come from) for 2010 to start their team. That sounds great in NASCAR, where $65 million is plenty to run two Cup cars for a season.

But consider that Ferrari and McLaren have each been spending more than $400 million a year lately and that Ferrari at its peak with Michael Schumacher topped half a billion in some years.

The Formula One Teams Association on Thursday passed a resolution aimed at cutting team budgets in half by 2010, according to The Associated Press.

But that still would be $200 million or more, far above the upstart team's proposed $65 million, even assuming Windsor could raise that in a country where NASCAR sponsorships are dropping and on a continent where there won't be a single Grand Prix race this year for the first time since 1958.

There is talk in Europe that the FIA, in meetings later this month, will place a budget cap of about $64 million on all F1 teams.

Even if Ferrari and McLaren formally went along with such a paltry -- for them -- cap, then when pigs fly will they actually abide by it.

But for the sake of argument, let's say all F1 teams will operate on $65 million a year. Indeed, Windsor has heard from the FIA that his type of plan is "everything they're looking for" under current economic conditions, he told's Dan Knutson at a news conference.

Windsor conceded that he and Anderson "would just get laughed out of the ballpark" if these were normal times in F1.

But under cut-rate conditions, F1 would be a shell of itself, gutted of the essence of its appeal, which is ultrahigh technology on unlimited budgets.

I've always felt there has to be at least one racing league in the world without boundaries, just to see how far engineering can take automobiles.

Put clamps on that, and you have hardly more than a gussied-up IRL.

Tight, primitive rules, hard knocks and hardscrabble teams are part of NASCAR's charm. They would be the downfall of F1.

So even if the proposed American team turned out to be competitive, it would be in a league on the wane.

How does Formula One Management, run by F1 czar Bernie Ecclestone, view this? Windsor said as late as last week that Ecclestone was supportive and positive. Then Wednesday, the F1 Web site reported that FOM apparently has objected to Windsor's original name for the team, "USF1," and demanded removal of the F1 brand.

So Windsor looks to have changed the name to USGPE -- United States Grand Prix Engineering, apparently -- reminiscent of the Williams Grand Prix Engineering team he managed in the 1990s.

Windsor learned much about logistics in his years at Williams in its heyday. But funding of the team was directed by others.

Logistics cost money.

F1's transport fleet of 747s flies out of London and Milan, central points for loading teams' equipment, and I doubt they're going to divert a plane to Charlotte to pick up one fledgling team's equipment on the way to Japan or Malaysia.

So USGPE, or whatever it is called, faces the expensive air freight of just getting its equipment to join the fleet out of London, or the exponentially costlier prospect of flying its cars directly from Charlotte to the Grand Prix venues around the world.

Windsor's tossing about of the names of Busch and Patrick as possible drivers for the team has drawn a lot of publicity, all the way to the London newspapers.

But both Busch and Patrick have said that, although flattered, they haven't even been contacted by USGPE.

And neither is remotely qualified, when you really think about it, to step into an F1car and be competitive anytime soon. Busch's background is all in stock cars. Patrick did spend a frustrating few years in the schooling formulas of Britain and Europe. Even so, road racing is the weaker part of her IRL game.

Andretti has yet to impress in the steppingstone formulas to F1. Rahal has been a fair to middlin' driver in the IRL. Speed is in NASCAR after being dropped by a shoestring F1 team. Montoya is in NASCAR because he was about to be squeezed out of the top ranks of F1. Allmendinger has digressed too long in NASCAR to transfer his open-wheel skills to F1.

Most of all, I must side here with T.E. Lawrence, aka Lawrence of Arabia, who wrote that "old and wise" really means "tired and disappointed."

I am too old and wise to believe USGPE will fly, much less soar, because I am too tired and disappointed after chronicling all the notions of a serious American presence in F1 that have arisen in the three decades since Mario Andretti won the world championship in 1978.

There hasn't been a serious American F1 constructor since the storied but ineffective Shadow team of the 1970s. And by the time Shadow folded, it was based in England out of necessity.

Even when Mario Andretti won the world title, it was for a British team, Lotus.

Since then, I've chased stories, beginning circa 1990, that Al Unser Jr. might go to Williams, that Michael Andretti (Mario's son, Marco's father) would go to Ferrari, then that Michael actually was going to McLaren … then when Michael crossed the pond in 1993, driver and team were so out of sync that he came home in midseason, having flopped or been set up to fail, depending on your viewpoint.

Then Jackie Stewart told me in the mid-'90s that Jeff Gordon was the best candidate to transfer, and I chased that notion for a while. Gordon, to his credit, was wise enough to quash the conjecture from the start, saying that, in his 20s, he was too old to focus on a vastly different discipline.

With the singular exception of Montoya -- who hasn't exactly set the NASCAR world on fire -- the time of the crossover drivers such as Mario Andretti, A.J. Foyt and Dan Gurney ended with Mario's '78 title. As the various forms of racing have grown more complex, they have moved too far apart for a Kyle Busch to master one form, then jump with any success to another. And sponsorship demands force drivers to declare in one form and stay there.

Another factor is intangible -- the question of whether the world F1 community really wants an American presence. I have come to doubt that, having covered F1 quite a bit for a time. This is one sport we can't beat the rest of the world at, and I think the rest of the world quietly likes it that way.

All in all, this talk of F1 in Charlotte, and these dreams of Kyle or Danica wheel-to-wheel with Lewis Hamilton, are fun and fascinating.

Unless you're tired and disappointed from so many flights of F1 fancy.

Windsor clarifies USF1 name change

(by Speed staff 3-6-09)

USF1 sporting director Peter Windsor has moved to clarify stories suggesting that the team has been told to change its name by Formula One Management.

Stories have circulated in recent days that FOM objected to the team's use of the trademarked phrase "F1" in their title, but speaking exclusively to, Windsor has diffused the story, saying that it was never the team's intention to compete under such a name, and instead they plan on competing under the name US Grand Prix Engineering.

"It’s not true as written" said Windsor in reference to the original story. "Our original logo was basically a placemark for a project in progress. Now that we’re in business, it’s important to create a logo and team name that is fully in accordance with FOM rules. This we are now doing."

"In the meantime, we’re diverting web traffic to one of the many domain names we registered some five years ago. We kinda liked USGPE because of the early FW days (referring to Williams Grand Prix Engineering). We’ll be back soon – bigger and better."

Windsor also added that he has been encouraged by the response to the team since they formally announced their plans to compete live on SPEED on February 24. "The response to the announcement was overwhelmingly positive" said the former Williams and Ferrari team manager. "Over 4000 articles were published about us in the month of February alone, and the site was getting something like 350 hits per second during and after the show. For a 'minority sport', F1 in the US seems to be alive and well!"

USF1 ready to roll

(by Tom Jensen 2-24-09)

It’s a plan as audacious as it is inspired: Build an all-new Formula 1 team from scratch, base it in Charlotte, N.C., hire two American drivers and go racing all over the globe against Ferrari, McLaren and the titans of F-1 in 2010.

But that’s exactly what engineer Ken Anderson and longtime SPEED reporter and former Williams team manager Peter Windsor plan to do with their new USF1 team. The duo was at SPEED headquarters in Charlotte on Tuesday to discuss their plans for the new team and in some cases not discuss the myriad specifics, which are still being kept tightly under wraps.

“How do you do a Formula 1 team? That’s an interesting question,” said Windsor. “There is no book about it. There’s lots of books on how to drive a race car, perhaps, but no book on how to do a Formula 1 team.” So in a very real sense, Windsor and Anderson intend to write an all-new book, or at least a historic new chapter in F-1’s rich history.

For the last four years, Windsor and Anderson have been quietly putting together their plans for USF1, which will be radically different than the traditional F-1 model. “We always wanted to do our own team, our way,” said Windsor. “It sounds very arrogant, perhaps, but we’ve got some history, we’ve got some things we want to bring into the sport that we think we can do well.”

Here are the highpoints:

• USF1 will be based in Charlotte, likely on the north side of town, very near SPEED’s headquarters. The facility will employ more than 100 people and will be modeled after modern NASCAR team shops, which allow fans to visit and watch cars being constructed. Windsor specifically mentioned Michael Waltrip Racing’s Raceworld USA facility in nearby Cornelius, N.C., as a shop he admired. The new USF1 headquarters also will have its own on-site television studio.

And it will be a facility that relies heavily on outside vendors in the motorsports-rich Metro Charlotte area and less on enormous budgets and lavish trappings. “For those of them out there who say, ‘Where’s all the money? Where’s the huge facility? Where’s the money falling out of the sky?’ That isn’t ever going to happen with USF1,” said Windsor. “We’ve always had a very different approach, and that approach will become evident as time goes on and this year unfolds.”

• The team intends to sign two American drivers. A variety of names were mentioned by Windsor and Anderson, including Marco Andretti, Danica Patrick and Scott Speed.

• USF1 will buy engines from another team, to be identified later. USF1 is essentially putting out an RFP for engines, looking for an appropriate supplier among the existing competitors.

• The team has four investors who own a minority share in the operation. Neither the amount they own, nor the identities of the investors were disclosed. Sponsors were not identified, either.

• USF1 will have a European satellite facility where it houses its transporters and other equipment, but the true base of operations will be in Charlotte.

• The team plans to race full-time in Formula 1 in 2010, and hopes to be in a position to finish in the points with some regularity by the following season. “After that, the sky’s the limit,” said Windsor.

KV hope to add second car from Indy

(by Matt Beer 3-6-09)

KV Racing team boss Jimmy Vasser is optimistic that his squad can add a second car for the second half of the IndyCar Series.

Mario Moraes is currently KV's only confirmed driver for the 2009 season, and the team recently had to release a group of employees due to their lack of sponsorship. They ran Will Power and Oriol Servia in a two-car line-up last year.

But Vasser is optimistic that KV can get a second car in the field for the Indianapolis 500 and hopefully beyond. Servia and Paul Tracy are among the candidates for the seat.

"At the very least we're going to have at least one more car at Indy," he told Indianapolis radio station 1070 The Fan.

"Most probably a car from Indy on forward. I don't think it's probable that we'll have two cars for the full season. But I really believe we can put the second car together from Indy."

He dismissed any suggestion that he would contest the Indy 500 himself.

"I always thought that if I was going to do that I need my financing in place by last November, and quite honestly getting me in the car is at the bottom of the line," Vasser said. "I'm working on deals for Oriol Servia, Paul Tracy and so on. I think there's a very small chance for Jimmy Vasser."

Although Dale Coyne Racing convert Moraes will be KV's sole representative in the early rounds, Vasser is confident that the young Brazilian - who was sixth quickest in the Homestead test - can fight for victories.

"If anybody is surprised, they were underestimating his abilities," said Vasser. "He impressed me a lot on the road courses late last year. He was quicker than (teammate) Bruno (Junqueira), and if you saw him at Chicago, he was not afraid to stick his nose up in there.

"I think he impressed a lot of people at Homestead. I don't want to jump the gun and say that Mario's going to do all sorts of things, but I know what Mario wants to do - he wants to run up front. He's 20 years old and I think there's no discounting his natural ability.

"I think we can give him the car that he can take his break-out win in this year."

Wednesday, March 4, 2009

Castroneves' tax trial offers lesson to his fellow drivers

(by Brant James 3-4-09)

When Danica Patrick talks about Helio Castroneves, you can imagine her sitting on the floor of her Phoenix home amid hundreds of files, contracts and tax documents. It would be the middle of the night, Patrick with a flashlight in one hand, magnifying glass in the other, mumbling gibberish as she speed-reads the forms.

Patrick's pit-in-stomach moment was not so anecdotally perfect, but it was profound and jarring for someone who earned $5 million in 2007 (according to a list which ranked her as the 95th highest-paid celebrity in America) and, at 26, is one of the most recognizable, marketable and bankable figures in sports. The feisty Indy Racing League driver with the Swimsuit-edition portfolio was a virtual license to print money even before she won her first race last spring. Earning it is one thing. Keeping it is another. So is making sure bills get paid, like taxes. That point becomes poignant this week with two-time Indianapolis 500-winner Castroneves going on trial in Miami on seven counts of federal tax evasion, crimes punishable by more than six years in prison.

Castroneves -- whose business manager is his sister, Kati -- claimed in January that complex contract language so confused him that he did not understand at times what he was signing. Defense attorney Roy Black said in opening arguments on Tuesday that Castroneves is ignorant of United States tax laws, and his defense seems to partly hinge on how a jury factors ignorance of personal affairs when considering the guilt of the charismatic Brazilian who gained multi-national fame as a Dancing with the Stars champion.

"I feel strongly and positively about it, especially when I started educating myself in this matter," Castroneves said in January. "I'm reading stuff with the type of language, I have no idea what it is. Even if it was in Portuguese, it would still be confusing to me"

Castroneves, 33, is hardly alone in being bedeviled by the details. Weeks before the start of the NASCAR season, Sprint Cup driver Elliott Sadler admitted he was unsure of the contents of his contract with Richard Petty Motorsports even as the team attempted to depose him from the No. 19 Dodge and replace him with A.J. Allmendinger. Sadler eventually retained his job by threatening possible legal action.

Patrick is determined not to be snared. It was a revelation late in coming.

"Number one, it's sad when you have to revert to the contract all the time because it should just be... you all just should be upstanding with each other," Patrick said, "but anyway, I was reading my contract this winter -- I'll be super honest -- I didn't know much about my finances. I didn't know about how much was coming in, where it was going, when it was coming and going. I would ask 'Could I afford this?' 'Can I get this money here?' '[Do] I want to do this?' Remember those commercials where knowledge is power? I really believe that now. The more I know, the less that I can be taken advantage of. So I learned about all my finances and stuff."

Entertainers in general and athletes in particular have long been the prey of the unscrupulous. Insurance schemes, bogus investments, and high margins siphon the riches earned by those unwilling or unable to defend themselves by becoming savvy with regard to their finances. Retired Sprint Cup champion Bobby Allison, 71, reportedly went bankrupt, and former drivers such as Sam Ard reached old age bereft of their health and earnings. But Castroneves' alleged financial missteps threaten to end his career in its prime or send him to prison.

Black said on Tuesday that Castroneves never attempted to skirt U.S. income tax, but intended to pay the tax on about $5 million in income in question after a decade-old deal was completed.

"All his taxes were properly done. They were properly paid," Black said.

Prosecutor Matt Axelrod claimed Castroneves, with the help of his sister and sports attorney Alan Miller -- who listed Sprint Cup driver Kyle Busch as a client until 2007 -- used a Panamanian corporation to evade taxes since 1999.

"When it came time to pay taxes on the millions of dollars that he made, he turned his back. He didn't pay," Axelrod said.

Prosecutors claim Miller helped Castroneves avoid paying taxes on $5 million from his initial contract with Penske Racing in 1999 by having it diverted under a deferred royalty deal to a Dutch company. Axelrod claims Miller asked for the revision to the contract when he learned Penske would withhold 30 percent of the $5 million in taxes.

Castroneves was to receive the money this May. The defense attorney said Castroneves would pay taxes upon receipt, while prosecutors say taxes were already owed, even though he'd not received the money.

"It was the only way they could achieve their goal of having Helio Castroneves illegally get his money tax-free," Axelrod said.

Castroneves' bind is a lesson to young drivers like Patrick, but it's one many veterans had to learn as they grew up in the sport.

Sprint Cup driver Tony Stewart, who oversees a portfolio that includes 16 business entities including, for the first time this year, a two-car Sprint Cup team, employs a squadron of managers to run his enterprises and utilizes Motorsports Management Inc. to coordinate his finances.

"When it comes to major decisions involving Tony's career, whether racing or business-related, autonomous decisions are seldom made," said Brett Frood, his former chief operating officer who now an executive vice president at Stewart-Haas Racing. "Diligence is performed and ideas are always bouncing around between Tony and his executive management team, with valuable feedback from (MMI) and his company."

Sprint Cup driver Jeff Gordon tasked his stepfather, John Bickford, with setting up and maintaining his business interests when he became instantly wealthy in his early 20s.

Patrick called Castroneves' situation unfortunate and described him as a "really nice guy" who "would do anything for you if you really needed it." If Castroneves is exonerated after what is expected to be a six-week trial, he should do something for an IRL that needs star power of his degree: get wiser about his finances and protect himself. He should do what Patrick is doing.

"Trust me, I am still a little lost, because it is not my forte, but I just started learning about different spreadsheets and things, the breakdown of where all my money goes and how much we spend here and there and so on," Patrick said. "Now I look at it and I'm like, "We spent how much on what? What's this? What's this category?" I think it's a really good healthy step into a mature direction for me, as a person. I should know."

Tuesday, March 3, 2009

Lawyer: Castroneves would pay in May

(by the Associated Press 3-3-09)

MIAMI -- Race car driver and "Dancing with the Stars" winner Helio Castroneves never sought to evade U.S. income taxes and planned to pay the Internal Revenue Service when he received $5 million from a deal made a decade ago, his attorney told a federal jury Tuesday.

Defense attorney Roy Black said in an opening statement that the Brazilian driver, a two-time winner of the Indianapolis 500, knows nothing about U.S. tax laws and relied on experts to handle his finances. Black said there was no scheme to hide money from the IRS.

"All his taxes were properly done. They were properly paid," Black told the 12-person jury.

Prosecutor Matt Axelrod disagreed, describing a series of allegedly fraudulent deals dating to 1999 involving a Panamanian corporation created to dodge taxes. Axelrod accused Castroneves' business manager-sister, Katiucia, and Michigan sports attorney Alan Miller of playing a role in the fraud.

"When it came time to pay taxes on the millions of dollars that he made, he turned his back. He didn't pay," Axelrod said.

The three are charged in a seven-count indictment with tax evasion and conspiracy, which could land each of them behind bars for more than six years. The trial is expected to last up to six weeks.

Central to the case is the ownership of the Panamanian entity, Seven Promotions. Black said it was formed by Castroneves' father to promote his son's early racing career and that the younger Castroneves had no ownership. Axelrod said it was set up to appear that way, and that all three defendants repeatedly lied about the race car driver's control of the business.

When Castroneves was hired in late 1999 to drive for Team Penske, the contract drawn up by Miller called for about $5 million to go to Seven Promotions. But Miller then asked Penske not to pay the money, saying he wanted it shifted under a deferred royalty deal to a Dutch company called Fintage Licensing B.V.

Black and Miller's lawyer, Robert Bennett, said that was legal, and that Castroneves will pay taxes on the money when he gets the money in May.

Axelrod said the deal was a diversion because Miller discovered Penske would withhold 30 percent of $5 million for taxes before transferring the money to Seven Promotions.

Axelrod claims even though Castroneves has not been directly paid the Penske money, he should have paid taxes long ago. The ultimate goal, the prosecutor said, was for Castroneves to leave the U.S. and escape the IRS.

"It was the only way they could achieve their goal of having Helio Castroneves illegally get his money tax-free," Axelrod said.

Black disputed the theory and said Castroneves lives in Coral Gables, a Miami suburb.

Prosecutors also claim Castroneves neglected to pay U.S. taxes on income from a sponsorship deal with the Brazilian company Coimex and that he didn't declare as income thousands of dollars worth of clothes and airline tickets he got from other deals.

Castroneves, 33, won the Indy 500 in 2001 and 2002 and the TV dance competition in 2007. He has been temporarily replaced on Team Penske by Australian Will Power pending the outcome of the trial. The Indy Racing League season begins April 5.

Monday, March 2, 2009

Tax trial begins for Castroneves

(by the Associated Press 3-2-09)

MIAMI -- On top of the world a few months ago, Brazilian race car driver and "Dancing with the Stars" champ Helio Castroneves faces possible prison time if convicted at a tax evasion trial that began Monday with jury selection.

Castroneves, a two-time winner of the Indianapolis 500, smiled broadly as he entered Miami's downtown federal courthouse. Prosecutors say Castroneves, his business-manager sister Katiucia and Michigan attorney Alan R. Miller conspired to hide about $5.5 million in income from the Internal Revenue Service using offshore accounts.

Castroneves claims he relied on experts to advise him on handling finances. He also says his father controlled a Panamanian entity called Seven Promotions at the heart of the prosecution's case.

Castroneves claims the money Seven Promotions received wasn't his tax liability because the income was for his father, who had financed and promoted his son's career for over 10 years.

Castroneves, his sister and Miller also deny acting "willfully" to evade taxes and that they took improper deductions.

Under federal sentencing guidelines, Castroneves, 33, could get more than six years in prison if convicted of conspiracy and tax evasion from 1999 to 2004. That would short-circuit a brilliant racing career that began in Sao Paulo, Brazil, where a youthful Castroneves broke into the sport by driving go-carts.

Before the trial, U.S. District Judge Donald Graham rejected defense efforts to introduce a large amount of racing memorabilia and numerous photos of Castroneves' rise from obscurity to the pinnacle of his sport.

"It seems to me that many of these exhibits are far afield of the issues in this case," Graham said.

Graham said he hoped to seat a jury of 12 people plus alternates by late Monday or Tuesday. Many prospective jurors said they had watched Castroneves either in a race or on the TV dance competition, which he won in 2007.

"I watched him every week on 'Dancing With The Stars' and you feel like you know the person," one female juror said. Asked by prosecutor Matt Axelrod if that would impact her ability to be impartial, the woman answered, "Probably."

Another male juror said he had called in to vote for Castroneves 12 times on the TV show. "I was a huge fan of his," the man said.

Defense questions focused mainly on whether jurors relied on professional expertise to file their taxes and whether they expected to pay the least amount possible under the law.

The trial is expected to take up to six weeks, and Castroneves has already been temporarily replaced on Team Penske by Australian driver Will Power for the Indy Racing League season that starts April 5 in St. Petersburg.

Two other prominent Latin American drivers -- Brazilian Tony Kanaan and Colombian Juan Pablo Montoya -- may testify on Castroneves' behalf, along with Miami philanthropist Adrienne Arsht.

Miller, a former professional football player turned attorney, has former Buffalo Bills quarterback and ex-U.S. House member Jack Kemp and racing mogul Roger Penske on his witness list.

The defense legal team also sports some big names: Miller is represented by Robert Bennett, who was President Bill Clinton's lawyer in the Paula Jones sexual harassment case; Roy Black, who represented radio host Rush Limbaugh in his prescription drug misuse case is there on behalf of Castroneves.

Castroneves, who lives in Coral Gables, won the Indy 500 in 2001 and 2002, then rocketed to even greater fame in 2007 by winning the television show dancing competition with partner Julianne Hough. Castroneves and his co-defendants were indicted Oct. 2.