Columbus Day edition

What a strange day -- courts are closed, but schools are open. It only took 10 minutes to get downtown on US1... Apparently, the DBR didn't take the day off. All kinds of fun stuff today, including Vanessa Blum's story on billing rates and her awesome video report:



There's also a story securities cases, which SFL likes because of the new Scott Dimond photo.

And John Pacenti dials in on UBS account holders seeking amnesty.

Jay Weaver at the Herald was busy this weekend on Alan Mendelsohn and Helio Castroneves.

Canes are #9... Dolphins will beat the Jets tonight. And the blog fantasy team racked up a win. And that's your Columbus day edition.

Unbelievable

So dear readers, now that Helio Castroneves has won the Indy 500, Dancing with the Stars, and his federal criminal case, I have this question for you:

What was more difficult to win?
	The Indy 500
	Dancing with the Stars
	Federal Criminal Case
pollcode.com free polls

``The jury finds him not guilty, then he wins the pole position at Indy, and now the government drops the case completely..."

"...All he has to do now is win the race and climb the fence.''

That's Roy Black's reaction after the government announced today that it would drop the final charge pending against Helio Castroneves. Jay Weaver has the details here.

The government did the right thing, as I explained before:

I would be really surprised if the feds chose to retry this one count. The sense is that Helio won the trial and was vindicated, so a retrial would look petty and vindictive. Plus, there's no reason to believe that the next jury would have any more reason to find Helio guilty after the first jury rejected almost the entire case.

Plus, now I get to post another Helio/Julianne picture.

BTW, Rumpole, where is my Benjamin?

Roy Black interviewed on Helio case

Tom Withers, who runs the awesome Federal Criminal Defense Blog out of Savannah, Georgia, has this great interview of Roy Black. Check it out.

Here's the intro question and answer:

Q: Thanks for your time and congratulations on the not guilty verdicts in the Helio Castroneves case. Any indication from the government on whether they will retry the conspiracy count against Castroneves and his sister?

Mr. Black: No, but in our view, the government can't retry Helio on conspiracy because of collateral estoppel. If the jury found no tax deficiency on the substantive evasion counts, then there was no unlawful plan. An agreement to comply with the tax code is not a crime. Or, if the jury found no willfulness on the evasion counts, then there can be no willfulness on the conspiracy. Either way we win. At a minimum we get interlocutory review in 11th Circuit before we start any litigation on this issue, we will meet with the government and see what their views are. There are civil remedies the government should be satisfied with.

Here's a snippet about a funny part of the trial with Bob Bennett:

Q: How was the experience of trying this case with Bob Bennett out of Washington, D.C.? Anything you gained from observing his courtroom demeanor/preparation?

Mr. Black: I have known and worked with Bob before and he is a wonderful lawyer. Not just that but the has a great sense of humor which really connects with the jury. One of the funnier parts of the trial dealt with Hugo Boss suits. The government claimed Helio should have reported the income from getting free suits from them. Our defense was that Hugo Boss was a sponsor of the racing team and Helio had to wear the suits. The claim was pretty petty. The total retail value of the suits was around $12,000. The summary government expert even admitted the amount was not material to the return. I cross-examined the CEO of Hugo Boss about how wonderful their suits were and that they wanted to show them off by having a slim good looking guy like Helio wear them. Then Bob got up, stuck his stomach out (which I can attest goes pretty far) and asked how would the suits look on his body. The jury got a good laugh out of that.

Will the feds retry Helio Castroneves?

As you all know by now, the jury acquitted Helio Castroneves and his co-defendants of all counts, save for one conspiracy count. Technically the government has the ability to retry Helio on that count. But will they?

In the past, this U.S. Attorney's office has retried defendants after hung juries -- for example, we are on the third Liberty City trial, and the office retried the Joe Cool case after it hung. But this is different because the jury acquitted Helio of every substantive count. I would be really surprised if the feds chose to retry this one count. The sense is that Helio won the trial and was vindicated, so a retrial would look petty and vindictive. Plus, there's no reason to believe that the next jury would have any more reason to find Helio guilty after the first jury rejected almost the entire case. What say you readers -- should the U.S. Attorney's office retry Helio on the one hung count?

(p.s. Rumpole, let me know if you want to double down on your last bet).

Helio Castroneves found not guilty

All three defendants found not guilty. The jury hung on one count as to Helio... I can't imagine that they would retry it. Congrats to him and his defense team.

Rumpole, get that Benjamin ready

The jurors in the Helio case asked for the opening statements to be read back today. Judge Graham said no, telling the jurors that opening statements weren't evidence. From Jay Weaver's article:

The jury said it reached a verdict on two tax-evasion counts against the 33-year-old Castroneves and deadlocked on five others -- including the leading conspiracy charge.
The panel also said it reached a verdict on one charge against the driver's sister/manager, Katiucia Castroneves, 35, but deadlocked on the other six.
Jurors said they did reach a verdict on four counts against Castroneves' sports lawyer, Alan R. Miller, 71, of Michigan, including the main conspiracy charge. Miller was not charged in the three other tax-evasion counts in the indictment.
One of Castroneves' lawyers, Roy Black, urged the judge to bring the deliberations -- now in their sixth day -- to a close. He asked Graham to announce the partial verdicts and to declare a mistrial on the deadlocked counts.
The judge refused.
Miller's attorney, Robert Bennett, then asked Graham if he would at least announce the jury's verdict for his client, saying the anticipation was ``sheer agony.''
Federal prosecutor Matt Axelrod opposed disclosure, raising concern about courtroom ''reaction'' if the jury's verdict on Miller was revealed at this point.
The judge sided with the government, denying Bennett's request.
It appears from the defense lawyers' requests in court that they're confident Miller may have been acquitted and that the jury may also have acquitted the Castroneves siblings on a least a few of the tax-evasion charges. A mistrial declared on the remaining counts would be an additional setback for the government.

Partial Verdict in Helio Castroneves case

The jury has reached a verdict on all counts as to the lawyer, Alan Miller. That verdict form has been placed in a sealed envelope. The jury has also reached verdicts on 3 counts as to Helio Castroneves and 2 counts as to his sister. The jury has been told to continue deliberating on the other 5 and 6 counts, respectively. Judge Graham gave the infamous "Allen charge" to the jury, otherwise known as the dynamite charge. More to come soon, I bet...

Back from Spring Break

Well, spring break is over, and you can feel it -- it already feels like summer outside. I'm already missing the blast of cool air from last week.

This week, we'll be sure to hear the Castroneves verdict.

Last week, I missed the 11th Circuit's opinion in Gen. Noriega's case. Looks like he is headed to France (!!). The Federal Criminal Defense Blog -- run by friend of blog Tom Withers -- has all the details.

Liberty City is still moving along. They've had 36 trial days -- Defendant Batiste is on the stand now...

Vanessa Blum covered the Riolo Ponzi scheme here. She raises the interesting question of whether trustees and receivers do more harm than good for investors. South Florida Lawyers covers a similar question here. Friend of blog David Rothstein in the Blum article:

As attorney David Rothstein of Miami put it: "People who perpetrate Ponzi schemes typically don't keep very clean records."Rothstein represents victims of another alleged Ponzi scheme under investigation in South Florida. In that case, federal regulators say George Theodule of Lake Worth raised more than $40 million, using fresh funds to repay earlier investors.

Theodule misappropriated at least $3.8 million to purchase expensive luggage, electronics, artwork and jewelry, according to a civil lawsuit filed in December by the U.S. Securities and Exchange Commission.Theodule's attorney, Russell Weigel of Miami, said his client disputes the allegations.To the frustration of his investors, Theodule has not been charged with any criminal activity. And according to Rothstein, it's unknown how much of the money entrusted to Theodule is left."Typically, when people live large, the money evaporates," Rothstein said.

Finally, you'll notice a new comment policy on the blog. You gotta sign in first. You can still post under an alias, but I think this will add a bit more accountability. We'll see how it works.

Helio Castroneves case to jury

Here's AP coverage and Sun-Sentinel coverage of the closings. Here's the govt case:

Racing champion and reality TV star Helio Castroneves took part in "a pattern of deception" with his sister and lawyer to avoid paying taxes on more than $5.5 million, a federal prosecutor told jurors Thursday in closing arguments.Prosecutor Jared Dwyer said the group had wealth and success but thought "the rules didn't apply to them" when it came to paying taxes. So, Dwyer said, they funneled Castroneves' income into shell corporations and offshore accounts to hide it from the Internal Revenue Service and shirk a tax bill of roughly $2.3 million."Mr. Castroneves wanted to take advantage of all the opportunities in this country but skipped out on his responsibilities," Dwyer said.

The defense:

In closing arguments, defense lawyers for Castroneves insisted he did not cheat on his taxes and had followed the advice of his attorneys and accountants. They reminded jurors Castroneves has not collected most of the money at issue and would only owe taxes when he is paid."There are mistakes and ignorance at times, but at the end of the day there is no crime," said attorney David Garvin.
***
According to prosecutors, after learning the U.S. firm would withhold 30 percent of his contract for the IRS, Castroneves and his co-defendants diverted the income to a Dutch company to avoid the deduction. Although Castroneves has not yet received the money, he still owes taxes under the constructive receipt rule, Dwyer told jurors.But defense lawyer Roy Black called the government's reasoning absurd. "You pay the taxes when you get the money, that's the bottom line," Black said.The jury is expected to begin weighing the evidence on Friday.

Helio Castroneves closing arguments on Thursday

Bad times for lawyers

The Herald's business section has a long piece on how the tough economy is affecting lawyers. And Julie Kay makes a special guest appearance here. (UPDATE -- Julie wrote the long piece as well, but they cut her name out of the byline!). One of the recruiters quoted in the article has this happy thought for lawyers who have been laid off: "Think about learning a new practice area or even a new career."


In other news, Jay Weaver has the latest on the Helio Castroneves case. Here's a small part of the article and the necessary picture:

Castroneves' lawyers maintain he owes no taxes on the Coimex earnings because the payments were made to his father, who lives in Brazil and once supported his son's career. As for the racer's Penske income, the money went to a Dutch annuity account -- income that Castroneves will start receiving next month, when he intends to pay his taxes.
The prosecution's portrayal of Castroneves as a chiseler could undercut his charismatic profile -- he's also known for winning the Dancing With the Stars reality TV show -- in the eyes of 12 federal jurors. As his trial wraps up this week, they will soon decide the fate of Castroneves, 33, his sister/manager, Katiucia Castroneves, 35, and his attorney, Alan R. Miller, 71, of Michigan.
They're charged with conspiring to evade paying taxes on $5.5 million in income between 1999 and 2004. If convicted, they could each face five to 10 years in prison.
Such an outcome would crush the racing star's career.
Whatever their decision, the jurors' verdict will come just after the start of the IndyCar Racing season, which got under way Sunday with the Honda Grand Prix of St. Petersburg -- a race that Castroneves won in 2006 and 2007. For this season, Penske has replaced Castroneves, a two-time Indy 500 winner, with Will Power.

Prosecution rests in Castroneves trial

Curt Anderson has the story.

So, will Helio testify?

Although I am blogging this from my Blackberry, I promise I am not doing it inside the courtroom!

Helio Castroneves

I was at the courthouse today and popped into the Castroneves trial. I lasted there about 5 minutes. After the DOJ prosecutor asked the following question, I left: "Now, we've been discussing general ledgers for some time -- please explain to the jury what a general ledger is."

I promise that I am blogging this back at my office and not inside the courtroom.

Here's more on that issue from the Palm Beach Post.

And now I get to post another picture:

Speaking of the Castroneves case, Judge Graham is being honored today at the University of Miami: he's receiving the William M. Hoeveler Award for ethics and leadership in the legal profession.

Thanks South Florida Lawyer!

Well, after a month of working around the clock, I'm back. It was almost impossible to blog during the trial, so thankfully South Florida Lawyer agreed to step in. He was fantastic and kept the blog alive. Thanks! You are welcome here anytime!

So let's get right back to it. The new courthouse is busy with lots of trials. (As for trying a case in the new courthouse, I thought the technology was great and the layout of the courtroom wasn't as bas as I thought it would be. I think the downsides of the courthouse so far are: 1) no cafeteria and 2) cramped security checkpoint to get in.)

The highest profile case is USA v. Helio Castroneves before Judge Graham. Jay Weaver had a Sunday report in the paper here:

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.

Next up is the penalty phase in the case of the killing of the Escobedo family along Florida's Turnpike. Here's Vanessa Blum's article:

The prospect of history will hang over a West Palm Beach federal courtroom Monday as 12 jurors weigh whether two men should receive the death penalty for executing a family of four along Florida's Turnpike.The same jury found Daniel Troya and Ricardo Sanchez Jr. guilty on March 5 of armed carjacking resulting in the deaths of Luis Escobedo, 28; his wife, Yessica Guerrero Escobedo, 25; and their sons, Luis Julian, 4, and Luis Damian, 3.No federal defendant in Florida has been condemned to die since Congress reauthorized capital punishment in 1988. However, this case could be different because the deaths of young children tend to sway juries, attorneys said.

And of course, here's the obligatory Helio picture, with Julianne of course.

Helio Trial Resumes Today.

Hi folks, blah blah blah.

I see the Helio trial resumes today:

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-Chowdrey, 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 of1999 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 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."

Hmm, that's it?

I didn't do too well with trusts and such when I had Professor Gaubatz (RIP), but this strikes me as a tough case for the prosecution.

UPDATE: Pete Yanowitch testifies --

Attorney Peter Yanowitch testified Tuesday that he was involved in contract talks between Castroneves and the Hogan racing team in 1999. Yanowitch says Castroneves wanted his money to go to a Panamanian entity that he owned.

IRS Targeting All Dancing Race Car Drivers?

SFL here -- David is still busy doing something involving the 6th Amendment and government lawyers who tape attorney-client conversations and forget to tell anybody about it.

So let's get on to the important stuff.

The "target" theme appears to be what Roy Black is running with in the Helio trial, according to this Herald report:

But the defense team countered the prosecution's case was fueled by the IRS' drive to target the 33-year-old celebrity.

''They have come up with a fiction,'' Castroneves' attorney, Roy Black, said in his opening statement, saying his client's tax obligation was legitimately deferred until May.

''When he won Dancing with the Stars [in 2007], that made him an even bigger target to the IRS,'' Black said.

Very interesting.

All I know is if 2008 winner Brooke Burke takes up racing, she darn well better have her taxes in order.

New Helio Photo Posted!

SFL here, reporting from inside Judge Graham's crowded courtroom with this exclusive photo of jury selection in the Helio Castroneves trial.

Ok ok, here's an actual story from The Indy Channel on what's going on:

"I wish I could be in a racecar, because I'm in control. Here, I'm not in control at all," Castroneves said. "I trust the people that are handling all of my business."Defense attorneys said they will try to show that an off-shore shell corporation involved in the case, Seven Promotions, was operated by Castroneves' father, not Helio.The trial is expected to last up to four weeks. Several luminaries are expected to testify at the trial, including Roger Penske, Jimmie Johnson and Rep. Jack Kemp.

Interesting, the bolded language -- that's what I always tell my clients when we are contemplating a trial vs. settlement (well, except for the race car bit).

And Jack Kemp? Man, this guy is bringing the firepower!

News and Notes

1. Pharmed sentencing: 9 years, top of the guidelines. From the Herald article:

Saying she was concerned about maintaining community values, U.S. District Judge Patricia A. Seitz Wednesday sentenced Carlos and Jorge de Céspedes to nine years in prison.
Despite testimony that they had given millions to charity, the judge decided the brothers -- who built up and then destroyed the Pharmed medical supply company -- should be sentenced at the top of the recommended guidelines of seven to nine years.
She said the brothers had been ''two-faced for too long'' and noted that the fraud against Kendall Regional Medical Center had gone for 14 years. The brothers had also pleaded guilty to a count of tax evasion. They will serve the sentences concurrently.


2. Helio Castroneves: The already great legal team adds superstar Roy Black to represent Helio along with David Garvin. Roy's partner Howard Srebnick represents sister Kati, and Bob Bennett and Lily Ann Sanchez represent the third defendant, an attorney. AUSA Matt Axelrod represents the government.

"Dancing with the U.S. Marshals''

Now that's funny, Judge Turnoff!

According to Larry Lebowitz's Herald article, Judge Turnoff allowed Helio Castroneves to travel to Australia later this month for a race, over the government objection. Turnoff explained that Castroneves would be "dancing with the U.S. Marshals" if he fled.

''I'm very happy,'' a smiling Castroneves said after the hearing. ``I want to race. This is what I do. I'll do my best to bring a trophy home for the judge.''