Entertainment

MIAMI (CBS) ― Race car driver and "Dancing With The Stars" winner Helio Castroneves pleaded not guilty Friday in Miami federal court on tax evasion and conspiracy charges.

The 33-year-old race car driver, who appeared in court in handcuffs and leg chains, was ordered released on $10 million bail. His lawyer, Mark Seiden, said Castroneves would depart later in the afternoon for a weekend race in Atlanta, reported CBS station WFOR-TV in Miami.

"We would enter a plea of not guilty," said Seiden, standing alongside a visibly shaken and frowning Castroneves.

Terms of Castroneves' release allow him to travel for work in the United States but not abroad, meaning he will likely miss a race later this month in Australia, Seiden said.

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

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

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

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

Prosecutors say Castroneves used offshore accounts to illegally avoid paying taxes on about $5.5 million in income from his racing career.

The indictment charges that Castroneves illegally concealed income from Penske Racing Inc. and the Brazilian firm Coimex International S.A. Neither company is charged with any wrongdoing. According to the indictment, his racing sponsors were paying his off-shore accounts in Panama, the Netherlands and Switzerland. The IRS says early on Castroneves declared he made just $50,000, instead of his actual salary totaling $600,000.

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

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

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

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

"This case sends a clear message that the IRS is committed to vigorously enforcing the tax laws and stopping offshore tax evasion," IRS commissioner Doug Shulman said.

Alan R. Miller's attorney, Michael Tein, said prosecutors acted "recklessly" in bringing the charges and said Miller has always had "an absolutely stellar" legal reputation.

"He acted at all times completely lawfully. He is 1,000 percent innocent," Tein said. "This case is pure harassment by the government in order to try to indict a famous person and get press."

Attorney Mark Seiden released the following statement on behalf of Castroneves Thursday night: "Helio Castroneves is a very competent and talented professional race car driver. He is not an accountant or a tax lawyer. He relied on first class tax lawyers for tax advice. It's our position that he did nothing wrong, and we look forward to our day in court."

Castroneves, a native of Brazil who lives in a $2.3 million Coral Gables mansion, is a two-time winner of the Indianapolis 500 and finished second this year in the IndyCar Series points standings. He and partner Julianne Hough won the 2007 "Dancing With The Stars" television reality show competition.

Castroneves recently signed on with "Entertainment Tonight" to be a correspondent for some episodes of this year's "Dancing With The Stars" show. He did a similar stint last year.

He has raced for Team Penske since 2000, capturing Indy 500 victories in 2000 and 2001, becoming the youngest driver, 27, to win the famous race twice. Castroneves has recorded a total of 18 victories and 43 top-three finishes, according to Penske's Web site.

(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)