A federal grand jury in Florida had indicted Castroneves, a Brazilian native who lives in Coral Gables, FL, on one count of conspiracy to defraud the United States of income taxes and six counts of income tax evasion on Thursday. Each count carries a maximum five-year prison sentence.
Castroneves entered the plea after being led into a Miami courtroom in both handcuffs and leg chains and weeping during the court appearance, according to People.
He was ordered released on $10 million bail -- $8 million of which reportedly came from a personal account in the Netherlands, the same country where an offshore company he allegedly routed $5 million he failed to pay taxes on is located.
"He surrendered his passport and has permission to travel to Atlanta for his race Saturday and anywhere in the U.S. for business," Castroneves lawyer Mark Seiden toldPeople.
According to the government's indictment, Castroneves allegedly fraudulently used an offshore corporation in the Netherlands to avoid paying income taxes on $5 million worth of licensing income from Penske Racing Inc. -- the IndyCar racing team he drives for -- between 2000 and 2002. Castroneves also allegedly failed to report $550,000 worth of sponsorship income from Coimex, a Brazilian import and export company, between 1999 and 2001. In addition, he also allegedly filed six false federal income tax returns between 1999 and 2004.
Katiucia Castroneves, Castroneves' sister and business manager, was also indicted on all seven counts. In addition, Alan R. Miller, Castroneves' attorney, was also indicted on three counts of tax evasion.
"Taxpayers, small and large, famous and not famous, should be aware of the enormously severe consequences they face if they fraudulently use offshore accounts to hide income, including potentially going to prison, paying back all their taxes plus interest and penalties, and being branded a felon for the rest of their lives," said Nathan J. Hochman, Assistant Attorney General of the Justice Department's Tax Division.
Castroneves won last fall's Dancing with the Stars edition with professional partner Julianne Hough. Although they reportedly receive a base fee and weekly stipends for their participation, Dancing with the Stars' participants do not, unlike most other reality competition winners, receive a cash prize for winning the competition.
Katiucia Castroneves and Miller also appeared in court on Friday but did not enter pleas. Katiucia Castroneves was ordered released on $2 million bail while Miller's bail was set at $250,000, according to The Associated Press.
According to his lawyer, Castroneves did nothing wrong.
"Helio Castroneves is a superb and accomplished professional race car driver," Seiden toldPeople. "He is not a tax lawyer and not an accountant. He relied in good faith on competent professionals for tax advice. We don't feel he did anything wrong and will be vindicated in court."
Miller's attorney also proclaimed his client's innocence.
"He acted at all times completely lawfully. He is 1,000 percent innocent," Michael Tein, an attorney representing Miller, told The AP. "This case is pure harassment by the government in order to try to indict a famous person and get press."
Katiucia Castroneves' lawyer did not respond to a request for comment, according to The AP.
Both Seiden and Penske Racing still expect Castroneves to participate in the IndyCar race in Atlanta on Saturday.
"We totally support Helio and are gearing up for the 10-hour car race this Saturday in Atlanta," Penske Racing executive Bed Denker, told People. "We will see him in Atlanta Saturday for the race."