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ESPN FC  By ESPN staff
May 14, 2014

'Tax evasion' investigation into Scolari

LISBON, Portugal -- Brazil coach Luiz Felipe Scolari is under criminal investigation in Portugal for suspected tax fraud and money laundering, according to U.S. court documents obtained Wednesday by The Associated Press.

Brazil boss Luiz Felipe Scolari watches on during the World Cup draw.
Scolari has denied any wrongdoing.

Portuguese tax authorities suspect 7.4 million euros ($10.1 million) that was transferred from Portugal to a bank in Miami between 2003 and 2008, when Scolari was coach of Portugal's national team, were local income that the Brazilian did not declare.

A U.S. district judge last week granted Portugal's request for a series of Miami bank accounts to be examined, Florida court documents show. An assistant U.S. attorney was placed in charge of collecting the evidence.

Tax fraud and money laundering together carry a maximum penalty of 17 years in prison in Portugal, and the investigation is an unwelcome distraction for the Brazil coach as his country prepares to host the World Cup.

The 65-year-old Scolari denied any wrongdoing after the court documents were first reported Monday by OffshoreAlert, a Florida-based site specializing in fraud investigations.

"I carried out all my tax returns correctly," Scolari said in a statement reported by the Folha de S. Paolo newspaper. "In every country I worked in, I always declared my income. I am absolutely convinced that my statements are correct."

Officials at the Portuguese Football Federation, which employed Scolari as national team coach, did not immediately reply to a request for comment.

FIFA had no comment on the investigation. FIFA's code of ethics can be applied to conduct "that damages the integrity and reputation of football and in particular to illegal, immoral and unethical behavior."

Sanctions for breaching the code range from a warning to a ban from any football-related activity.

Portuguese investigators want to know who were the "real beneficiaries" of numerous payments made into the Miami accounts over the six-year period.

The money went to accounts held by Netherlands-based Flamboyant Sports C.V., London-based Chaterella Investors Limited and Taliston Financial Corp., a British Virgin Islands company, according to prosecutors. Those companies owned, at various times, non-exclusive rights to the use of Scolari's name, image and voice, they say. Transfers were also made to Miami accounts in the name of Scolari himself and of his son Leonardo.

The investigators suspect Scolari used those companies and bank accounts to hide income from the Portuguese tax authorities.

Portuguese investigators sent their initial request for assistance to the U.S. Justice Department in Washington in late 2012. It was not clear why the request was submitted to a judge only last week. The judge endorsed the request last Thursday.

The Portuguese attorney general's office acknowledged in an email to the AP that the Department for Criminal Investigation and Prosecution has opened an inquiry into Scolari and said investigators have also asked Britain, the Netherlands and Brazil for help. No further details were available. In Portugal, ongoing investigations are subject to a judicial secrecy law which forbids the release of details of the case.

Scolari, who is Brazilian, led his country's national team to the World Cup title in 2002. He will again coach the Brazilian team at this year's World Cup.

He has also coached in Japan and the Middle East. He was coach of Premier League club Chelsea between 2008-09.

Scolari was Portugal's most successful national team coach. He guided the Portuguese to the final of the 2004 European Championship and to the semifinals of the 2006 World Cup. Along the way, he gave Cristiano Ronaldo his national team debut and made him captain.

To help pay the salary of a World Cup-winning coach -- and to prevent him from being poached by other clubs and countries which offered him contracts, including England -- the Portuguese federation signed multimillion-dollar sponsorship deals, including with Nike and two Portuguese banks. Scolari, whose salary in Portugal was never made public, appeared in advertising campaigns.

Portugal's government has set up special investigative teams and increased penalties in an effort to crack down on tax evasion. The country needed a 78 billion euro ($107 billion) bailout in 2011 after high debts pushed it to the brink of bankruptcy.

In neighboring Spain, where authorities have also targeted tax evaders, officials have brought tax fraud charges against Lionel Messi and his club, Barcelona.

Information from the Associated Press was used in this report.

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