A state trial court sentenced Peter Graf, the father of tennis star Steffi Graf, to three years and nine months imprisonment for evading about $7.4 million of taxes on his daughter’s income, as prosecutors who had asked for a stiffer sentence looked on in disappointment.
“He was stubborn and ambitious, and his ambitions misled him,” Judge Joachim Plass said of Peter Graf, a rags-to-riches former used-car salesman who helped turn his daughter into the world’s best woman tennis player.
Plass, head of the five-member trial panel, further said he could find no evidence that Steffi Graf had participated in any tax fraud. He recommended that an ongoing German investigation against her be halted.
Steffi Graf remains the subject of a tax investigation in the United States, however. And, as Judge Plass noted, she is also being investigated by the Women’s Tennis Assn., because evidence surfaced during her father’s trial that she had taken appearance money to play in certain tournaments, in violation of the WTA’s code of conduct.
Steffi Graf has continued to play tennis throughout the case and did not testify at the trial. Her father has so far served 16 months in “investigative custody,” but was allowed last November to post $3.3-million bond, surrender his passport, and go live at home.
The Graf tax-evasion scandal has aroused intense public interest in Germany, and several hundred curiosity-seekers stood quietly in front of the courthouse in Mannheim on Friday, hoping to catch a glimpse of the star athlete’s father as he came to hear his verdict and sentence.
The German income tax bite is already sharp, and with public funds for social programs running short, there is intense concern about who is paying their taxes, who is cheating, and how the laws ought to be changed to redistribute the burden.
Most German-born star athletes already have left the country for such tax havens as Monaco. Until the Grafs’ house was raided by tax authorities in May 1995 and Peter Graf was arrested the following August, Steffi Graf was seen as a kind of national hero because she had stayed on in Germany and appeared to be paying her “fair share.”
Even now, Steffi Graf has avoided much blame in public eyes by arguing that since she was only 14 when she started her career, she quite naturally let her father handle all of her personal finances. Even when she reached adulthood, she says, she continued to let him receive all of her earnings and file her tax returns.
She says she had no idea that he was grossly understating her income and in some years not filing tax returns at all.
Since the tax-evasion scandal broke, she has made back-tax payments of more than $13 million. It now appears she might have overpaid.
The prosecution had called for a sentence of six years and nine months for Peter Graf, who committed his fraud by creating shell companies, called Sunpark Sports, in the Netherlands and the Netherlands Antilles. He had then asked tournament officials, and the companies whose products Steffi endorsed, to channel her fees through these companies.
In his remarks Friday, Judge Plass said he thought Steffi Graf’s corporate sponsors should have suspected something was wrong when asked to send money to companies outside Germany.
“They obviously got wind of [the evasion], but you can’t accuse them of being an accessory,” he said, noting that Peter Graf had misrepresented the shell companies’ role and ownership to them.
The court also sentenced a tax advisor who helped Graf set up the fraud, Joachim Eckhardt, to two years and six months.
Many observers of the high-profile trial had been expecting hefty fines in addition to prison terms. But Plass said that since the Graf family assets were still blended, he couldn’t fine the father without affecting the non-indicted daughter.
The judge also pointed out that Graf had never been convicted of a crime before, that he had made his daughter “a good ambassador for Germany,” and that he was pushed into committing his crimes by others.
In earlier trial testimony, Peter Graf had accused the tax officials of his home state, Baden-Wuerttemberg, of telling him that he could get special tax relief as an inducement for keeping his superstar daughter in Germany.
The prosecutors said Friday that they would appeal Graf’s sentence--a move that means Graf will remain more or less a free man for now, because the German legal system allows some convicted defendants to stay at home while their sentences are being appealed.
Graf’s main defense attorney, Franz Salditt, said he viewed the judge’s decision with “great satisfaction.”
Christian Retzlaff of The Times’ Berlin bureau contributed to this story from Mannheim, Germany.