The key issues, arguments in Lionel Messi's tax fraud case

Could Messi be found guilty of tax fraud? SI legal expert Michael McCann sheds light on the case and how each side will argue.

Michael McCann | Jan 20, 2016

The key issues, arguments in Lionel Messi's tax fraud case /

Did Barcelona star Lionel Messi collaborate with his father, Jorge Horacio Messi, in a criminal scheme to avoid paying over €4 million in taxes to the government of Spain? Or was the 28-year-old Argentina captain a mere innocent and unaware bystander as his father managed all of the money and the accompanying bank accounts?

Messi and his father, who together have paid more than €5 million to the Spanish government in efforts to remedy unpaid taxes and related interest fees, are scheduled to stand trial in Barcelona between May 31 and June 3 for the crime of tax evasion. If convicted, Messi could be sentenced to a prison term, with the state attorney suggesting a sentence of as long as a couple of years. Given that Messi lacks a criminal record, any sentence would likely be shorter than the term sought by the state attorney.

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Generally speaking, tax fraud refers to when a taxpayer intentionally or knowingly fails to pay taxes. Under Article 305 of the Spanish Criminal Code, tax fraud refers to “he who by action or omission defrauds the Public Treasury” of at least €120,000.

There is debate in Spain about how the word “defraud” should be interpreted and the extent to which it requires intent or knowledge for proof of guilt.

Still, under a conventional understanding, tax fraud is different from when a taxpayer fails to pay taxes because of ignorance or unfamiliarity, such as when a taxpayer misapplies applicable tax rates or misuses deductions. Tax fraud normally means the taxpayer actually knew better and tried to scheme the system.

Messi’s chief defense is that he did not know better and, just importantly, could not have known better. He maintains that his father has always handled his finances. Further, Messi insists that he automatically goes along with father’s recommendations on questions about investments and related financial transactions. Messi evidently trusts his dad and his dad’s business instincts.

Notwithstanding this tax controversy, the Messis’ father-son arrangement has seemingly worked well. With the father handling the business side of his son’s career, Lionel Messi has expended his time and energy on becoming arguably the world’s best player. He is also one of the wealthiest athletes on Earth, with a net worth reportedly in the ballpark of $200 million.

Best photos of Lionel Messi throughout the years

A young Lionel Messi poses for a photo in Argentina circa 1993.

Lionel Messi celebrates after scoring Argentina's second goal against Venezuela during a South American Under-20 Championship game on Jan. 13, 2005 in Armenia, Colombia.

Lionel Messi flips into a pool during a relaxed practice of Argentina's Under-20 soccer team on Jan. 14, 2005 in Pereira, Colombia.

Lionel Messi celebrates with the trophy after Argentina won the FIFA World Youth Championships over Nigeria on July 2, 2005 in Utrecht, Netherlands.

Lionel Messi poses with the Golden Boy trophy awarded by Italian magazine 'Tuttosport' distinguishing the best player under-21 on Dec. 14, 2005 in Barcelona, Spain.

Barcelona's Lionel Messi, Ronaldinho and Rafael Marquez celebrate after defeating Espanyol to win the Spanish League on May 6, 2006 at the Camp Nou stadium in Barcelona, Spain.

Khalid Boulahrouz and Lionel Messi challenge for the ball during the World Cup Group C soccer match between the Netherlands and Argentina on June 21, 2006 at the World Cup stadium in Frankfurt, Germany.

Barcelona's Lionel Messi scores with his hand during a Spanish League match against Espanyol on June 9, 2007 at the Camp Nou stadium in Barcelona, Spain. Messi continued to draw comparisons with Argentine soccer legend Diego Maradona who scored in similar fashion during a quarterfinal World Cup match against England in 1986.

Argentina's Lionel Messi plays the ball during the 2008 Summer Olympics Men's Soccer semifinal against Brazil on Aug. 19, 2008 at Beijing Workers' Stadium in China.

Lionel Messi speaks with the media upon his arrival at the Buenos Aires International Airport on May 30, 2009.

Argentina's Lionel Messi plays the ball during the FIFA World Cup Group B match against South Korea on June 17, 2010 at Soccer City Stadium in Johannesburg, South Africa.

Argentina head coach Diego Maradona talks with Lionel Messi as they celebrate their victory over South Korea in the FIFA World Cup Group B match on June 17, 2010 at Soccer City Stadium in Johannesburg, South Africa.

Argentina's Lionel Messi plays the ball during the FIFA World Cup Round of 16 match against Mexico on June 27, 2010 at Soccer City Stadium in Johannesburg, South Africa.

Marcos Delgado/Clasos.com/LatinContent/Getty Images

Lionel Messi sits on the beach with girlfriend Antonella Rocuzzo on July 20, 2010 in Cancun, Mexico.

Lionel Messi and girlfriend Antonella Rocuzzo swim with dolphins at the Delphinus aquarium on July 24, 2010 in Playa del Carmen, Mexico.

Barcelona's Lionel Messi from vies for the ball with Getafe's goalkeeper Jordi Codina during their La Liga match on Nov. 7, 2010 at the Coliseum Alfonso Perez in Getafe, near Madrid, Spain.

Barcelona's Lionel Messi celebrates with teammates after scoring against Real Madrid during their semifinal, 1st leg Champions League soccer match on April 27, 2011 at the Santiago Bernabeu Stadium in Madrid, Spain.

Barcelona's Lionel Messi reacts after scoring against Osasuna during their La Liga match on Sept. 17, 2011 at the Camp Nou stadium in Barcelona, Spain.

2012-0421-Lionel-Messi-Pepe-Sergio-Ramos-Fabio-Coentrao.jpg — Daniel Ochoa de Olza/AP

Barcelona's Lionel Messi duels for the ball with Real Madrid's Pepe, Sergio Ramos and Fabio Coentrao during their La Liga match on April 21, 2012 at the Camp Nou stadium in Barcelona, Spain.

Argentina's Lionel Messi celebrates with Gonzalo Higuain after scoring against Ecuador during their World Cup qualifying match on June 2, 2012 in Buenos Aires, Argentina.

Carlos M. Saavedra for Sports Illustrated

Argentina's Lionel Messi makes a header during an International Friendly against Brazil on June 9, 2012 at MetLife Stadium in East Rutherford, N.J.

Barcelona's Lionel Messi celebrates after scoring against Real Madrid during their La Liga match on Oct. 7, 2012 at the Camp Nou stadium in Barcelona, Spain.

Barcelona's Lionel Messi smiles during a news conference after receiving his Golden Boot award in recognition for scoring the most goals in Europe's domestic leagues on Oct. 29, 2012 in Barcelona, Spain.

2013-0116-Lionel-Messi-FIFA-World-Player-of-the-Year-awards.jpg — Emilio Morenatti/AP

Barcelona's Lionel Messi poses with his four FIFA Men's World Player of the Year awards before a Copa del Rey match against Malaga on Jan. 16, 2013 at the Camp Nou stadium, in Barcelona, Spain. Messi received the award for a record-breaking fourth successive year.

Barcelona's Lionel Messi kicks the ball during their La Liga match against Rayo Vallecano on March 17, 2013 at the Camp Nou stadium in Barcelona, Spain.

Barcelona's Lionel Messi celebrates scoring the opening goal during their UEFA Champions League quarterfinal match against Paris Saint-Germain on April 2, 2013 at Parc des Princes in Paris, France.

2013-0519-Lionel-Messi-son-Thiago-Spanish-League-trophy.jpg — David Ramos/Getty Images

Barcelona's Lionel Messi holds his son Thiago as they sit next to the trophy after winning the La Liga match against Real Valladolid on May 19, 2013 at Camp Nou stadium in Barcelona, Spain.

Barcelona's Lionel Messi plays the ball during their La Liga match against Espanyol on March 29, 2014 at Cornella-El Prat stadium in Cornella de Llobregat, Spain.

Argentina's Lionel Messi appears on the June 9, 2014 cover of the World Cup Preview Issue of Sports Illustrated.

Argentina's Lionel Messi celebrates after scoring his team's second goal during the FIFA World Cup Group F match against Bosnia-Herzegovina on June 15, 2014 at Maracana Stadium in Rio de Janeiro, Brazil.

Argentina's Lionel Messi celebrates with teammates Angel di Maria and Marcos Rojo after scoring their first goal during the FIFA World Cup Group F match against Nigeria on June 25, 2014 at the Estadio Beira-Rio in Porto Alegre, Brazil.

Belgium's Vincent Kompany and Argentina's Lionel Messi fight for the ball during the FIFA World Cup quarterfinal match on July 5, 2014 at the Estadio Nacional in Brasilia, Brazil.

Barcelona's Lionel Messi scores his team's fourth goal during the La Liga match against Granada CF on Sept. 27, 2014 at Camp Nou stadium in Barcelona, Spain.

Barcelona's Lionel Messi celebrates with teammates after scoring his team's fourth goal during the La Liga match against Sevilla FC on Nov. 22, 2014 at Camp Nou stadium in Barcelona, Spain.

Alexander Hassenstein/FIFA via Getty Images

FIFA Ballon d'Or nominee Lionel Messi poses for a portrait prior to the FIFA Ballon d'Or Gala on Jan. 12, 2015 at the Park Hyatt hotel in Zurich, Switzerland.

Barcelona's Lionel Messi attempts a bicycle kick against Valencia's Nicolas Otamendi during their La Liga match on April 18, 2015 at the Camp Nou stadium in Barcelona, Spain.

Barcelona's Lionel Messi plays with his son Thiago after the La Liga match against Deportivo La Coruna on May 23, 2015 at Camp Nou stadium in Barcelona, Spain.

Barcelona's Lionel Messi kisses the trophy after the Champions League final match victory over Juventus F.C. on June 6, 2015 at the Olympiastadion in Berlin, Germany.

Argentina's Lionel Messi kicks the ball during their Copa America semifinal match against Paraguay on June 30, 2015 at the Estadio Municipal de Concepcion in Chile.

Barcelona's Lionel Messi scores his side's second goal past Roma goalkeeper Wojciech Szczesny during their Group E Champions League match on Nov. 24, 2015 at the Camp Nou stadium in Barcelona, Spain.

Messi poses for his second Sports Illustrated cover prior to the 2016 Copa America Centenario in the United States.

Messi jumps into the stands at Camp Nou to celebrate Barcelona's miracle comeback against PSG in the second leg of the Champions League round of 16 on March 8, 2017.

Messi shows off the back of his jersey to Real Madrid fans who witnessed his last-second winner for Barcelona in a riveting Clasico at Estadio Santiago Bernabeu on April 23, 2017.

Messi thus argues that he was not in position to detect any misconduct by his father. Along those lines, Messi contends that even if his father, as Spanish tax authorities assert, used offshore tax havens in Belize and Uruguay to hide money generated from Messi’s image rights, Messi himself would not have known about this activity. He thus would not have committed fraud since there would be an absence of intent or knowledge.

Interestingly, prosecutors declined to endorse the criminal case against Messi due to their assessment of the evidence as, on balance, favoring Messi’s portrayal. Tax authorities and the local state attorney disagree. They maintain that Messi knew far more about his financial doings than he now claims. They’ll need to prove it through evidence and witness testimony.

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With that in mind, watch for the state attorney to attempt to introduce statements, emails and other exchanges that depict Messi—who has signed numerous endorsement deals—as conversant on financial matters. Witnesses, including business executives with whom Messi has interacted, might also be called to testify. The state attorney would expect them to say, in so many words, that they recall Messi as curious about business topics.

Messi, in contrast, likely plans to utilize evidence and witnesses—such as his father—that portray him as so trusting of his father that he would not question business decisions. To be sure, the dynamics of this father-son relationship will be critical in understanding whether Messi would be ignorant of important transactions related to his earnings and publicity rights. The fact that prosecutors’ declined to pursue a criminal case against Messi indicates that there may be vulnerabilities in the state attorney’s arguments that Messi can exploit. With that in mind, the less Messi is depicted as business savvy and involved in his financial matters, the weaker the case against him.

It is possible that the May trial won’t ever come to pass. Messi could work out a plea deal prior to the trial date and eliminate this controversy from clouding his career and interfering with a busy schedule. Yet for the time being, Messi faces a trial that could not only harm his career but, more importantly, threaten his freedom.

Michael McCann is a legal analyst and writer for Sports Illustrated. He is also a Massachusetts attorney and the founding director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law. McCann is also the distinguished visiting Hall of Fame Professor of Law at Mississippi College School of Law.

Published Jan 20, 2016

MICHAEL MCCANN

Michael McCann is a legal analyst and writer for Sports Illustrated and the founding director of the Sports and Entertainment Law Institute (SELI) at the University of New Hampshire School of Law, where he is also a tenured professor of law.