For all her success on the court, Steffi Graf can't seem to win. The quiet 26-year-old German has dominated women's tennis for most of the past decade, but a dark cloud has always seemed to hover over her. Five years ago, after winning the Australian Open, she was hounded by lurid tabloid reports of an affair between her doting father-cum-manager and a model only a year older than Steffi. In 1993, at the height of her rivalry with Monica Seles, a deranged fan stabbed Seles so that his favorite, Graf, would regain the No. 1 standing. She did--but as she mowed down one opponent after another, critics complained that the women's game had become boring.

Last month, after picking up her fourth U.S. Open title, the usually cool Graf broke down in tears when a reporter asked about her father. Reason: since August, Peter Graf has been detained in a Mannheim prison on charges that he cheated the German government of millions of dollars in taxes on her earnings. Last week Graf's tax adviser, Joachim Eckardt, was arrested on "a strong suspicion of tax evasion of a particularly serious nature." The investigation has taken on increasingly alarming dimensions--pointing to preferential treatment by local officials.

Wary of high tax rates, other well-paid German sports stars have moved out to the tax haven of Monaco. Graf, in contrast, pleased the local fans by staying in her home town of Bruhl. But Peter Graf, 57, who handled Steffi's finances, apparently created his own tax shelter. He had the suspicious habit of demanding cash--only payments for his daughter's appearances, and, according to the charges against him, he grossly underreported her income and thus underpaid her taxes. At the time of his arrest last August, authorities estimated that between 1989 and 1992 Steffi had earnings of $25.2 million from tournament winnings and endorsements. According to press reports, she owed $12.2 million in taxes, but her father paid only $5 million.

Even that shocking charge may understate the crime. Since the arrest, the German press has pounced on the story, and juicy new details have leaked out of the investigation. Der Spiegel reported last week that investigators now believe Graf's earnings were $35 million between 1989 and 1992. Peter Graf allegedly collected undeclared revenues via a circuitous route involving Sunpark, a sports firm that lists Steffi and Peter Graf as stockholders. In addition, media reports have suggested that some corporate sponsors may have been involved in the scheme.

Since 1988, according to Der Spiegel, the federal Finance Ministry had forwarded numerous documents to the government of Baden-Wurttemberg state, where the Grafs reside, recommending an investigation into possible tax evasion. But to no avail. Did the state officials ignore these red flags to protect their most famous residents? The evidence suggests the answer is yes. The Sudwestfunk TV station recently uncovered a deal struck at the end of 1993 between Peter Graf's lawyer and Baden-Wurttemberg finance ministry officials. The ministry reportedly accepted Graf's claim that taxable income for 1993 was a paltry $1.9 million, though the actual earnings amounted to some $12 million. The agreement was confirmed by Graf's lawyer, Joachim Schwenn, and the Baden-Wurttemberg finance ministry. Schwenn told reporters that the Grafs were operating under a "conclusive de facto understanding" made with local, state and regional tax authorities in Baden-Wurttemberg on Dec. 1, 1993.

The state's finance minister, Gerhard Mayer-Vorfelder, has been criticized for accepting a phone call from Peter Graf, who complained about the tax investigators' search of his residence on May 23. Mayer-Vorfelder has denied any impropriety on his part, and insisted last week that "there are no privileges for prominent taxpayers." Still, some politicians are now calling for a parliamentary investigation into each of the specific charges made by the media.

The continuing probe ultimately leads to Steffi Graf. Though she has not been charged and is not likely to be detained, prosecutors say they cannot eliminate her from the investigation because the returns were filed in her name on her income. Through his lawyer, Peter Graf has used that fact in his own defense: he maintains that at most, he could only be charged as an accessory to tax evasion, since the income declarations involved are his daughter's. But that argument lays the blame on Steffi. According to a magazine poll, 70% of the public still sees her as the unknowing victim of her father's underhanded dealings-but 57% believe her image has suffered from the scandal.

"In the last 10 years I have concentrated on my tennis," she told reporters last August. "I must confess that I made the mistake of not paying attention to my financial matters." She then promised to take "full responsibility," but that is easier said than done. Experts figure her total bill, including back taxes, interest and fines, could add up to $70 million. And the damage to her reputation could be incalculable.

--Reported by Rhea Schoenthal/Bonn