Gary Barbera faces jail time after admitting tax fraud

A prominent Philadelphia car dealer, Gary Barbera, admitted in federal district court yesterday that he filed false tax returns in 2003 and 2004, cheating Uncle Sam out of $77,675 in taxes.

Barbera, 45, of Gladwyne, is to be sentenced on Sept. 15 and could face from 12 to 18 months in a federal lockup. He was released on $25,000 unsecured bond.

As part of his plea, Barbera must pay $109,995 in restitution to the IRS, including $20,000 before sentencing.

Neither Barbera nor his attorney would comment to reporters afterward. The car dealer could also lose his professional auto-sales license after being sentenced.

The government's plea memo said Barbera underreported income from two car dealerships, Gary Barbera Dodgeland and Gary Barbera Chryslerland, and used the two corporations to pay personal expenses. (The two businesses have since been consolidated into the Chryslerland location on Roosevelt Boulevard, court papers said.)

According to the plea memo, the IRS began a civil audit in January 2005 of Dodgeland's 2003 tax return, focusing on business deductions that Barbera had taken. The audit eventually expanded to include Chryslerland's 2003 and 2004 returns, and agents found that Barbera was deducting personal expenses as if they were legitimate business expenses.

The case was later referred to the IRS' criminal division, and agents executed search warrants at Barbera's dealerships and his residence in December 2007.

Evidence from the search warrants revealed that Barbera had been skimming income from the dealerships known as "dealer reward" checks from Chrysler Financial Services and not reporting it on his tax returns, the plea memo said.

Chrysler Financial provided wholesale and retail financing to Barbera's dealerships.

The financing arm issued quarterly dealer-reward checks to any dealership if it used Chrysler Financial to buy cars and at least 25 percent of its customers took out loans with Chrysler Financial to buy cars, the plea memo said.

Prosecutors said that Barbera elected to have the quarterly checks made payable to himself and that the checks were not recorded on the dealerships' books.

The plea memo said Barbera kept a second set of books that he did not show or provide to his accountant when the accountant prepared his tax returns.