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dealership ultimately claimed and was allowed an embezzlement
loss on its corporate income tax returns for 1966 and 1967.
Petitioner's Story
Petitioner stated that this scheme started in 1965.
Petitioner admitted that it was his idea to "move a few cars",
supposedly in order to help Caplan keep the dealership, but that
the plan expanded to include many cars. Petitioner admits that
"maybe I got a little greedy, and I took approximately $40,000
from that money". The dealership, according to petitioner, was
experiencing financial difficulties resulting from the low volume
of sales and the costs of purchasing a new location and building
a showroom, after the previous landlord had refused to renew the
lease. Petitioner said the downpayments on the new cars were
actually monies transferred from the downpayments on used cars
sales. Petitioner testified that it would have been impossible
to maintain this scheme of "moving" cars, obtaining financing,
transferring deposits, and making payments on the loans without
someone in authority sanctioning these actions. Petitioner
indicated that the dealership was holding checks for sales that
they had noted on the books as paid.
According to petitioner, General Motors Acceptance
Corporation (GMAC), a subsidiary of General Motors, conducted a
review of the dealership approximately a year before the ultimate
2(...continued)
vehicle, a prerequisite to the purchaser's legally reselling the
car.
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