Retired car dealer James Henry Pflueger lied about how much in taxes he owed on the sale of a commercial property in San Diego because he needed the money for his legal expenses in the Ka Loko Dam disaster and other judgments, federal prosecutor Les Osborne said Tuesday in opening statements of Pflueger’s conspiracy and tax evasion trial.

Pflueger, 86, is on trial for conspiring to conceal from the IRS profits from the sale of the property and the payments his former company, Pflueger Inc., made to cover his personal expenses from 2003 through 2006. He is also on trial for filing false federal income tax returns.

The government last week dropped a charge accusing Pflueger of failing to report his holdings in a Swiss bank account.

U.S. District Judge Leslie E. Kobayashi is presiding over the nonjury trial.

Pflueger’s Beverly Hills, Calif., lawyer Steven Toscher said any errors of fraud that benefited Pflueger were committed by the retired car dealer’s high-powered Los Angeles accountant Dennis Lawrence Duban and others without Pflueger’s knowledge.

Duban, who is expected to testify as a government witness, pleaded guilty in October to preparing a false income tax return for Pflueger that underreported the gain on the sale of the San Diego property.

The government said that until 2007, Pflueger had reported that land portion of the property had a tax basis of $106,322. However, after the sale of the property, Pflueger reported the tax basis of the land was $7,006,322, reducing his capital gain. The property was sold for $20.1 million.

Duban also pleaded guilty to preparing a false income tax return for Pflueger’s son, Charles Alan Pflueger, which failed to report as income the personal expenses Pflueger Inc. paid for him.

Alan Pflueger became sole owner of Pflueger Inc. in 2002. He pleaded guilty in May to filing a false personal income tax return for failing to report as income money one of the company’s subsidiaries paid to cover his credit card and home utility bills and for landscaping and maintenance of his residences.

Osborne said both Pfluegers used the company as their personal checking account long before 2003 and that the company continued to pay the personal expenses of James Pflueger long after he no longer did any work for Pflueger Inc.

The elder Pflueger is also awaiting trial in state court on manslaughter charges in connection with the deaths in 2006 of seven people who were swept away after a breach of the Ka Loko Dam sent hundreds of millions of gallons of water downstream on Kauai’s North Shore.

Kauai Circuit Judge Randal Valenciano scheduled trial for next month.