An Upper East Side art dealer avoided jail for tax fraud and petty larceny yesterday when a judge agreed to give him probation because he had helped prosecutors nail his ex-boss. James Sansum, 38, who had faced up to four years behind bars, was sentenced to three years' probation by Manhattan Supreme Court Justice Carol Berkman.

His former boss, Helen Fioratti, who sold hundred of thousands of dollars in antiques to help furnish the lavish apartment of disgraced Tyco chief Dennis Kozlowski, started the criminal case against Sansum three years ago by telling prosecutors he had stolen more than $600,000 worth of artwork from her. But Sansum turned the tables on her, telling authorities how art dealers avoid paying sales tax. Fioratti who owns L'Antiquaire & The Connoisseur Inc. art gallery on E. 73rd St., pleaded guilty to fraud and tax evasion. Fioratti was sentenced to pay a $5,000 fine and make restitution of $600,000 for cheating the city and state out of sales taxes.

Sansum's lawyer, Arthur Aidala, said that Fioratti's claims against his client were wildly exaggerated. Sansum ultimately pleaded guilty to petty larceny for having a painting by Fioratti's daughter worth less than $1,000. He also admitted underreporting his income by about $75,000 for two years and has paid $58,000 in back taxes and penalties.

An Upper East Side art dealer who was indicted on charges of stealing art, antiques and books from his former employer, among other crimes, has pleaded guilty to falsifying business records, tax evasion and petty larceny, officials said yesterday.The dealer, James Sansum, 37, faces up to four years in prison when he is sentenced in March, said a spokeswoman for the Manhattan district attorney, Robert M. Morgenthau. The district attorney's office began an investigation after Mr. Sansum's former employer, Helen Fioratti, complained. If convicted at a trial, Mr. Sansum would have faced up to 15 years in prison.

''We worked very hard to reach an equitable resolution,'' said Arthur L. Aidala, Mr. Sansum's lawyer. ''Given what he was facing, the amount of time in jail with mandatory minimums, Mr. Sansum is relived to put this behind him and move on with his life.''

Mr. Aidala said that Mr. Sansum would continue to run his gallery, James Sansum Fine and Decorative Art, a second-floor shop on Lexington Avenue between 72nd and 73rd Streets, pending sentencing. At the very least, he will face probation, fines and restitution. Ms. Fioratti employed Mr. Sansum for 12 years at L'Antiquaire and the Connoisseur, a noted gallery on 73rd Street off Madison Avenue. His positions ranged from intern to shareholder. He seemed to have a close relationship with the Fiorattis, living with them in their Manhattan home after his graduation from Harvard.

Interviewed last year at his gallery, Mr. Sansum protested his innocence. He described his predicament as the result of a personal and business relationship gone bad. He claimed that Ms. Fioratti, an expert in her field, had turned on him, betraying his trust, and that the criminal investigation was retaliation for a lawsuit he filed against her in 2001 to force her to buy out his minority share in her business. That suit is pending in civil court.

Over time, Mr. Sansum was trusted to deal with L'Antiquaire's clients. The gallery specializes in European art, including old master drawings, and furniture from the 15th to 18th centuries. After his investigation, Mr. Morgenthau charged Mr. Sansum last year with stealing and embezzling more than $560,000, including 30 pieces of Ms. Fioratti's artwork. Prosecutors said he charged to her gallery a $23,000 Gucci bill, which he characterized as client expenses, and $15,000 for a personal trainer, health club membership and visits to a tanning salon.

In Mr. Sansum's defense, Mr. Aidala said that ''the way the corporation operated was that in lieu of adequate salaries to the shareholders, business credit cards were issued and used by the members of the corporation for their own personal expenses.'' Mr. Sansum pleaded guilty to falsifying business records at L'Antiquaire from 1989 to 2001. He also pleaded guilty to petty larceny for stealing artwork from Ms. Fioratti's daughter, Arianna Fioratti Loreto, and to falsifying his tax returns, substantially understating his tax liability, in 1999 and 2000.

But what about the $560,000 worth of art, antiques and personal goods that prosecutors had said was stolen from Ms. Fioratti? ''After the thorough investigation by the district attorney's office, they reached the conclusion that these were the most appropriate charges for Mr. Sansum to plead guilty to,'' Mr. Aidala said. ''I think once they dug deeper into the facts of the case, they realized that everything was not as it originally appeared to be.'' A spokeswoman for Mr. Morgenthau said that she would not comment further on the agreement. Michael Miller, a lawyer representing L'Antiquaire, said yesterday that his clients were pleased with Mr. Sansum's plea.