Tax fraud charges against Gail Villani, the owner of seven Gui’s Lumber locations in Western New York, have been dismissed after an investigation by the New York State Department of Taxation & Finance found she did not owe the state money.
Ms. Villani was charged last September, accused of owing the tax department $589,000 in state sales tax revenue for a four-year period. The three felony tax-fraud charges against Ms. Villani could have resulted in up to 15 years in prison had they not been dropped.
WGRZ reports Mr. Covert saying, “To have this hanging over her head, felony charges, she had banking institutions that cutoff her line of credit, she had friends and family members that did not understand how she could be under felony criminal charges.”
Auditors reveal a different debt
Mr. Covert told the Buffalo News that an that independent audit—something the tax department never did until it was compelled—proved that not only did Gui’s Lumber pay its sales taxes in full, it actually overpaid. He said a revised report issued by the tax department showed there was an overpayment of about $100,000 in a three-month period, meaning the total overpayment could be even more.
Now that the criminal charges have been dismissed, Mr. Covert told the Buffalo News, he intends to demand repayment of the overpaid taxes.
Asked by the Buffalo News how the state could have made such a large mistake, Mr. Covert responded, “I don’t know. It’s very difficult to really understand how they could have done that. It appears that they looked at the wrong books, or at least they interpreted the accounting books in the wrong manner.”
“The tax department just got it wrong”
“Apparently, the New York State Tax Department was looking at other records, other third party records, that misled them in relation to what my client’s sales tax liability was,” he continued. “By working with the district attorney’s office in Niagara County, we were able to establish that that initial audit was not correct.”
Mr. Covert told the Buffalo News he doesn’t know why the case was opened in the first place. He said Joel M. Grundy, an assistant Niagara County district attorney who prosecuted the case, said in court that the tax department’s revised report, in Mr. Covert’s words, “destroyed any chance that they could prove the case.”
“The tax department just got it wrong,” Mr. Covert told the Buffalo News, “and it’s great that the DA’s office did the right thing.”
About Barry Covert
A member of Lipsitz Green Scime Cambria’s Criminal Defense Trials and Appeals Practice Area, Mr. Covert focuses on state and federal criminal trials and appeals; constitutional law, including First Amendment, Second Amendment, civil rights actions, and the False Claims Act; defending against allegations of scientific misconduct and fraud, research misconduct and fraud, and plagiarism; and defense of professional licensing.