BUFFALO, N.Y. -- Tax fraud charges against the owner of several Western New York Ace Hardware stores have been dismissed after a more than six month long investigation revealed she did not owe the state money.
Gail Villani owns seven Gui's Lumber locations across Western New York, including one in Niagara Falls. Last September, Villani was charged with tax fraud. She was accused of owing the state $589,000 in state sales tax revenue over a four year period from 2005-2009.
"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," says attorney Barry Covert.
Covert, Villani's attorney, says the Niagara County District Attorney's office dismissed those charges Wednesday.
"We went through what the New York State Tax Department had shown, and we were able to prove to the Niagara County District Attorney's office that they, in fact, had not underpaid their sales tax liability, but, in fact, in some of the months had over paid some of their sales tax liability," says Covert.
"So how does the state make a mistake like that?" asked 2 On Your Side's Kelly Dudzik.
"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," said Covert.
The botched audits could have led to a sentence of up to 15 years in prison for Villani had she been found guilty.
"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. And by working with the District Attorney's office in Niagara County, we were able to establish that that initial audit was not correct," says Covert.
The spokesperson for the New York State Department of Taxation and Finance told 2 On Your Side that he could not comment. The Niagara County District Attorney's office, which prosecuted the case, did not return our phone call Wednesday.
