A Buffalo cocaine user who printed bogus W-2 earnings statements and phony payroll checks in exchange for drugs was sentenced Wednesday to 2 to seven years in prison.
John Tally, 52, pleaded guilty last April in Erie County Court to tax fraud, grand larceny and forgery.
Prosecutors said Tally printed the bogus W-2s and payroll checks for drug dealers who gave him cocaine and occasionally money. The dealers passed the phony documents to their customers, who claimed false wages on their state income tax returns and obtain fraudulent refunds or cash the payroll checks. The customers then split the money with the dealers.
Tally admitted printing the bogus W-2s from Jan. 1, 2010, to Nov. 30, 2012, resulting in about $44,000 in fraudulent tax refunds, according to Assistant District Attorney Gary Ertel.
The Erie County District Attorney’s Office prosecuted the people who received the refunds, and civil judgments were filed against them to retrieve the money, Ertel said.
Tally also admitted producing forged payroll checks from hundreds of local businesses from April 1, 2012 to Nov. 30, 2012, according to Assistant District Attorney Brian Dassero.
Nearly $50,000 in bogus checks were cashed at supermarkets and check-cashing businesses, prosecutors said. Most of the checks were for $250.
Ertel said the bulk of the check passers were prosecuted, and restitution is being sought from them.
Before sentencing, Tally told Judge Michael Pietruszka that he was sorry for his actions and would not get involved in such schemes again.
The judge imposed the same prison sentence on each of the charges – third-degree criminal tax fraud for the W-2s and third-degree grand larceny and four counts of second-degree forgery for the payroll checks. He ordered the sentences to run concurrently.
The judge also ordered them to run concurrently with a 30-month federal prison sentence that U.S. District Judge Richard J. Arcara recently imposed on Tally, who was convicted of fraud and making counterfeit money.
Federal prosecutors said Tally was involved in a conspiracy with Emma Mills to create false W-2 forms that were submitted to the Internal Revenue Service with false tax returns to claim undeserved refunds.
Arcara ordered Tally to pay more than $35,000 in restitution to the IRS.
Mills pleaded guilty to fraud in December and is scheduled for sentencing April 14.