Contractors And Developer Charged In White Plains Federal Court With Conspiracy, Fraud, And Kickback Scheme
summary
Michael Barnett, Robert Lees, and Kevin DiCello were charged with conspiracy, fraud, and false statements for orchestrating an $865,000 kickback scheme by inflating subcontractor bids on the Vineyard Commons project, disguising payments as rebates, and fraudulently drawing HUD-guaranteed construction funds, with $200,000 already paid and funds diverted for personal use.
paragraph
Michael Barnett, developer of Vineyard Commons, conspired with Robert Lees and Kevin DiCello, executives of a subcontractor, to inflate the company’s bid by $865,000 and funnel the excess as a kickback disguised as a customer rebate to Barnett. The scheme relied on false draw requests to a HUD-guaranteed construction loan, with $200,000 paid in January 2010 and used by Barnett to settle personal obligations and fund a private pool house. The defendants face federal charges of conspiracy, wire fraud, and making false statements to a financial institution, with HUD as the ultimate victim of the fraud.
narrative
Michael Barnett, the developer of Vineyard Commons, conspired with Robert Lees and Kevin DiCello, executives of a subcontractor providing rough carpentry and lumber supplies, to defraud a HUD-guaranteed construction loan through an $865,000 kickback scheme. The trio agreed to inflate the subcontractor’s bid by that amount, with the excess funds paid to Barnett under the false pretense of a customer rebate to a company he controlled, which had no role in the project. In January 2010, a partial kickback of $200,000 was paid and recorded fraudulently on the subcontractor’s books to conceal the illicit transfer. Barnett used the $200,000 to pay off an obligation to the general contractor and also solicited the same subcontractor to provide free labor and materials for a personal pool house, submitting false invoices to the lender to cover those costs. The entire scheme was designed to siphon federally insured funds meant for affordable senior housing into private enrichment, with HUD ultimately bearing the loss through its loan guarantee. The defendants were charged with conspiracy, wire fraud, and making false statements to a financial institution in a Superseding Indictment filed in the Southern District of New York. The case, prosecuted by Assistant U.S. Attorneys Michael Maimin and James McMahon, underscores HUD-OIG’s commitment to rooting out corruption in federally funded housing projects.
Classified public-corruption(confidence 90%). No EDGAR filing fingerprint (criminal/DOJ-side scheme). detection rule →
Parties
christina scaringifalse statementshis construction lenderkevin dicellolumber companymichael barnettPreet Bharararobert leesthis behavior
Keywords
barnettvineyard commonslumber companykickbackwhite plainsconspiracy fraudvineyardcommonslumberlinkcompanyconstructioncontractors developerdeveloper whiteplains federal
Exhibits & Attached Documents (2)
Extracted insights
Dollar amounts 3
- $865K $865,000 $100K–$1M
- $865K $865,000 $100K–$1M
- $200K $200,000 $100K–$1M
Entities 13
- scheme_term an $865,000 kickback
- scheme_term a partial kickback payment of $200,000
- person christina scaringi
- person false statements
- scheme_term have their employer pay barnett a kickback
- person his construction lender
- person kevin dicello
- scheme_term kickbacks and investments
- company lumber company
- person michael barnett
- person Preet Bharara
- person robert lees
- person this behavior
Triples 24
- Preet Bharara announced the return of a Superseding Indictment
- Christina Scaringi announced the return of a Superseding Indictment
- MICHAEL BARNETT charging conspiracy, fraud, and false statement charges
- ROBERT LEES charging conspiracy, fraud, and false statement charges
- KEVIN DICELLO charging conspiracy, fraud, and false statement charges
- Michael Barnett abused his position as the developer of Vineyard Commons
- Michael Barnett defrauded his construction lender
- Michael Barnett defrauded the U.S. Department of Housing and Urban Development
- Robert Lees agreed to an $865,000 kickback
- Kevin DiCello agreed to an $865,000 kickback
- HUD-OIG will not tolerate this behavior
- BARNETT sought kickbacks and investments
- BARNETT made false statements
- LEES were a division president
- DICELLO were vice president of operations
- LEES agreed to have their employer pay BARNETT a kickback
- DICELLO agreed to have their employer pay BARNETT a kickback
- BARNETT entered into an agreement
- LEES entered into an agreement
- DICELLO entered into an agreement
- Lumber Company inflated its bid for labor and materials
- Lumber Company made a partial kickback payment of $200,000
- BARNETT used the $200,000 as a partial payment
- BARNETT solicited subcontractors
PDF (from attached: indictment)
Text layers
Extracted body text (5,004c)
Press Release Contractors And Developer Charged In White Plains Federal Court With Conspiracy, Fraud, And Kickback Scheme Wednesday, May 6, 2015 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Preet Bharara, the United States Attorney for the Southern District of New York, and Christina Scaringi, Special Agent in Charge, Department of Housing and Urban Development, Office of the Inspector General ("HUD-OIG"), Northeast Region, announced today the return of a Superseding Indictment charging MICHAEL BARNETT, ROBERT LEES, and KEVIN DICELLO with conspiracy, fraud, and false statement charges in connection with the development of Vineyard Commons, a luxury residential complex in Ulster County, New York. This case is assigned to Judge Kenneth M. Karas. Manhattan U.S. Attorney Preet Bharara said: “Michael Barnett allegedly abused his position as the developer of Vineyard Commons to enrich himself and defraud his construction lender and, ultimately, the U.S. Department of Housing and Urban Development, which guaranteed the construction loan. As charged, Robert Lees and Kevin DiCello were all too willing to go along with Barnett's demand for an $865,000 kickback so that they could get more business from Barnett in the future.” HUD-OIG Special Agent in Charge Christina Scaringi said: “These defendants were entrusted to use federally-insured funds to provide decent affordable housing for our senior citizens. Instead, as alleged, they lied to the lender and siphoned project funds to satisfy their greed. The HUD OIG will not tolerate this behavior and is committed to rooting out those who choose to engage in these outrageous acts.” According to the allegations made in the Superseding Indictment*: BARNETT, who was the developer of Vineyard Commons, sought kickbacks and investments from subcontractors and vendors on the project and made false statements to the project's lender so that he could draw down on the project's line of credit. LEES and DICELLO were a division president and vice president of operations, respectively, for a subcontractor and vendor that provided rough carpentry and lumber supplies on the project (the "Lumber Company"). The indictment charges that LEES and DICELLO agreed to have their employer pay BARNETT a kickback of approximately $865,000 in exchange for the Vineyard Commons contract, as well as future business on other developments BARNETT was planning. BARNETT, LEES, and DICELLO entered into an agreement by which the Lumber Company inflated its bid for labor and materials by approximately $865,000, which would be paid to BARNETT as a kickback from the Lumber Company. The defendants intended that the kickback would be funded unwittingly by the construction lender, and ultimately by HUD through its guaranty of the construction loan, through the submission of false and inflated requests to draw down the construction loan. In January 2010, the Lumber Company made a partial kickback payment of $200,000 to BARNETT, and the defendants disguised the transaction on the Lumber Company's books by making it appear to be a customer rebate payable to a company controlled by BARNETT that was not involved in the development of Vineyard Commons. BARNETT then used the $200,000 as a partial payment of an obligation he had to the general contractor on Vineyard Commons. BARNETT solicited subcontractors and vendors on the Vineyard Commons project, including the Lumber Company, to provide labor and materials to build a pool house at his home. Some of these subcontractors and vendors, including the Lumber Company, agreed to do so. BARNETT submitted false invoices to the construction lender in order to enrich himself fraudulently by drawing down the loan. The defendants and the counts with which they are charged in the Superseding Indictment are set forth in the attached list. Mr. Bharara thanked the HUD-OIG for its outstanding work on the investigation. This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Michael Maimin and James McMahon are in charge of the prosecution. *The charges contained in the Superseding Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty. View Chart US v Barnett et al Indictment Updated December 1, 2015 Component USAO - New York, Southern Press Release Number: 15-118OCR text (5,004c · plain-text · 99% conf)
Press Release Contractors And Developer Charged In White Plains Federal Court With Conspiracy, Fraud, And Kickback Scheme Wednesday, May 6, 2015 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Preet Bharara, the United States Attorney for the Southern District of New York, and Christina Scaringi, Special Agent in Charge, Department of Housing and Urban Development, Office of the Inspector General ("HUD-OIG"), Northeast Region, announced today the return of a Superseding Indictment charging MICHAEL BARNETT, ROBERT LEES, and KEVIN DICELLO with conspiracy, fraud, and false statement charges in connection with the development of Vineyard Commons, a luxury residential complex in Ulster County, New York. This case is assigned to Judge Kenneth M. Karas. Manhattan U.S. Attorney Preet Bharara said: “Michael Barnett allegedly abused his position as the developer of Vineyard Commons to enrich himself and defraud his construction lender and, ultimately, the U.S. Department of Housing and Urban Development, which guaranteed the construction loan. As charged, Robert Lees and Kevin DiCello were all too willing to go along with Barnett's demand for an $865,000 kickback so that they could get more business from Barnett in the future.” HUD-OIG Special Agent in Charge Christina Scaringi said: “These defendants were entrusted to use federally-insured funds to provide decent affordable housing for our senior citizens. Instead, as alleged, they lied to the lender and siphoned project funds to satisfy their greed. The HUD OIG will not tolerate this behavior and is committed to rooting out those who choose to engage in these outrageous acts.” According to the allegations made in the Superseding Indictment*: BARNETT, who was the developer of Vineyard Commons, sought kickbacks and investments from subcontractors and vendors on the project and made false statements to the project's lender so that he could draw down on the project's line of credit. LEES and DICELLO were a division president and vice president of operations, respectively, for a subcontractor and vendor that provided rough carpentry and lumber supplies on the project (the "Lumber Company"). The indictment charges that LEES and DICELLO agreed to have their employer pay BARNETT a kickback of approximately $865,000 in exchange for the Vineyard Commons contract, as well as future business on other developments BARNETT was planning. BARNETT, LEES, and DICELLO entered into an agreement by which the Lumber Company inflated its bid for labor and materials by approximately $865,000, which would be paid to BARNETT as a kickback from the Lumber Company. The defendants intended that the kickback would be funded unwittingly by the construction lender, and ultimately by HUD through its guaranty of the construction loan, through the submission of false and inflated requests to draw down the construction loan. In January 2010, the Lumber Company made a partial kickback payment of $200,000 to BARNETT, and the defendants disguised the transaction on the Lumber Company's books by making it appear to be a customer rebate payable to a company controlled by BARNETT that was not involved in the development of Vineyard Commons. BARNETT then used the $200,000 as a partial payment of an obligation he had to the general contractor on Vineyard Commons. BARNETT solicited subcontractors and vendors on the Vineyard Commons project, including the Lumber Company, to provide labor and materials to build a pool house at his home. Some of these subcontractors and vendors, including the Lumber Company, agreed to do so. BARNETT submitted false invoices to the construction lender in order to enrich himself fraudulently by drawing down the loan. The defendants and the counts with which they are charged in the Superseding Indictment are set forth in the attached list. Mr. Bharara thanked the HUD-OIG for its outstanding work on the investigation. This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Michael Maimin and James McMahon are in charge of the prosecution. *The charges contained in the Superseding Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty. View Chart US v Barnett et al Indictment Updated December 1, 2015 Component USAO - New York, Southern Press Release Number: 15-118