2015-05-06 DOJ SDNY indictment 166 KB 6,979 chars

United States v. Michael Barnett; Robert Lees; and Kevin DiCello, Southern District of New York (May 6, 2015) — Indictment

raw: OCR_UNRECOVERABLE

OCR_UNRECOVERABLE (S.D.N.Y. May 6, 2015)

Caption
United States v. Michael Barnett, et al.
Exhibit of Contractors And Developer Charged In White Plains Federal Court With Conspiracy, Fraud, And Kickback Scheme
Source PDF JSON

Enriched metadata

Scheme
corporate-fraud (100%)
Court
Southern District of New York
Classified corporate-fraud(confidence 100%). EDGAR detection: forms 10-K/10-Q/8-K· recall 56% / precision 8%. detection rule →
Statutes
Title 18, United States Code, Section 371Title 18, United States Code, Sections 1343Title 18, United States Code, Sections 1341Title 18, United States Code, Sections 1014Title 18, United States Code, Sections 1957Title 18, United States Code, Sections 1001(a)
Parties
United States of AmericaMichael BarnettRobert LeesKevin DiCello
Keywords
ocrunrecoverable

Extracted insights

Dollar amounts 3
  • $865K $865,000 $100K–$1M
  • $865K $865,000 $100K–$1M
  • $200K $200,000 $100K–$1M
Entities 5
  • scheme_term $865,000 kickback
  • company lumber company
  • person michael barnett
  • scheme_term partial kickback payment of $200,000 to michael barnett
  • person Preet Bharara
Triples 6
  • Preet Bharara announced the return of Superseding Indictment charging Michael Barnett, Robert Lees, and Kevin DiCello
  • Michael Barnett allegedly abused his position as the developer of Vineyard Commons
  • Robert Lees and Kevin DiCello demanded $865,000 kickback
  • HUD-OIG Special Agent Christina Scaringi said HUD OIG will not tolerate this behavior
  • Lumber Company inflated its bid for labor and materials by approximately $865,000
  • Lumber Company made partial kickback payment of $200,000 to Michael Barnett
PDF
OCR_UNRECOVERABLE · Source
Text layers
Extracted body text (6,979c) 
UNITED STATES ATTORNEY’S OFFICE 

 Southern District of New York 
 

 U.S. ATTORNEY PREET BHARARA 

 
FOR IMMEDIATE RELEASE      CONTACT:  U.S. ATTORNEY’S OFFICE 

Wednesday, May 6, 2015          James Margolin, Jennifer Queliz, 

http://www.justice.gov/usao/nys             Betsy Feuerstein, Dawn Dearden 

                     (212) 637-2600 

 

                HUD-OIG 

                Christina Scaringi 

                (212) 542-7277 

                   

  

CONTRACTORS AND DEVELOPER CHARGED IN WHITE PLAINS 

FEDERAL COURT WITH CONSPIRACY, FRAUD, AND KICKBACK 

SCHEME 

 
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
1
: 

 

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 

                                                           
1
 As the introductory phrase signifies, the entirety of the text of the Superseding Indictment and the description of the Superseding Indictment set 

forth below constitute only allegations, and every fact described should be treated as an allegation. 

http://www.justice.gov/usao/nys


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. 

 

15-118           ### 

 

 

U.S. v. Michael Barnett et al. 

 
Defendant Age Residence Charges and Maximum Penalties 



Michael Barnett 46 Hopewell Junction, New 

York 

Conspiracy, in violation of Title 18, United States 

Code, Section 371 (one count): 5 years in prison 

Wire fraud, in violation of Title 18, United States 

Code, Sections 1343 and 2 (twelve counts): 30 

years in prison per count 

Mail fraud, in violation of Title 18, United States 

Code, Sections 1341 and 2 (one count): 30 years in 

prison 

False statements in loan and credit applications, in 

violation of Title 18, United States Code, 

Sections 1014 and 2 (23 counts): 30 years in prison 

per count 

Engaging in monetary transactions in property 

derived from specified unlawful activity, in 

violation of Title 18, United States Code, 

Sections 1957 and 2 (one count): 10 years in prison 

False statements, in violation of Title 18, United 

States Code, Sections 1001(a) and 2 (three counts): 

five years in prison per count 

Robert Lees 61 Lititz, PA Conspiracy, in violation of Title 18, United States 

Code, Section 371 (one count): 5 years in prison 

Mail fraud, in violation of Title 18, United States 

Code, Sections 1341 and 2 (one count): 30 years in 

prison 

False statements in loan and credit applications, in 

violation of Title 18, United States Code, 

Sections 1014 and 2 (one count): 30 years in prison 

Kevin DiCello 43 Pottsville, PA Conspiracy, in violation of Title 18, United States 

Code, Section 371 (one count): 5 years in prison 

Mail fraud, in violation of Title 18, United States 

Code, Sections 1341 and 2 (one count): 30 years in 

prison 

False statements in loan and credit applications, in 

violation of Title 18, United States Code, 

Sections 1014 and 2 (one count): 30 years in prison
OCR text (6,979c · textlayer · 95% conf) 
UNITED STATES ATTORNEY’S OFFICE 

 Southern District of New York 
 

 U.S. ATTORNEY PREET BHARARA 

 
FOR IMMEDIATE RELEASE      CONTACT:  U.S. ATTORNEY’S OFFICE 

Wednesday, May 6, 2015          James Margolin, Jennifer Queliz, 

http://www.justice.gov/usao/nys             Betsy Feuerstein, Dawn Dearden 

                     (212) 637-2600 

 

                HUD-OIG 

                Christina Scaringi 

                (212) 542-7277 

                   

  

CONTRACTORS AND DEVELOPER CHARGED IN WHITE PLAINS 

FEDERAL COURT WITH CONSPIRACY, FRAUD, AND KICKBACK 

SCHEME 

 
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
1
: 

 

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 

                                                           
1
 As the introductory phrase signifies, the entirety of the text of the Superseding Indictment and the description of the Superseding Indictment set 

forth below constitute only allegations, and every fact described should be treated as an allegation. 

http://www.justice.gov/usao/nys


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. 

 

15-118           ### 

 

 

U.S. v. Michael Barnett et al. 

 
Defendant Age Residence Charges and Maximum Penalties 



Michael Barnett 46 Hopewell Junction, New 

York 

Conspiracy, in violation of Title 18, United States 

Code, Section 371 (one count): 5 years in prison 

Wire fraud, in violation of Title 18, United States 

Code, Sections 1343 and 2 (twelve counts): 30 

years in prison per count 

Mail fraud, in violation of Title 18, United States 

Code, Sections 1341 and 2 (one count): 30 years in 

prison 

False statements in loan and credit applications, in 

violation of Title 18, United States Code, 

Sections 1014 and 2 (23 counts): 30 years in prison 

per count 

Engaging in monetary transactions in property 

derived from specified unlawful activity, in 

violation of Title 18, United States Code, 

Sections 1957 and 2 (one count): 10 years in prison 

False statements, in violation of Title 18, United 

States Code, Sections 1001(a) and 2 (three counts): 

five years in prison per count 

Robert Lees 61 Lititz, PA Conspiracy, in violation of Title 18, United States 

Code, Section 371 (one count): 5 years in prison 

Mail fraud, in violation of Title 18, United States 

Code, Sections 1341 and 2 (one count): 30 years in 

prison 

False statements in loan and credit applications, in 

violation of Title 18, United States Code, 

Sections 1014 and 2 (one count): 30 years in prison 

Kevin DiCello 43 Pottsville, PA Conspiracy, in violation of Title 18, United States 

Code, Section 371 (one count): 5 years in prison 

Mail fraud, in violation of Title 18, United States 

Code, Sections 1341 and 2 (one count): 30 years in 

prison 

False statements in loan and credit applications, in 

violation of Title 18, United States Code, 

Sections 1014 and 2 (one count): 30 years in prison