Former Ulster County real estate developer Michael Barnett was sentenced today to 37 months in federal prison for orchestrating a fraudulent kickback scheme that involved HUD and his construction lender. The sentence, handed down by U.S. District Judge Kenneth M. Karas, is the culmination of an investigation into Barnett’s misdeeds at Vineyard Commons, a luxury residential complex.
Barnett, 47, from Marlboro, New York, pleaded guilty to conspiracy and making false statements in January 2016. He manipulated his co-conspirators, Robert Lees and Kevin DiCello of the Lumber Company, into inflating bids by $865,000 to finance kickbacks.
The scam worked by disguising payments as customer rebates, allowing Barnett to use $200,000 from a partial kickback for personal obligations. Additionally, he solicited labor and materials from subcontractors to build a private pool house at his residence using the scheme’s proceeds.
In addition to prison time, Barnett was ordered to pay $1,334,620 in restitution and forfeit $200,000 in ill-gotten gains. His co-defendants have been convicted, with Lees facing sentencing on December 15, 2016, and DiCello scheduled for January 19, 2017.
Manhattan U.S. Attorney Preet Bharara emphasized the severity of Barnett’s actions, stating, “Michael Barnett used his position to defraud HUD and lenders for personal gain.” The investigation was led by Assistant United States Attorneys Michael D. Maimin, James McMahon, and Won S. Shin.
The case is a testament to the dedication of the HUD-Office of Inspector General, who played a critical role in uncovering this fraud.
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Key Facts
- State: New York
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes|Public Corruption|White Collar Crime
- Source: Official Source ↗
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