(USAO, NY) Preet Bharara, the United States Attorney for the Southern District of New York, announced today that MICHAEL BARNETT, a real estate developer, was sentenced today by U.S. District Judge Kenneth M. Karas to 37 months in prison for conspiring to defraud lenders and make false statements to the U.S. Department of Housing and Urban Development (“HUD”) in connection with his development of Vineyard Commons, a luxury residential complex in Ulster County, New York.  BARNETT pled guilty on January 19, 2016, before U.S. Magistrate Judge Paul E. Davison.

Manhattan U.S. Attorney Preet Bharara said:  “Michael Barnett abused his position as the developer of Vineyard Commons to enrich himself and defraud HUD and his construction lender.  Today he has been sentenced to federal prison for his crimes.”

According to the Superseding Indictment to which BARNETT pled guilty and his admissions in court during his plea allocution:

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.  BARNETT arranged with his co-defendants, Robert Lees and Kevin DiCello, executives of a vendor that provided rough carpentry and lumber supplies on the project (the “Lumber Company”), to have the Lumber Company pay Barnett a kickback in exchange for BARNETT’s award to the Lumber Company of the Vineyard Commons contract, as well as future business on other developments BARNETT was planning.  To raise funds for the kickback, BARNETT, Lees, and DiCello agreed that the Lumber Company would inflate its bid for labor and materials by approximately $865,000...