Vineyard Commons Developer Indicted

BY MARK REYNOLDS  |   MREYNOLDS@TCNEWSPAPERS.COM

            Developer Michael Barnett, 43, of Hopewell Junction has been indicted for his involvement in the Vineyard Commons senior housing project in Highland.

            From the start, the luxury rental project became mired in controversy and debt to the point where the federal Housing and Urban Development agency, who insured the loan, eventually auctioned off the mortgage in August 2012 to the True North Management Group, resulting in a $27 million loss. They in turn sued to foreclose on Vineyard Commons Holdings LLC (in wife Denise Barnett’s name) on Nov.16, 2012, resulting in the Barnett’s filing for Chapter 7 bankruptcy two weeks later on Nov. 30, 2012, claiming they owed creditors more than $24 million. 

            United States Attorney Preet Bharara signed a 31 count indictment against Michael Barnett, charging him with Conspiracy, Wire Fraud, Mail Fraud, False Statements on Loan and Credit Application, Engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity and for False Statements. Barnett also helped plan and develop two additional projects in the area, named in the indictment as ‘Future Projects.” 

            A timeline of the Conspiracy charges is documented in the indictment. In 2009 Barnett hired a General Contractor (unnamed) for the project, who in turn sub-contracted a framing company (also unnamed) responsible for framing and rough carpentry. A private lender [‘Mortgagor’] in Washington D.C. provided the financing, a $46 million loan, which was insured by the Federal Housing Administration [FHA] of the department of Housing and Urban Development [HUD]. The indictment states that Barnett “used his position as the developer of Vineyard Commons and the Future Projects to enrich himself by, among other means, persuading contractors and subcontractors to provide him with kickbacks and to invest money in Vineyard Commons and the Future Projects.” The indictment states that Barnett provided the Mortgagor with false and inflated invoices so the company would provide him with HUD-insured funds.

            From 2008 to 2010 the General Contractor and sub-contractors did invest in Vineyard Commons, in part, because Barnett led them to believe they would be hired for work at Vineyard Commons and possibly for future projects, according to the indictment. 

            The indictment reveals that in 2009 Barnett solicited sub-contractors at Vineyard Commons to provide their labor and materials to construct a pool house at his home residence. Some agreed to do so and would either absorb the cost or falsely build the costs into those related to Vineyard Commons or on future projects. Again this was based on the premise that working at Barnett’s home would mean they would work on his other projects. 

            On Jan 19, 2009 the Framer furnished the General Contractor with a Final Bid for labor and materials for the Vineyard Commons project but by April 2009 the two agreed to provide this at a greater amount than the Final Bid, which was called the Contract Price. The indictment states that Barnett, the Framer and the General Contractor “intended that the difference between the Final Bid and the Contract Price (called Contract Excess) would be returned to Barnett as a kickback.” The following month the General Contractor agreed to provide Barnett with a $1 million letter of credit and in return Barnett “informally pledged” the Contract Excess to the Contractor as collateral. In June 2009 Barnett also obtained a letter of credit from the Framer in the amount of $650,000 in order to secure the HUD/FHA insured financing from the Mortgagor; promising the contract excess to the Framer as collateral.

            On July 2, 2009 Barnett and others supplied HUD with the contractor’s and or Mortgagor cost breakdown. This included the Framer’s estimate, which exceeded his actual price for labor and materials by approximately the Contract Excess.

            The indictment states that from July 2009 to January 2012 the General Contractor submitted his requisitions on HUD forms to the Mortgagor, which eventually were sent to HUD. The General Contractor certified that the information on the forms was true and accurate, which resulted in the Mortgagor disbursing HUD-insured funds each month on the basis of the requisitions. For this, Barnett was charged with making False Statements in the months of January, February and March of 2010. 

            The indictment highlighted the money trail surrounding Barnett and Vineyard Commons. On January 15, 2010 the Framer sent Barnett a check for $200,000 from the Contract Excess via Michigan to New York to a company Barnett controlled. This allowed Barnett to make a partial payment on his obligation to the General Contractor. This allegedly was done on Jan. 29, 2010 and resulted in the mail fraud charge.    

            The indictment also charges Barnett with Wire Fraud, stating that he obtained “money and property by means of false and fraudulent pretenses, representations and promises” through wire transmissions and faxes. 

            The indictment notes that Barnett “willfully and knowingly” made false statements on loan and credit applications in order to influence the action of the Federal Housing Administration. There are 13 instances listed in the indictment, from September 2009 through March 2010, when Barnett allegedly listed false and inflated dollar amounts in invoices so the Mortgagor “would disburse funds to which Barnett, the General Contractor and the Vineyard Commons were not entitled.”

            According to the indictment, Barnett will have to forfeit “all property, real and personal that constitutes or is derived from proceeds traceable to the commission of the offense charged in Count One [Conspiracy] of this indictment.” This includes 10 Wintergreen Place in Hopewell Junction. If any property cannot be located because Barnett failed to mention it, or it has been substantially dimished in value, been sold or transferred to a third party, has been comingled with other property which cannot be subdivided off without difficulty or has been placed beyond the jurisdiction of the court, then his property at 6 Heather Court in Fishkill will be forfeited.

            Barnett could not be reached for comment for this article. 

Coalition Calls for GE to Continue Cleanup

BY MARK REYNOLDS  |   MREYNOLDS@TCNEWSPAPERS.COM

  

         Last week a broad coalition of activists, environmentalists, and town officials, representatives of business, legislators, fishermen and concerned citizens from Albany to Westchester County gathered at Long Dock Park in Beacon to call upon General Electric to continue removing PCBs from the Hudson River and not to shutdown later this year.

A group calling itself the Campaign for a Cleaner Hudson is pointing out that GE is slated to finish an Environmental Protection Agency [EPA] ordered cleanup this summer, two years ahead of schedule, but they are seeking to have GE continue their cleanup as they have for the past 5 years rather than shutdown this year. They have pointed out that if GE does not continue they “will leave behind millions of pounds of health-threatening PCB-contaminated sediments both north and south of the Federal Dam in Troy. That significant pollution will block the river’s recovery and waterfront revitalization for generations. If GE won’t accept responsibility for its toxic legacy, New York State taxpayers will end up paying the bill for the crucial cleanup work, namely the PCB-laden navigational channel of the Champlain Canal.”

To date 58 communities along the Hudson River have called for a more comprehensive cleanup and have passed formal resolutions “to pressure GE to not shirk its responsibilities.” GE released PCBs into the Hudson from 1947-1977.

Fisherman Gil Hawkins said the river is cleaner “but it is not clean. What will GE be remembered for; what is their legacy?” He said the river once had a thriving fishing industry but today is moving more toward recreational activities. He said he worries the river may not be clean for his grandchildren and even his great grandchildren. “Let’s keep this cleanup going until the job is done.”

Environmental Action Director Manna Jo Greene said GE has been doing a good job “but the cleanup that they are required under EPA to do is not the complete job. There is navigational dredging yet to be done and the Federal Natural Resource Trustees are also asking that additional 136 acre PCB contaminated sediment be removed from the upper Hudson. Furthermore, we want to be sure the floodplains and the backwaters that are still highly contaminated are cleaned up thoroughly and responsibly.” 

Beacon Mayor Randy Casale welcomed everyone to his city and began by thanking Scenic Hudson, Clearwater, the Beacon Sloop Club [and] the Riverkeeper “because they have been the people who have been pushing to clean the river up.”

Leo Wiegman, Mayor of the Village of Croton-on-Hudson, said his town was “delighted” to sign on for a fuller clean up effort “for the simple reason; a healthy river is good for our protection of the public health safety and welfare of our community.”

Karen Mejia, Councilwoman of the City of Newburgh, said the health of the river should be a concern for everyone.

“Much, much more needs to be done and we’re going to do it with the coalition that’s here today,” she said.

Pete Bardunias, President/CEO of the Chamber of Southern Saratoga County, asked people to look at the bigger picture.

“What we’re very concerned about is the economic future of upstate as well as downstate; we feel it’s all tied together,” he said. “We believe not only tourism, but manufacturing still plays an important role in upstate New York.” He said it is important to “make sure our transportation resources are fully utilized the best they can be and that definitely includes the upper Hudson River and certainly we would like to see it fully cleaned for the recreational aspects as well.”

Paul Gallay, President and Hudson Riverkeeper, said it may appear that GE is being asked to do something “out of the goodness of their hearts because they are good corporate citizens or because they think it’s in their enlightened self-interest. I am here to tell you this is something that General Electric must do; this is not something that they can walk away from.” He said the wording of the law does not permit doing the first part of a cleanup “and then pretend you’ve finished the rest of it.” Gallay said GE has not cleaned up the floodplains or addressed the damages that the company has done to the fishing industry and the economic “sphere” and to the communities “who would like to fish, swim and boat safely. GE owes New York and the Hudson a debt. It has not paid off that debt simply by completing the first major phase of the dredging…They owe New York the rest of this cleanup. We are dedicated to assuring that they pay down their debt 100%.” He pointed out that there are still hot spots in the river that are  within 200 feet of where the company has been already dredging and it would be very cost effective for the company to remain to finish the job.

“That’s how easy it would be to have General Electric stay in the water and finish the job that would allow a quicker recovery of the river from the stand point of economic opportunity and the dredging of the Canal and having a quicker recovery from the stand point of having the fish edible more than one meal a month…Think about it, the damage done is enormous. We are going to get our fishery back to some degree but if General Electric tries to say we’re going to take a victory lap, we’re only half way through the race but we’re thrilled with our results and we think you should be too. That doesn’t cut it; it isn’t good enough…We care about whether they finish the job and satisfy the law.”

In a prepared statement, General Electric spokesperson Mark Behan said the company is meeting their responsibilities, noting that it was the U.S. EPA that made the determination of the size and scope of the project.

“GE is addressing 100% of the PCBs that EPA targeted in the dredging project that will be completed this year,” he wrote, stating that this project is one of the largest cleanups undertaken in the U.S.

Behan stated before the work began the EPA “evaluated a full range of options and considered detailed scientific analyses and extensive public input. He added that the EPA has determined that the current project “is meeting the agency’s cleanup goals and that no additional dredging is warranted.” Behan highlighted EPA spokesperson Walter Mugdan, who said in November, that his agency “will not, in the foreseeable future, be requiring or demanding GE to do any additional dredging.”

Behan said GE will be dismantling their dewatering, transportation and processing facilities used for dredging and cleanup, but added that “GE will meet its obligations in every respect.” He stated that after this GE will continue with habitat reconstruction in the areas that have been dredged, continue monitoring the environmental conditions of the river and will evaluate the floodplains on the shoreline between Ft. Edward and Troy.

Comptroller Slams Plattekill Fire Department

BY MARK REYNOLDS  |   MREYNOLDS@TCNEWSPAPERS.COM

            On January 9 the New York State Comptroller issued an audit on the Plattekill Fire Department, analyzing the management of their internal financial operations from Jan. 1, 2013 through Jan. 14, 2014. Throughout the 21 page audit the Comptroller repeatedly highlighted the fire department’s lack of proper accounting, recording keeping and monitoring of their finances and warned that this “increases the risk that errors and irregularities could occur and remain undetected and uncorrected.”  

            The Plattekill Fire District’s two firehouses cover 23 sq/miles and serve 16,900 residents in the Town of Plattekill and a portion of the Town of Newburgh. The audit states that the Board of Fire Commissioners is responsible for managing the district’s overall finances and record keeping.  

            The audit states that the department treasurer is responsible for accounting of the district’s funds and for keeping the board apprised of the district’s financial position. It notes that the treasurer collected 15 receipts totaling $1,362,710 in 2013 but failed to issue press numbered duplicate receipts or record the dates in which the cash or checks were received.

            Additionally, the treasurer did not deposit receipts collected in a timely manner, failed to compile bank reconciliations for the first 9 months of 2013, however when finally completed were accurate, and submitted late and inaccurate reports to the board of fire commissioners. In addition, the treasurer did not provide the board with the district’s financial activities at their annual organization meeting “because the board did not require her to do so.” The board informed the Comptroller that they relied upon their external auditor’s annual audit and the treasurer’s monthly report. The Comptroller pointed out, however, that besides the treasurer submitting late monthly reports, they also contained errors.

            The Comptroller stated that the fire commissioners did not audit of their own vouchers and failed to ensure that all of the claims were permissible district expenses. The fire commissioners also did not select many of their professional service providers through a competitive bidding process; particularly three providers who were paid $15,297 in 2013. The audit broke out these expenses; $12,355 for general legal counsel, $2,120 for map surveying services and $822 for legal services relating to a personal injury case.

The district did not obtain the required number of quotations for 10 purchases totaling $23,921, as required under General Municipal Law, nor have written contracts with all providers.

The audit notes that when questioned, “District officials were unable to provide an explanation or documentation as to why they did not use a competitive process to select the other vendors or why they did not enter into written contractual agreements with the service providers.”

The audit states that the department has an established procurement policy that requires 3 written quotations or written proposals for purchases up to $500 and for purchases from $501 to $9,999 there must be board approval, a purchase order and 3 written/faxed quotations. The Comptroller reviewed 11 purchase orders totaling $42,619 issued in 2013 and found that “all had one or more deficiencies.” The board failed to formally approve the purchase contract awards for 10 purchases totaling $40,499; ten purchases totaling $23,921 did not have the required number of quotations; nine purchases totaling $41,194 were not pre-approved by the board; two purchases totaling $20,819 had payments exceeding the amounts the board approved and one purchase of $4,500 had no board approval.

The treasurer stated that she handles quotes for non-fire equipment and “that the purchase deficiencies occurred because she was not adequately trained for the treasurer position, including handling district purchases.”

The audit highlights the fact that the fire district’s own financial report for 2012 found that the district had failed to comply with their own procurement policy by obtaining the required number of quotations. The Fire District was required by law to prepare a written corrective action plan within 90 days that would address the 2012 findings but failed to do so. The audit notes that Fire District Board Chairman James Hoppenstedt Sr. said his board had discussed the 2012 discrepancies but he “was unable to provide a specific reason for why district officials did not prepare a written corrective action plan.”   

            The Comptroller’s audit took notice that in 2013 the district purchased $1,716 from Hoppenstedt’s general store. The audit states that this may not be prohibited if Hoppenstedt had abstained from voting on vouchers for items purchased at his store. However, “because the district does not create or certify abstracts for payments made to vendors, we were unable to determine if he abstained from voting on this payment.” 

            The audit points out that due to a lack of careful oversight, “district officials have no assurance that goods and services are procured in the most prudent an economical manner, goods and services of desired quality are being acquired at the lowest possible prices and procurement is not influenced by favoritism, extravagance, fraud or corruption.”

            The audit contains an attached letter from Hoppenstedt, dated Dec.12, 2014, acknowledging that his board is in agreement with the findings. He wrote that the department has started the process of “implementing measures to improve the internal controls over our financial operations” as is outlined in the audit. He promised that the district’s corrective action plan will follow. 

Planning Chairman Criticized at Public Hearing

BY MARK REYNOLDS  |   MREYNOLDS@TCNEWSPAPERS.COM

Though Lloyd Supervisor Ray Costantino struggled to focus last weeks Public Hearing on Matt Smith’s zoning change request, he was unable to quell significant public condemnation for the actions of Lloyd’s Planning Board Chairman, Dominick Martorana, who commented on Smith’s parcel at the Jan. 6 Ulster County Planning Board [UCPB] meeting, where he is also a member.

Smith has long been seeking a zoning change from residential ¼ acre to General Business [GB] for his Commercial Avenue property. At last weeks Town Board Public Hearing there was no public opposition to the zone change for Smith.

At the county Planning Board meeting Martorana spoke freely about Smith’s parcel, which succeeded in moving the board away from a no impact statement they were about to issue, to a Required Modification recommendation, not of GB but of Central Business [CB], a zoning designation Smith has repeatedly stated is of no use to him.

Paul Hansut, Lloyd’s Republican Party Chairman and Majority Leader of the Ulster County Legislature, pressed the Town Board on the issue.

“I listened to the recording of the meeting and he [Martorana] misled the county Planning Board about this,” he said, adding that he was disheartened to learn about Martorana’s actions.

Many residents stated that Martorana should have recused himself at the county level, especially in light of the fact that he did so when Smith previously appeared before his Lloyd Planning Board.

Donna Deeprose cited NYS General Municipal Law, Article 12-B sec 239-C (2)(c) that back’s the recusal argument.

“A member of a county planning board shall excuse himself or herself from any deliberation or vote relating to a matter or proposal before such county planning board which is or has been the subject of a proposal, application or vote before the municipal board of which he or she is a member.”

A subsequent NYS Attorney General’s opinion in 2003 clarified the wording of the law even further: “Under General Municipal Law 239 a county planning board member must recuse himself or herself from voting on any matter that was subject of a vote, proposal or application, before any body in the municipality where the individual serves as an official.”

Martorana, at one time, had also been the real estate agent of record for Smith’s parcel and recused himself from his own Planning Board, but only at a second meeting and only after repeated requests from Smith.

Lloyd’s Planning Board and Town Board both voted to proceed with a GB designation for Smith, a key fact Martorana omitted at the Jan. 6 UCPB meeting.

Councilman Mike Horodyski said he had also heard the recording of the county meeting and concurred with the characterization that Martorana had overstepped himself. Horodyski is on record stating that Martorana, by speaking at the UCPB meeting, placed his opinions above the decision of his own Planning Board as that of the Town Board.

“This should be talked about by the Town Board at a later date,” he said with Costantino agreeing, “not here tonight.”

Resident Joe Indelicato pressed Costantino on the issue, saying he felt Martorana had “disobeyed the law.”

The Supervisor asserted that Martorana acts as the town’s area representative who looks at regional issues when he is at the UCPB.

“It is about what is good for Ulster County,” he said. “It is not political but a planning issue.”

Costantino further added that Smith has not yet made a formal application to the town and the decision reached by the Lloyd Planning Board favoring GB was of an informal nature. Costantino appeared to be defending Martorana’s actions by asserting that because of the informal nature of the decision and that Smith was not immediately before the Lloyd Planning Board, that Martorana was not breaking the law.

In a subsequent interview, Hansut said that the Supervisor is splitting hairs on the issue and that what Martorana had done is troubling and should not be tolerated.

Dan McLaughlin voiced his concern about Martorana’s actions and urged the Town Board to investigate the matter further.

“I trust you will do the right thing,” he said.

As previously reported in the July 16, 2008 edition of the Southern Ulster Times, Martorana did exactly the same thing at the May 7, 2008 UCPB meeting concerning John Indelicato’s request for an Open Development designation for his New Paltz Road property.

Indelicato had been before the Town seeking relief in order to build himself a home on property that has been in his family for nearly a century. Not only did Martorana speak about this application in violation of state statute, he again, as with Smith, failed to convey accurate information to the members of the UCPB, resulting in a final recommendation from the UCPB that did not reflect the facts.

In 2008 attorney Steven Leventhal, of Leventhal and Sliney LLP, an authority on ethical and procedural municipal matters, commented on the Indelicato situation that also pertains to the Smith matter in 2010. Leventhal said then that Martorana, by sitting on the local and county boards, is essentially acting as his own boss.

“If you are a member of a board on the town level that has to refer matters to a county board for its approval, you essentially are in the position of reviewing your own work,” he said. “You cannot participate in the deliberations or the vote.”

On the Indelicato and Smith proposals, Martorana not only spoke but voted on both matters at the county level. In 2008 the town and the county were apprised of the violations concerning Indelicato but no action was taken against Martorana at that time. The Lloyd Town Board indicated they will review the present situation with Martorana but did not elaborate on what action they will take in the future.

Hansut said that he hopes this entire matter is investigated.

“I hope Ray [Costantino] looks at this,” he said. “It is my understanding that this is the second time he [Martorana] spoke before the county board involving a project in the town.”

Marlborough Project Requests Zone Change

BY MARK REYNOLDS  |   MREYNOLDS@TCNEWSPAPERS.COM

Perhaps the economy is getting better - at least the developer of the Bayside project thinks so. After a long absence, representatives of this project recently returned to the Marlborough Town Board to request a needed zone change in order to proceed. The project is being proposed at the intersection of Route 9W near Purdy Avenue.

The project’s attorney, Dominic Cordisco, of Drake and Loeb along with engineers Andrew Fetherston and Joseph Dopico of Maser Consulting, brought the board up to speed on the present status of the project.

Cordisco said the project is requesting a zone change from residential one acre [R-1] to simply residential [R]. He said the R district is “more lenient” and would allow the same project but not confine the developer to a senior, age restricted project.

Cordisco said his client also wishes to amend his residential project to include 12,500 square feet of commercial space along Route 9W, which the parcel fronts. In addition, owners of an adjoining parcel, John and Joseph Amedeo, have joined with the developer in seeking the zone change for their parcel that runs to Birdsall Lane.

Cordisco said the newest plan has been refined.

“We are not looking for a rush to judgment on anything,” Cordisco told the board. “All we are trying to do is to start the process that has been before you for a long time under the old petition.”

Fetherston apprised the board on their revised plan. The proposed project is for 101 mix designed units of Duplex, Townhouses and some rentals above the commercial structure by Route 9W. The engineer said they are hoping to do a “perfect alignment” of their project’s road with the proposed traffic light at the Elementary School. Fetherston said he has discussed this with the Marlboro School Board, the Department of Transportation [DOT], Town Officials and has received comments from the Town Highway Department on this issue. Fetherston said there will now only be a gated entrance/exit out to Purdy Lane that will only be used by emergency vehicles and not by residents of the project. He added that the Duplex units along Purdy will be designed to reflect the architecture of the existing single family homes on the north side of the road.

On the south side of the parcel, which borders the Middle School, Fetherston said they have incorporated sidewalks to allow children to safely walk down to Route 9W and “all the way across to the Elementary School,” thus preventing the dangerous situation of children walking on the shoulders of this busy roadway. He said there will be more parking provided for the public in the new plan. Fetherston said they are “completely staying out” of the Federal wetlands on the back side of the property.

“This is a conceptual plan that is evolving and has evolved over time,” he said.

Supervisor Chris Cerone said no cars or garages will face Purdy to lessen the lighting impact to the existing homeowners there.

“There are no garages, no driveways entering Purdy,” Fetherston agreed. “They all enter the internal road [on the site],”

Councilman Dr. Anthony Pascale said the units will all be owner occupied and not be held by absentee landlords. He added that he believed the 2-story Duplex units may be 55 and older.

“We are open to that,” Cordisco said. “At this time we need to start the process to start the zone change.”

Cordisco said the plan is designed to meet the town’s zoning code.

“We’re saying take an existing zoning district that you already have in town, the R district and apply it to this site,” he said.

Cordisco said the project is entirely within the water district but only partially within the sewer district, categorizing the extension of the sewer district as “still an open item.” He said he will have to calculate what the project’s fair share contribution to this district will be.

Cordisco asked the board to circulate to the other involved boards for lead agency as a way to begin the process. He said this will indicate that the Town Board feels the project is “worthy of consideration.”

“It is not giving thumbs up or thumbs down,” he noted. “But it is at least starting the process so that we can do a full environmental review. That is important because we are not trying to cut any corners.”

A full review will take into consideration the impacts that Bayside will have upon traffic, water, and sewer, storm water, visual and financial upon the town.

The Town Board made a motion to circulate as lead agency, as Cordisco suggested, and made it subject to the developer providing an escrow deposit.

In a follow up interview, Cerone said he will consider Bayside separately from the nearby Dockside project, who is also asking for a zone change to residential. Both projects have been sent to the Ulster County Planning Board for their comments.

“I am looking at them both at the same time, but I’m taking each project on its merits,” he said. “They are both going to have to do full traffic studies and long form Environmental Impact Statements [EIS]. They have to go through the whole process.”