Lexington Man Arraigned on a Multi-Million-Dollar Conspiracy Charge
|U.S. Attorney’s Office September 07, 2010|
LEXINGTON, KY—A Lexington man who was allegedly part of a conspiracy to defraud mortgage lenders out of more than $2 million in loans was arraigned this afternoon in federal court.
An August 27 indictment charged 51-year-old Barry Buchignani with conspiracy to commit wire fraud and conspiracy to make false statements.
Buchignani entered a plea of not guilty before U.S. Senior District Court Judge Joseph M. Hood. A trial is set for November 2.
Buchignani, a former Lexington police officer, is accused of conspiring with others who worked in the mortgage loan business to buy six homes in Lexington using approximately $2.5 million in loans that he fraudulently obtained from lenders.
According to the indictment, Buchignani caused lenders to overpay him in loans by leading them to believe that the homes he planned to buy cost much more than their true lower sales price. Buchignani executed this scheme by conspiring with attorney Kim Allen Clay, construction contractor James Davis, mortgage broker Warren Reid, and others to falsify information on loan applications.
The indictment alleges that the loan applications falsely inflated Buchignani’s finances, contained fraudulent real estate contracts, bogus lease documents, false financial summaries, fraudulent checks, false tax returns, and stated that Buchignani had a higher income and fewer liabilities than he actually had.
On one application, Buchignani allegedly failed to disclose that he was simultaneously owning or purchasing four other houses that mortgaged for more than $1,750,000.
In addition, the indictment also alleges that Buchignani conspired with Clay, Davis, and others to make false statements to the United States Department of Housing and Urban Development (HUD).
The indictment accuses Buchignani of conspiring to falsify six HUD-1 settlement statements. HUD-1 is a summary document required by federal law to be generated at the time of residential real estate closings.
Among other things, the form lists the sale price and the down payment amount involved with a particular sale. The indictment alleges that Buchignani’s HUD-1 documents listed false sales prices for his six home purchases connected to the conspiracy. In addition, Buchignani’s forms listed false down payment amounts on all six purchases when no down payments of any kind were ever made according to the indictment.
Buchignani faces up to 20 years in prison if convicted.
Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, Elizabeth A. Fries, Special Agent in Charge of the FBI, and Chief Ronnie Bastin, Lexington-Fayette, Urban County Government Division of Police jointly made the announcement today.
Buchignani is the latest in a string of individuals charged in the four-year investigation into mortgage fraud activities in Central Kentucky. Clay pleaded guilty to wire and mail fraud charges in 2007 for his part in closing loans, preparing false documents, and conducting financial transactions in furtherance of the scheme. He was sentenced to 18 months in prison in November of last year.
Davis and Reid recently pleaded guilty to charges of conspiring to commit wire fraud as part of the same scheme. Davis entered his guilty plea on March 5, 2010. Reid did likewise on April 8, 2010. Both men are awaiting sentencing.
The investigation preceding the indictment was conducted jointly by the FBI and the Lexington-Fayette Urban County Government Division of Police. The U.S. Attorney’s Office will be represented by Assistant United States Attorney Brandon W. Marshall.
The indictment of a person by a grand jury is an accusation only, and that person is presumed innocent unless proven guilty.