Antonio Otero, Equity Skimming, Texas 2019

A Texas man has been sentenced to federal prison for his role in a scheme to skim equity from a Texarkana assisted living facility.

Antonio Otero, 43, of Little Rock, AR, pleaded guilty on October 29, 2019, to charges of equity skimming and was sentenced to 46 months in federal prison by U.S. District Judge Robert W. Schroeder III on [date].

Otero was also ordered to pay restitution in the amount of $2 million to the U.S. Department of Housing and Urban Development (HUD).

According to information presented in court, from before 2011 until October 2015, Otero was the administrator of the Magnolia Alzheimer’s Assisted Living facility in Texarkana, Texas, and was instrumental in the founding and operation of the facility.

Otero obtained a loan that was insured by HUD, which provided a favorable interest rate and did not require the owners of the Magnolia to take personal responsibility for the loan in the event of a default. Instead, HUD would suffer the financial loss in the event that the Magnolia defaulted on the loan.

As a condition of this federal benefit, Otero and the owners of the Magnolia agreed to be bound by a regulatory agreement with HUD that prohibited them from removing equity from the Magnolia unless the loan was being paid and the Magnolia had surplus cash.

Instead of paying the HUD insured loan, Otero engaged in a scheme to skim equity from the Magnolia. He took money from the facility to pay for personal expenses, including $3,952 for camera equipment, a $3,247 watch, and $2,520 in landscaping for his personal residence.

Otero also took money from the facility and gave it to other individuals, including $13,000 for cosmetic surgery, $5,500 for a loan repayment, and $30,000 in equity distributions. In total, Otero took personal responsibility for causing a loss to the United States in the amount of $2 million.

Source: https://www.justice.gov/usao-edtx/pr/former-administrator-texarkana-assisted-living-facility-sentenced-federal-violations