Former Municipal Finance Director Pleads Guilty to Misappropriating $2.5 Million in Government Funds

A former municipal finance director in Puerto Rico has pleaded guilty to misappropriating $2.5 million in government funds intended for the U.S. Department of Housing and Urban Development (HUD) Section 108 Loan Guarantee Program.

Victor Cruz-Quintero, the former director of finance for the Municipality of Toa Baja, pleaded guilty to one count of misappropriation of government funds before United States Magistrate Judge Marcos E. López in San Juan, Puerto Rico, on an unspecified date.

As the director of finance, Cruz-Quintero made an unauthorized transfer of $2,538,164.41 from HUD Section 108 Loan Guarantee Program funds into the municipality’s general fund on October 28, 2014. These funds were then used to make payroll payments to municipal employees and to pay various municipal contractors.

The use of HUD funds for these purposes was unauthorized, as all federal funds and financing provided by HUD to the Municipality of Toa Baja as part of the Section 108 Loan Guarantee Program were required to be used only for purposes authorized by HUD.

The Municipality of Toa Baja recognized the misappropriation of these funds on March 18, 2021, and executed a Repayment Agreement with HUD to make five annual payments totaling $2,605,164.

Victor Cruz-Quintero faces a maximum penalty of 10 years in prison. A federal district court judge will determine the sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

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