From Staff Reports

TEXARKANA — The former administrator of an Alzheimer’s assisted living facility in Texarkana pleaded guilty Tuesday to skimming equity from the facility, U.S. Attorney Joseph D. Brown has announced.

Antonio Otero, 43, of Little Rock, Arkansas, pleaded guilty to the federal violations before U.S. Magistrate Judge Barry A. Bryant in the Eastern District of Texas.

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 and was instrumental in the founding and operation of the facility.

To secure millions of dollars in necessary funding, Otero obtained a loan that was insured by the U.S. Department of Housing and Urban Development.

The HUD-insured loan 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 if the Magnolia defaulted on the loan.

As a condition of this federal benefit, court documents said 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, court documents said. For example, the documents said, Otero took money from the Magnolia to pay for $3,952 of camera equipment, a $3,247 watch, $2,520 in landscaping for his home, a $27,408 personal mortgage payment, a $12,750 down payment on a personal vehicle and $1,540 tickets to a Dallas Cowboys football game. Additionally, he took money from the Magnolia and gave it to other individuals, including $13,000 for cosmetic surgery, $5,500 for a loan repayment and $30,000 in equity distributions, the documents said.

In total, Otero took personal responsibility for causing a $2 million loss to the United States, court documents showed. As part of his plea agreement, he has agreed to pay the $2 million restitution.

Otero also faces up to five years in federal prison. A sentencing hearing will be scheduled after a presentence investigation by the U.S. Probation Office.