The owner of an assisted living facility in Texas pleaded guilty Wednesday to defrauding the U.S. Department of Housing and Urban Development and has agreed to pay restitution, the Department of Justice announced.

Rafael Otero, Ph.D., a clinical psychologist, and his son, Antonio Otero, “exploited a HUD-insured mortgage program designed to provide affordable housing for those suffering from diseases like Alzheimer’s,” Acting U.S. Attorney Nicholas Ganjei said. “While they left the HUD-insured mortgage unpaid, the Oteros took hundreds of thousands of dollars. Because of their actions, the American taxpayers ultimately suffered a loss of over $3.6 million.”

Under federal statutes, Rafael Otero faces up to a year in federal prison when he is sentenced. Antonio Otero pleaded guilty to equity skimming on Oct. 28, 2019, and was sentenced on June 2, 2020, to 46 months in prison. He also was ordered to pay $2 million in restitution to HUD.

According to information presented in court, Rafael Otero was the majority owner of the Magnolia Alzheimer’s Assisted Living in Texarkana, TX, and his son was the facility’s administrator. To secure millions of dollars in funding, they obtained a loan for which HUD would take the financial loss in the event that Magnolia defaulted.

Under terms of the loan, the owners of the Magnolia were prohibited from receiving money from the facility unless the loan was being paid and the facility had surplus cash. Instead of paying the HUD-insured loan, however, and in violation of the loan agreement, the Oteros took hundreds of thousands of dollars from the Magnolia, the Justice Department said.

Rafael Otero reportedly received more than $150,000 from Magnolia in unauthorized compensation and other payments. Antonio Otero was said to have taken even more money from the Magnolia, using it to pay for $3,952 in camera equipment, a $3,247 watch, $2,520 in landscaping for his personal residence, a $27,408 personal mortgage payment, a $12,750 down payment on a personal vehicle, and $1,540 for tickets to a Dallas Cowboys game. Additionally, the Justice Department said, he took money from Magnolia and gave it to other people — for instance, paying $13,000 for cosmetic surgery.

When Rafael Otero learned that his son had been stealing money from Magnolia, he did not report him to authorities or remove him from his position, according to the Justice Department. Antonio Otero subsequently reportedly took an additional $62,000.