The former administrator of a Texas assisted living community has been sentenced to 46 months in federal prison and ordered to pay $2 million in restitution to the federal government after pleading guilty to skimming equity from the community instead of making loan payments to the Department of Housing and Urban Development. The Justice Department made the announcement on Tuesday.

Antonio Otero, the founder and former administrator of The Magnolia Alzheimer’s Assisted Living facility in Texarkana, TX, faced up to five years in federal prison. He had pleaded guilty in October.

According  to the U.S. Attorney’s Office of the Eastern District of Texas, where Otero was sentenced, Otero obtained a HUD-insured loan for the facility. Under the loan terms, HUD would incur the financial loss in the event that The Magnolia defaulted. Otero and The Magnolia owners agreed to be bound by a regulatory agreement with HUD that prohibited them from removing equity from the facility unless the loan was being paid and The Magnolia had surplus cash.

Instead of paying the loan, however, Otero reportedly skimmed equity from The Magnolia to pay $3,952 for camera equipment, $3,247 for a watch, $2,520 for landscaping for his home, $27,408 to make a personal mortgage payment, $12,750 for a down payment on a personal vehicle and $1,540 for tickets to a Dallas Cowboys game.

Otero, who was administrator of the facility from before 2011 until October 2015, also reportedly gave money that he took from The Magnolia to individuals — $13,000 for cosmetic surgery, $5,500 for a loan repayment and $30,000 in equity distributions.

In August 2017, The Magnolia went under the management of Riebe Investments. 

The case was investigated by the Fort Worth Office of HUD’s Office of Inspector General.

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