Former TXK administrator of assisted living facility sentenced to 46 months for federal violations


TEXARKANA, Ark. (KTAL/KMSS) – A Little Rock man was sentenced to federal prison Tuesday for federal violations in the Eastern District of Texas.

According to the U.S. Attorney Stephen J. Cox, 43-year-old Antonio Otero pleaded guilty on Oct. 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.  Otero was also ordered to pay restitution in the amount of $2 million to the U.S. Department of Housing and Urban Development.

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. In order 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 (HUD.)

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 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. For example, Otero took money from the Magnolia to pay for $3,952 of 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 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. In total, Otero took personal responsibility for causing a loss to the United States in the amount of $2 million.

This case was investigated by the Fort Worth Office of the U.S. Department of Housing and Urban Development’s Office of Inspector General and prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

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