Psychologist to serve 1 year for HUD fraud

TEXARKANA, Texas — A local psychologist and former nursing home owner has been sentenced to a year in federal prison in connection with fraud involving a Housing and Urban Development loan.

Rafael Otero, 68, must surrender himself to federal authorities to begin serving his term by Jan. 12. He appeared on Aug. 12 with Texarkana lawyer Jeff Harrelson before U.S. Magistrate Judge Caroline Craven for sentencing on the misdemeanor charge of HUD fraud, according to court documents.

Otero’s son, Antonio Otero, used funds, which should have gone toward the HUD mortgage at the Magnolia assisted living facility in Texarkana, for personal expenses including plastic surgery, NFL tickets and landscaping. He was sentenced in June 2020 to 46 months in federal prison and ordered to pay $2 million in restitution.

Rafael Otero is liable for $3,654,677 in restitution. In a sentencing memorandum filed in advance of the hearing, Harrelson argued that Rafael Otero’s misconduct doesn’t rise to the level of that his son’s though he admits Otero violated federal law.

While Antonio Otero embezzled funds to support an extravagant lifestyle, Harrelson claimed his father made payments totaling approximately $150,000 to non-HUD lenders when the HUD loan should have been a priority.

“These were not amounts paid toward a lavish lifestyle, as Antonio had done, but were made to try to keep the doors open at The Magnolia,” the memorandum states. “Yes, these payments violated the statute, and Dr. Otero has accepted responsibility for this misdemeanor violation, but his conduct as compared to Antonio’s are vastly dissimilar along the spectrum of criminal conduct.”

The memorandum further argues that Otero’s absence as a bilingual mental health practitioner will negatively impact the local community.

Following his release from federal custody, Rafael Otero will be supervised by federal authorities for a year. Assistant U.S. Attorney Jonathan Hornok represented the government.