Ex-SBA chief accused of misusing donations made to nonprofits
A former head of the Small Business Administration is facing criminal charges in San Antonio that he misappropriated hundreds of thousands of dollars donated to two nonprofits he’s led.
Hector Barreto, who headed the SBA for five years under President George W. Bush, was indicted this week by a federal grand jury on four conspiracy charges, including to commit money laundering and wire fraud.
Barreto, 60, received more than a total of $900,000 from the Latino Coalition Foundation and Hispanic Business Roundtable Institute from 2013 to 2019, according to the indictment. He lives in Orange County, California.
San Antonio health care consultant Miguel Gutierrez, who along with Barreto allegedly had operational control over both nonprofits, was indicted on the same charges. Gutierrez also is charged with four counts of filing false tax returns.
Barreto and Gutierrez allegedly used the the nonprofits’ funds to pay personal expenses such as for travel, meals, entertainment and unrelated business interests. Payments also were made to family members, the indictments say.
Barreto has been cooperating with the investigation since receiving a grand jury subpoena last year, his attorney, Manny Medrano of Los Angeles, said Friday.
“We vigorously deny any and all allegations of misconduct,” Medrano said. “We look forward
to our day in court and a federal jury trial to exonerate my client.”
Donations made by the founder of a Texas health care services company, identified as Victim 1, and a financial institution, identified as Victim 2, to the nonprofits were diverted to Barreto and Gutierrez through direct payments and by payments funneled through third parties, the indictment alleges.
Victim 1 is believed to be Dr. George Rapier III, founder, chairman and CEO of San Antonio’s WellMed Medical Management, which operates clinics that provide health care to senior citizens. He is a well-known philanthropist. A WellMed spokesman declined to comment Friday.
Victim 1 donated about $2.4 million to the Latino Coalition Foundation and $1.6 million to the Hispanic Business Roundtable Institute from April 2013 through April 2019.
Gutierrez has been a longtime WellMed consultant.
“Mr. Gutierrez has done nothing wrong and he is very eager to have the opportunity to clear his name in court,” his attorney, Donald H. Flanary III, said.
Victim 2, the unidentified FDIC-insured financial institution, donated $250,000 to the foundation.
The third parties who allegedly accepted payments from the nonprofits and then funneled most of those funds to Barreto and Gutierrez are identified in the indictment as Cooperating Witness 1 and Cooperating Witness 2.
Witness 1 is a San Antonio attorney who allegedly accepted payments via wire transfers. The payments were supported by false or misleading invoices, the indictment says. Witness 2 is Nevada political consultant.
It appears from the indictment that Witness 1 and Witness 2 may have each received more than $100,000 from the alleged scheme.
Barreto served a five-year stint as SBA administrator from 2001 to 2005.
After he left the post, he took the helm of the Latino Coalition, based in Kansas City. It was founded in 1995 by a group of Hispanic business owners from across the country to research and develop policies relevant to Latinos. Barreto is its chairman emeritus, its website shows.
Barreto “has devoted his life to government and nonprofit service,” said Medrano, his lawyer. “He’s been intimately involved for decades in the Latino community and business community.”
He has served as chairman of the Latino Coalition Foundation, which promotes initiatives that will enhance business, economic and social development of Latinos, its tax filings state.
A phone number listed on the Irvine, Calif., foundation’s website wasn’t working Friday.
A representative for the Latino Coalition didn’t comment.
Assistant U.S. Attorney Joseph Blackwell declined to comment on the indictment.