A California man and his Texas co-conspirator were sentenced in a federal court in San Antonio for conspiracy to commit wire fraud.
Hector Barreto, 62, of San Juan Capistrano, was sentenced to 20 months in prison and ordered to pay $944,693.51 in restitution and a $100,000 fine. Miguel Gutierrez, 49, was sentenced to 10 months in prison as a condition of five year probation.
He was also ordered to pay a $100,000 fine and restitution of $1,194,439.51. A restraining order was entered against both defendants to ensure government oversight of their assets until the victims are made whole.
According to Court documents, Barreto, who served as the Small Business Administrator under President George W. Bush, and Gutierrez operated a charity called the Latino Coalition Foundation.
Barreto controlled the charity’s bank accounts and had operational control.
Barreto and Gutierrez solicited donations into that charity to be used to establish an apprenticeship program to help low income youth get critical job training and skills.
Instead of using the charitable funds for charity, Barreto and Gutierrez stole much of the funds for themselves through direct and indirect payments to themselves, using the charity’s credit cards for personal expenses, and payments to friends and family members.
To help hide the diversion of charitable funds, Barreto and Gutierrez falsified the IRS Form 990s for the charity to make it falsely appear they had not received payments from the charity when in reality, they had received hundreds of thousands of dollars.
Gutierrez pleaded guilty in July 2022 to one count of conspiracy to commit wire fraud and one count of filing a false tax return. Barreto pleaded guilty in April 2023 to conspiracy to commit wire fraud and conspiracy to defraud the United States.
“Our nations charity system is based upon trust,” said U.S. Attorney Jaime Esparza for the Western District of Texas. “Donors trust that those who run the charities are using their money for charity and not to line their own pockets. The defendants today were sentenced for betraying that trust. Our office will vigorously prosecute anyone who steals charitable donations to feed their own greed.”
“Many Americans want to help their communities by supporting charities and causes that they care about. They trust that their support will be used to help those in need,” said Acting Special Agent in Charge Doug Olson for the FBI San Antonio Division. “Hector Barreto and Miguel Gutierrez abused that trust, and this sentence reflects the seriousness of their crimes. We want to thank our partners in IRS Criminal Investigation for their continued work in protecting our nation’s citizens.”
“The tax-exempt status offered by the IRS helps citizens to know that an organization is operated to promote social welfare. Barreto and Gutierrez stole a significant portion of tax-exempt funds and eroded the trust citizens have in these organizations,” said Assistant Special Agent in Charge Rodrick Benton for IRS Criminal Investigation’s Houston Field Office. “CI special agents helped unravel this scheme and will continue working to protect the public’s interest by stopping these schemes cold.”
The FBI and CI investigated the case.