By Paul Kruze, Contributing Editor
July 3, 2019 (El Cajon) - Andrew Otero on Tuesday released a long written statement on his involvement in a construction contracting scheme. Otero was sentenced Friday in federal court after being found guilty of defrauding the federal government to obtain funds allocated for businesses owned by disabled veterans. Otero states, “I make no excuse, and take full responsibility for what I was convicted of. When you bend rules sometimes you have not even the slightest idea of what the consequences can turn out to be.”
In the statement (published on the East County Enquirer’s Facebook page), Otero absolves his wife of any involvement in the illegal actions. “Tamara Stork Otero was completely un-involved with any of my businesses. She was not aware of how I obtained these three projects. After the Government radio on our facilities, and she became aware of the 2& Agreement, she expressed how “stupid” she thought I was for doing this. Looking back, I have to agree with her.”
Here are his unedited words in their entirety, as released:
“To my Friends;
Just thought I would let everyone know the facts on my legal situation. Its over now, and my Attorney’s have finally given me the go-ahead to talk freely about it.
There are many things written on-line about this case, along with lots of “hear-say”. Its important to me that you just hear the facts from me.
I want to start by saying that I make no excuse, and take full responsibility for what I was convicted of. When you bend rules, sometimes you have not even the slightest idea of what the consequences can turn out to be. A very costly but valuable lesson I have learned in this 6 year ordeal.
10 years ago (March 2009) my business next door neighbor approached me about starting a joint venture. He had a “disabled Vet” status and wanted to participate in some Government programs, taking advantage of the projects that are set aside for people with this status. My mistake started the minute I agreed to this. I was a fairly large Federal Government General Contractor. He worked for the company next door that did IT and Telephones. They did ours. He wanted to do GC work because that is where all the opportunity is in the Disabled Vet program. As a GC, he was basically a one man show, but to be honest, a “no-man” show as he had no experience in General Contracting. Because of this, I should have turned him down. Instead, I saw it as an opportunity to obtain work for our General Contracting company. I knew from the start that I would be doing basically everything. I had the bonding capacity, the experience, Government relationships, as well as the infrastructure to perform any project that would be contracted through this program. He had none of the above. He had nothing to contribute other than the Disabled Vet status.
So we obtained 3 projects in this program before I made the decision to shut it down due to some new stricter certification requirements that came out. Unfortunately the last project was an 8 million dollar project which made this a 12 million dollar deal. As of note, the government gave us this last project while their investigation was taking place behind the scenes (we didn’t know about it yet).
I probably don’t need to explain; 1. Who estimated the jobs? 2. Who ran the jobs? - of course! - And of course, the Disabled Vet had little to no participation in it all as he didn’t need to. We were taking care of everything. That's not how it is supposed to be. The Disabled Vet is supposed to have 51 percent control. It didn’t matter that he always made over 51 percent of the profits. I’ll explain that later.
So looking back at my lack in judgement above. I did something even more lacking; When we obtained our first job, we went to get bonding for the job. Since the Disabled Vet was technically 51% owner, the bonding company wanted his financial information. Looking at his information, I knew we were going to have trouble getting a bond...So what do I do? I come up with this brilliant (sarcasm) idea of what is known now as either “The side Agreement”, or “The 2% Agreement”. A lot of people don’t realize that larger General contractors operate on very high volume, but very low profits. Most of your very large GC’s are actually operating on less than 1% profit after paying all cost, and overhead. Its still a pretty substantial number when you’re doing 250 million plus per year. I would have been considered a mid size GC. My 10 year profit average was below 4% at this time. This is where the 2% came from. 2% represented over 51% of our 10 year average. He was making 2% of the gross. This is very important to understand. He wasn’t making 2% of the “profits”.....He was making 2% of the “Gross revenue” (total contract amount). So I decided that this was the answer to the bonding problem. Show the bonding company that A&D GC was doing everything. The risk to them was the same as any other project A&D GC was doing with them. HUGE mistake number 2! This was the smoking gun that buried me. Again, it doesn’t matter that the Disabled Vet was getting 51% of the profits. He was definitely not 51% in control. The “2% Agreement” confirmed that.
That is pretty much it in a nutshell. I bent the rules. Feeling desperate to keep your company busy and keep a large amount of people employed is no excuse for bending rules. Trying to justify it by thinking just because you’re paying out over 51% of the profits does not justify breaking the rules in regard to control. This case was never about money. The Government didn’t prosecute on that platform. It was always about control.
So when you’re dealing with the Federal Government, they have their own guidelines which they use to prosecute both Civil & Criminal. There is law written that they can sue for 3 times the contract value. Not profit, but contract value!! Even though we received “Outstanding” evaluations by the Government on all 3 projects, they are able to go after us for 36 Million dollars! When it comes to going to trial, they go for it all! Fortunately we were able to settle the civil suit at a more reasonable amount without going to trial (the trial was for the criminal side).
As many are aware, we lost the case. The prosecutor in this case, Rebecca Kanter is probably the best Attorney I have ever witnessed in action. She was brilliant in her prosecution of this case for many reasons which I wont get into. I have no hard feeling towards her. They were fair with me after trial when coming to a settlement agreement for the criminal side. Of course there were things she said at trial that I thought were unfair, but her job is to win the case. All I have is complements in how she thoroughly and methodically did this. She is an amazing, and very brilliant Attorney that if you’re ever in court with her, you better hope she is on your side. Of course she also had an amazing support team that went through hundreds of thousands of e-mails and documents in gathering her evidence.
Bottom line: I was Sentenced by Judge Houston last Friday. Judge Houston I believe is a very fair Judge who has to show the public that you don’t get away with bending rules and taking advantage of Federal programs designed to help Veterans, Minorities, or whatever other special disadvantaged programs are out there. Judge Houston sentenced me to 18 months in Federal custody. With good behavior (I think I can behave) I’ll get out in 15 months. He was even fair enough to let me wait until October 7th to check in, in order to complete our one last General Contracting project we have going in Lemoore, CA. In addition, I really appreciated that Judge Houston clearly pointed out several times during sentencing that none of this affected A&D Fire Sprinklers and that “Fire Sprinklers was not a part of this”.
On the Civil side, we settled with the Government for 3.2 Million dollars. If we pay the 3.2 Million by August, this amount will offset any and all criminal fines. Fortunately Tamara and I were able to sell some Idaho property in order to pay this fine.
Just a little technical info if you’re wondering why there are multiple counts against me; Once the Joint Venture is determined to be a non-legit Joint Venture, everything you submit to the Government can be considered another count of fraud, or False Statements. This would include each individual monthly Billings. In addition, since everything is done all on-line now, its also considered “wire fraud”.
I also want to be clear. Tamara Stork Otero was completely un-involved with any of my businesses. She was not aware of how I obtained these three projects. After the Government raid on our facilities, and she became aware of the 2% Agreement, she expressed how “stupid” she thought I was for doing this. Looking back, I have to agree with her.
I am looking forward to getting my debt to society (and Veterans) paid. When I do, I am so looking forward to moving forward once again!
I am so thankful for my friends and family who have supported, and shown their belief in me throughout this entire ordeal. I couldn’t have made it this far without them. There will be a positive outcome once this is in my rear view mirror. I am already experiencing some of it now. I really appreciate friends and family more than I would ever have, had this not happened. It has brought us closer than ever. I do know that there are many that I didn’t hear from just because people don’t know what to say, and/or are afraid to say the wrong thing. I know most everyone of you know WHO I am, and that has not changed. This has and will only make me a better person - I will make sure of that!
To my friends and family: I love you”
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