The third former City of Amarillo employee accused of stealing federal housing assistance funds intended for vulnerable residents has officially pleaded guilty in federal court, marking another chapter in a years-long embezzlement scandal tied to pandemic-era relief programs.
Amarillo resident Selene Varela appeared Monday afternoon before Magistrate Judge Lee Ann Reno at the J. Marvin Jones Federal Building, where she entered a guilty plea to one count of theft concerning a program receiving federal funds.
Varela is the third former employee connected to the City’s Community Development Department to plead guilty in connection with the misuse of federal housing assistance money distributed during the COVID-19 pandemic. Federal prosecutors say the thefts targeted funds that were intended to help residents avoid eviction and maintain stable housing during a period of widespread economic hardship.
According to court records, Varela embezzled approximately $41,350 between September 2020 and August 2022 while working as a Homeless Management Information System analyst for the City of Amarillo. She had worked on and off for the city beginning in 2014 and, by 2019, was assigned to the department responsible for administering housing assistance programs funded through the U.S. Department of Housing and Urban Development.
The funds came through the Emergency Solutions Grant program, which expanded during the pandemic to assist renters facing financial instability because of job losses or reduced income. Under the program, the city paid landlords directly in exchange for providing housing to eligible residents.
As part of her duties, Varela helped vet applicants, coordinate property inspections, and prepare Payment Voucher Packages submitted to the city’s finance department for payment approval.
Court documents state that pandemic-related remote work policies and waived inspection requirements created opportunities for fraud.
Investigators say Varela submitted fraudulent payment requests using her own address as the location supposedly needing assistance while listing a relative as the tenant. The first fraudulent payment — totaling $6,600 for six months of rent — was issued to her landlord in September 2020. According to court records, neither the landlord nor the relative whose name was used knew about the scheme.
Authorities also alleged that Varela created a fictitious landlord profile using another relative’s information and generated fake tenant records to secure additional payments. That relative allegedly cashed the checks and gave Varela the proceeds.
From June 2021 through August 2022, the City of Amarillo issued 22 payments totaling roughly $34,750 connected to the fraudulent activity, according to court filings.
During Monday’s hearing, Reno reviewed the conditions of Varela’s release pending sentencing. Those conditions include restrictions against violating any local, state, or federal laws, surrendering her passport, remaining within a 240-mile radius of Amarillo, avoiding firearms or explosive devices, and reporting contact with law enforcement to the court.
Reno also informed Varela of her constitutional rights, including the right to remain silent and the right to legal representation. After accepting the guilty plea, Reno said she would recommend that U.S. District Judge Matthew Kacsmaryk formally accept the plea agreement and later schedule sentencing proceedings.
Varela faces a maximum sentence of 10 years in federal prison, a fine of up to $250,000, as many as three years of supervised release, and restitution totaling $41,350. However, based on the sentences received by the other two former employees involved in the scandal, she could ultimately receive a shorter prison term.
Her former supervisor, Amy Dixon, was the first employee to plead guilty in the case. Dixon admitted to stealing approximately $465,000 from the same housing assistance program and was sentenced in 2024 to two years in federal prison along with restitution payments. Dixon was released from prison on March 13, 2026.
Another former employee, Vanessa Robinson, pleaded guilty in March 2025 to conspiracy to embezzle from a federally funded program. Prosecutors said Robinson stole more than $121,325 between 2019 and 2024. She later received an 18-month federal prison sentence and was ordered to pay restitution.
In a statement released after Varela’s guilty plea, the City of Amarillo said the investigation originated after city staff identified irregularities and reported them to federal authorities in late 2023.
“The City of Amarillo is aware of the recent guilty plea involving a former employee connected to federal housing assistance funds,” the statement read. “This case is part of a previously identified matter that was uncovered through internal processes and reported by city staff to federal authorities in late 2023.”
The city also emphasized that additional oversight and monitoring procedures have since been implemented.
“The initial discovery resulted from efforts to strengthen oversight and accountability within the program, including enhanced monitoring and review processes,” the statement continued. “Those measures have remained in place and continue to guide program operations today.”
The Texas Department of Housing and Community Affairs previously confirmed that the City of Amarillo was required to reimburse misused federal funds connected to the case.
Despite the scandal, city officials say federal and state reviews found no remaining compliance issues severe enough to jeopardize continued funding for local housing assistance programs. Officials maintain that services funded through the program continue operating for residents who rely on them.
