Massachusetts State Rep. Francisco E. Paulino (D) was arrested by federal authorities Wednesday after being indicted on charges stemming from an alleged scheme to fraudulently obtain hundreds of thousands of dollars in pandemic relief funds.
Paulino, 46, represents Massachusetts’ 16th Essex District and was taken into custody by FBI agents following an 11-count federal indictment filed Tuesday in US District Court in Boston.
The Democratic lawmaker faces eight counts of wire fraud and three counts involving unlawful monetary transactions or aiding and abetting money laundering.
Federal prosecutors allege Paulino participated in a scheme between approximately April 2020 and December 2021 involving more than $700,000 in pandemic relief funds.
According to the indictment, Paulino owned and operated Madison Tax LLC and Madison Mortgage Inc. in Lawrence. Prosecutors allege he used those businesses, intermediaries and other individuals’ personal information to obtain government funds and direct money into accounts under his control.
One portion of the case centers on Pandemic Unemployment Assistance benefits.
Prosecutors allege Paulino submitted an application in April 2020 using the identity of a 77-year-old relative without that person’s knowledge. The application allegedly claimed the relative was self-employed or an independent contractor whose employment had been affected by the pandemic.
Federal authorities say the benefits were directed into a Citizens Bank account controlled solely by Paulino.
The indictment alleges Paulino continued submitting weekly certifications through September 2021 and provided fabricated documents after the Massachusetts Department of Unemployment Assistance sought additional information.
Tens of thousands of dollars in unemployment benefits were ultimately deposited into the account, according to prosecutors, who allege some of the money was later used for personal expenses, loans, real estate and transfers to Paulino’s campaign account.
Federal investigators are also accusing Paulino of improperly obtaining Economic Injury Disaster Loan funds through the Small Business Administration.
One of Paulino’s businesses, Jackson Enterprise, which operated a Heav’nly Donuts location, allegedly received approximately $136,600 after prosecutors say its 2019 revenue was overstated. Authorities allege some of that money was subsequently directed toward a real estate purchase in Lawrence, per Trending Politics.
Madison Tax received approximately $401,800.
“As an accounting office we serve the community of Lawrence one the poorest city in the country. We need your help,” Paulino wrote to the SBA in May 2020, according to the indictment.
Prosecutors allege some of the money was later transferred to Madison Mortgage and used to finance high-interest mortgages on properties in Lawrence and Methuen.
Another portion of the case involves a laundry-business owner who was a client of Paulino’s.
The indictment alleges the client had limited English and had entrusted Paulino with personal information and online banking credentials for accounting purposes.
Prosecutors accuse Paulino of submitting an SBA application in the client’s name without the client’s knowledge and later increasing the loan to $347,500.
Authorities allege that in November 2021, Paulino arranged for $200,000 to be transferred from the client’s account to a Madison Tax account. That money was then allegedly used toward a $680,000 mortgage issued through Paulino’s mortgage company, which collected a $17,000 origination fee.
US Attorney Leah Foley condemned the alleged conduct while discussing Paulino’s case alongside the separate indictment of Lawrence Mayor Brian DePeña.
Foley said pandemic relief money was intended for struggling Americans and businesses rather than individuals who allegedly sought to enrich themselves.
Federal prosecutors are also seeking forfeiture of property allegedly connected to the offenses.
Paulino had not publicly commented on the allegations as of the report, and the charges remain accusations unless and until proven in court.
