The FBI arrested Massachusetts State Rep. Francisco Paulino (D-Methuen) on Wednesday morning after a federal grand jury indicted the second-term Democrat on 11 counts of wire fraud and money laundering.
Prosecutors say Paulino treated COVID relief programs like an ATM, fraudulently obtaining more than $700,000 in pandemic unemployment benefits and Small Business Administration disaster loans.
Paulino represents the 16th Essex District, which includes Methuen and Lawrence, the same Merrimack Valley corridor that just saw Lawrence Mayor Brian DePeña arrested two weeks ago on separate $1.5 million-plus COVID loan fraud and money-laundering charges.
Both men are Dominican-born Democrats. Both, prosecutors allege, used the pandemic as their “personal cash cows.”
The 24-page indictment alleges Paulino ran the operation from roughly April 2020 through at least December 2021 — the same period he was campaigning for and then winning the state House seat he still holds. He used his Lawrence tax-preparation firm, Madison Tax LLC, as the vehicle.
Highlights from the charging documents:
In April 2020 he filed a pandemic unemployment assistance claim in the name of a 77-year-old relative without her knowledge, falsely claiming she was self-employed.
More than $39,000–$44,000 in benefits went straight into a bank account he controlled. He kept filing false weekly certifications into September 2021 and submitted fabricated documents, including purported IRS paperwork, when the state asked questions.
He obtained or modified Economic Injury Disaster Loans for his own businesses (including a Heav’nly Donuts location) and for at least one client who spoke limited English and trusted Paulino with tax records and online banking access.
In one case he allegedly increased a client’s loan without the client’s knowledge, then later asked that same client for a $200,000 loan.
Funds were funneled through intermediaries into Paulino’s personal and business accounts and used for personal expenses, real estate, loan payments, and transfers into his campaign account.
Prosecutors also say he turned around and lent some of the cheap government money to others at higher interest rates, making a profit off the taxpayers’ dime.
Paulino faces eight counts of aiding and abetting wire fraud and three counts of aiding and abetting money laundering. He was taken into custody outside a Lawrence apartment complex shortly after sunrise and is scheduled for arraignment in Boston federal court.
Hellbound and Down 