Federal prosecutors charged Massachusetts State Rep. Francisco Paulino with scamming more than $700,000 in pandemic relief funds, the second Democratic official in the state arrested on similar charges this month.
Paulino was arrested early Wednesday morning on an 11-count federal indictment alleging pandemic unemployment insurance fraud, pandemic loan fraud, and money laundering. U.S. Attorney Leah Foley said the state representative devised a scheme beginning in 2020 that funneled federal COVID relief money into personal real estate expenses, loan payments, transfers to his own campaign account, and high-interest loans to other individuals.
The indictment alleges Paulino launched the fraud by signing up for COVID relief funding on behalf of an unwitting 77-year-old relative. From there, prosecutors say, the scheme expanded, and the total haul exceeded $700,000 in taxpayer money that Congress had earmarked for Americans struggling through the pandemic.
His arrest landed roughly a week after the FBI picked up Lawrence, Massachusetts, Mayor Brian DePeña on a separate 11-count federal grand jury indictment covering pandemic loan fraud and money laundering. DePeña allegedly began diverting public funds in 2020 while serving on the Lawrence city council and applied for pandemic relief through Tenares Tire Services Inc., his tire shop in Lawrence.
Two elected Democrats in the same state, both accused of treating emergency pandemic programs as personal piggy banks, both indicted within days of each other. The pattern is hard to miss.
The indictment breaks down into eight counts of wire fraud and three counts of unlawful monetary transactions, Newsmax reported. Paulino allegedly operated the fraud through Madison Tax LLC, a Lawrence-based tax preparation company he founded. Prosecutors say he used other people's identities and intermediaries to route pandemic funds through the firm and into accounts he controlled.
The timeline of the alleged scheme runs from approximately April 2020 through December 2021, nearly the entire window during which federal pandemic relief programs were distributing emergency funds to workers and small businesses across the country.
Beyond exploiting his elderly relative, Paulino allegedly targeted vulnerable clients. The Washington Examiner reported that the indictment describes Paulino manipulating client loan applications and overstating business revenues to secure relief funds. One alleged victim was a laundry owner with limited English proficiency, for whom Paulino allegedly obtained government loans without the person's knowledge and redirected the money to his own real estate and mortgage payments.
That detail, a state legislator allegedly preying on an immigrant small-business owner who couldn't read the paperwork, captures the kind of betrayal these charges describe. The people Paulino represented were the same people he allegedly robbed.
Foley did not mince words at the announcement. She framed both the Paulino and DePeña cases as a direct message to public officials who treated pandemic relief as a personal opportunity.
"Everyone listening today knows how difficult it was for Americans during the pandemic. The money these two individuals allegedly scammed was meant for hardworking Americans and struggling business owners, not for two greedy individuals who lied and stole for their own personal benefit."
She added a pointed warning aimed at anyone still hoping the federal government might move on from pandemic fraud cases.
"It is never a proud moment when we arrest a public official, but we will continue to do it until the message is received: No one is above the law, and no one gets a pass."
FBI Special Agent Ted Docks was blunter. He described both men as officials who saw a national crisis and saw dollar signs.
"Simply put, both men are accused of treating the COVID-19 pandemic as their own personal cash cows."
DePeña's case shares an uncomfortable number of details with Paulino's. The Lawrence mayor faces his own 11-count federal indictment, also rooted in pandemic loan fraud and money laundering. Prosecutors say he began diverting public funds in 2020, while he still sat on the Lawrence city council, and allegedly applied for pandemic relief through his tire shop.
The FBI arrested DePeña earlier this month. No details on the total dollar amount of his alleged fraud appeared in the charging announcement, but the structural similarity to Paulino's case, a Democratic officeholder, a side business, pandemic relief programs exploited from the inside, drew immediate attention.
Paulino's indictment makes him the second sitting Massachusetts Democratic state representative indicted during this legislative session, the New York Post noted. Massachusetts House Speaker Ron Mariano called the charges "extremely concerning" and said the chamber would monitor the case and act if needed.
"Monitor the case" is a cautious response to an elected colleague accused of stealing three-quarters of a million dollars from pandemic programs. Whether the Massachusetts House takes any concrete action, suspension, removal from committees, a formal investigation, remains to be seen.
Foley signaled that federal prosecutors are not winding down pandemic fraud enforcement. Her office described itself as "dialed in and laser-focused on rooting out every bit" of COVID relief fraud, pledging to "hold fraudsters accountable until the stealing stops."
The sheer scale of federal pandemic spending, trillions of dollars pushed out the door with minimal oversight during 2020 and 2021, created an environment where fraud was almost inevitable. But the Paulino and DePeña cases stand apart because the accused are not anonymous scammers working from a laptop. They are elected officials, entrusted with public authority, who allegedly exploited emergency programs designed to keep their own constituents afloat.
Paulino allegedly used the proceeds for real estate, loan payments, and his campaign account. He allegedly lent pandemic money to other people at interest rates higher than the original loan rate, turning taxpayer-funded emergency relief into a private lending operation. No statement from Paulino or his legal counsel has appeared in public reporting on the case.
The open questions are significant. Which specific pandemic programs did Paulino exploit, the Paycheck Protection Program, Economic Injury Disaster Loans, Pandemic Unemployment Assistance, or some combination? How many clients of Madison Tax were drawn into the scheme without their knowledge? And what, if anything, did Massachusetts Democratic leadership know about Paulino's side business before federal agents showed up?
None of those questions have public answers yet. The indictment and Foley's statements lay out the government's theory. Paulino has not entered a plea, and no bail or custody status has been reported.
When the people who write the laws are the ones allegedly breaking them, accountability is not optional, it is the bare minimum a self-governing country owes its taxpayers.
