JUST IN: Massachusetts Democrat Rep. Arrested By The FBI

Massachusetts State Representative Francisco E. Paulino, a Democrat representing the 16th Essex District, was arrested by federal authorities on Wednesday following a grand jury indictment on charges related to alleged pandemic relief fraud.

Paulino, 46, of Methuen, faces an 11-count indictment on eight counts of wire fraud and three counts of unlawful monetary transactions or aiding and abetting money laundering. The indictment, which was filed on August 25 in U.S. District Court in Boston, alleges a scheme running from approximately April 2020 through at least December 2021.

Prosecutors estimate that the alleged fraud involved more than $700,000 in federal pandemic-related relief funds. Paulino was taken into custody by FBI agents and was scheduled for arraignment in Boston federal court the same day. Information on whether he has obtained council is not publicly available, and his office has not responded to requests for comment.

According to the 24-page indictment and statements from prosecutors, Paulino owned and operated Madison Tax LLC and Madison Mortgage Inc. in Lawrence. Prosecutors allege that he used the personal identifying information of other individuals, Madison Tax as a vehicle for the scheme, and intermediaries to obtain and direct pandemic-related funds into accounts he controlled.

One set of allegations concerns Pandemic Unemployment Assistance. In April 2020, according to the indictment, Paulino submitted an online application in the name of a 77-year-old relative without that relative’s knowledge. The application falsely certified that the relative was self-employed or an independent contractor whose work was limited by the pandemic and directed deposits to a Citizens Bank checking account held solely in Paulino’s name.

Prosecutors say he filed weekly certifications through September 2021 and submitted fabricated documents, including ones purporting to be from the IRS, after the Massachusetts Department of Unemployment Assistance inquired. Approximately $39,330 to more than $44,000 in benefits were deposited into the account he controlled. Some of those funds were used for personal expenses, loan payments, real estate payments, and transfers to his campaign account, according to the charging documents.

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JUST IN – FBI arrests Massachusetts State Rep. Francisco Paulino on 8 counts of wire fraud and 3 of money laundering, after he allegedly stole $700,000 in pandemic relief, re-loaned the taxpayer funds at higher interest, bought real estate, paid personal loans and funded his… pic.twitter.com/J6uQWj9Qbu

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Additional allegations involve Economic Injury Disaster Loans administered by the Small Business Administration. Prosecutors say Paulino submitted or modified applications for two of his own businesses. For Jackson Enterprise, which operated a Heav’nly Donuts location, the indictment alleges he overstated 2019 revenues; the business received about $136,600, some of which was later moved toward a Lawrence real estate purchase.

For Madison Tax, he received approximately $401,800. “I am desperate. As an accounting office we serve the community of Lawrence one the poorest city in the country. We need your help,” the lawmaker wrote in an email to the SBA on May 13, 2020. Prosecutors further allege portions of these funds were transferred to Madison Mortgage and used to fund high-interest mortgages on properties in Methuen and Lawrence, with Paulino collecting origination fees.

A third set of allegations involves a Lawrence laundry-business owner identified as a client. The indictment states the client had limited English, considered Paulino a friend, and had given him personal identifying information and online banking credentials for tax and bookkeeping work. Prosecutors allege Paulino submitted an SBA application in the client’s name in June 2020 using an email address Paulino controlled, later modified the loan without the client’s knowledge to a total of $347,500, and in November 2021 arranged a $200,000 transfer from the client’s account to a Madison Tax account.

That money was then used toward a $680,000 mortgage through Paulino’s mortgage company, from which he collected a $17,000 origination fee, according to the indictment

“The conduct alleged by the Lawrence mayor and the District State Representative is appalling. Everyone listening today knows how difficult it was for Americans during the pandemic and how challenging it was for businesses,” U.S. Attorney Leah Foley said at a press conference that also addressed the separate indictment of Lawrence Mayor Brian DePeña. 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.

The indictment seeks forfeiture of property traceable to the alleged offenses. Paulino has not publicly commented on the charges as of this report.

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