Massachusetts Rep. Francisco Paulino indicted on wire fraud, money laundering charges for alleged misuse of COVID-19 funds, officials say
Senior Digital Editor/Producer, WCVB.com
BOSTON —
Massachusetts State Rep. Francisco Paulino was indicted on several charges, including wire fraud and money laundering, amid a federal investigation into his alleged misuse of more than $700,000 in COVID-19 relief funds.
Paulino, 46, of Methuen, who represents the 16th Essex District, is accused of fraudulently obtaining pandemic-related relief funds and funneling the money to his personal and business bank accounts, according to the 24-page indictment.
Paulino pleaded not guilty Wednesday to eight wire-fraud counts and three unlawful-monetary-transaction counts in Massachusetts federal court. His passport was seized before he was released on personal recognizance with conditions.
Paulino is accused of using his two businesses in the scheme, Madison Mortgage and Madison Tax. The mortgage company is no longer operating, while the tax business has been ordered to notify clients and temporarily suspend operations until at least the next hearing in October.
The judge also barred Paulino from accessing clients’ records or bank accounts.
If convicted, the maximum sentence for each wire fraud charge is 20 years, while the maximum sentence for each count of money laundering is 10 years.
Prosecutors allege Paulino used Madison Tax as part of a scheme running from about April 2020 through at least December 2021. It allegedly involved a fraudulent unemployment claim for $44,160 filed in a relative’s name and Economic Injury Disaster Loans (EIDL) applications or modifications involving his businesses and a client.
Prosecutors also allege a Lawrence laundry-business owner with limited English trusted Paulino with tax matters, personal information and online banking access. The indictment says Paulino obtained an EIDL modification without the client’s knowledge and later sought a $200,000 loan from the client, which was transferred to Madison Tax and allegedly used toward a Lawrence mortgage.
The indictment alleges Paulino overstated revenue to obtain an EIDL for Jackson Enterprise, which operated Lawrence Heav’nly Donuts, and later moved $18,000 toward a Lawrence real estate purchase. Prosecutors also allege Madison Tax EIDL funds were transferred to Madison Mortgage and used toward mortgages tied to property purchases in Methuen and Lawrence.
“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,” U.S. Attorney General Leah Foley said.
In a statement, House Speaker Ronald J. Mariano said “the charges that have been brought against Rep. Paulino are extremely concerning, and while every American is entitled to due process, the seriousness of the charges undermines public trust in elected officials. Given the timing of this announcement in the legislative session, the House will closely monitor the legal proceedings and, upon their conclusion, take appropriate action if necessary to ensure accountability.”
Video below: Feds detail charges against rep
Lawrence mayor also accused of fraud
Lawrence Mayor Brian DePeña, who was originally arrested on two federal charges earlier this month, now faces 11 felony counts under an indictment obtained by NewsCenter 5 on Wednesday morning.
The allegations involved more than $1.5 million in COVID-19 small business loans.
It specifies that the Economic Injury Disaster Loan issued to DePeña’s tire business, Tenares Tire, was ultimately worth a total of $1,654,400 after two loan modifications.