Massachusetts state Rep. Francisco Paulino charged with pandemic loan fraud and money laundering
Federal prosecutors say the Methuen Democrat fraudulently obtained more than $700,000 in COVID-era jobless benefits and small-business loans before winning office, then used some of the money to buy property and fund private mortgages.
The Massachusetts state representative for the 16th Essex District, which covers Lawrence and Methuen, was arrested Wednesday on federal charges that he fraudulently obtained more than $700,000 in pandemic unemployment benefits and small-business loans before he was elected, the U.S. attorney's office in Boston said.
Francisco Paulino, 46, of Methuen, is charged in an 11-count indictment returned by a federal grand jury in Boston with eight counts of wire fraud and three counts of money laundering. He was scheduled to appear in federal court in Boston at 2 p.m. Wednesday.
According to the indictment, Paulino applied in April 2020 to the state Department of Unemployment Assistance for Pandemic Unemployment Assistance in the name of a 77-year-old relative who did not know about it, falsely claiming the relative had worked in 2019 for his business, Madison Tax LLC. Prosecutors said he backed the claim with fabricated documents, had the payments deposited into an account in his own name and collected more than $44,000 between April 2020 and September 2021, which he spent on real estate expenses, loan payments and transfers into his political campaign account.
Prosecutors also allege Paulino inflated a company's revenue to obtain a $136,600 Small Business Administration disaster loan in July 2020, and that he diverted $220,000 from a separate $401,800 disaster loan to his mortgage company to help fund private mortgages in Methuen and Lawrence, charging interest and origination fees. The indictment further alleges he sought a loan increase for one of his tax clients without the client's knowledge and then had $200,000 of the money lent to him.
The charges are allegations, and Paulino is presumed innocent unless proven guilty. Wire fraud carries up to 20 years in prison.
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