Democrat Rep. Arrested by FBI in Massive $700K Fraud Case

Massachusetts State Rep. Francisco E. Paulino, a Democrat from the 16th Essex District, was taken into custody by FBI agents Wednesday after a federal grand jury in Boston returned an 11-count indictment.

Paulino, 46, of Methuen, is charged with eight counts of wire fraud and three counts of unlawful monetary transactions, or aiding and abetting money laundering. Prosecutors say the alleged scheme ran from about April 2020 through at least December 2021.

The indictment estimates more than $700,000 in federal pandemic-related relief was involved. Paulino was scheduled for arraignment the same day in Boston federal court.

He owned Madison Tax LLC and Madison Mortgage Inc. in Lawrence. Prosecutors allege he used other people’s identifying information, his tax firm, and intermediaries to steer relief money into accounts he controlled.

One set of allegations involves Pandemic Unemployment Assistance. In April 2020, the indictment says, Paulino filed an online application in the name of a 77-year-old relative without that relative’s knowledge.

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

— Disclose.tv (@disclosetv) August 26, 2026

The application allegedly certified the relative was self-employed or an independent contractor whose work was limited by the pandemic. Deposits were directed to a Citizens Bank checking account held solely in Paulino’s name.

Prosecutors say he filed weekly certifications through September 2021 and later submitted fabricated documents, including papers purporting to come from the IRS, after state unemployment officials asked questions. About $39,330 to more than $44,000 landed in the account he controlled.

Some of that money, according to charging documents, went to personal expenses, loan payments, real estate, and transfers to his campaign account.

A second track involves SBA Economic Injury Disaster Loans. For Jackson Enterprise, tied to a Heav’nly Donuts location, prosecutors say he overstated 2019 revenues. The business received about $136,600, some of which was later moved toward a Lawrence real estate purchase.

Madison Tax received about $401,800. In a May 13, 2020 email to the SBA, Paulino wrote: “I am desperate. As an accounting office we serve the community of Lawrence one the poorest city in the country. We need your help.”

A third set of allegations involves a Lawrence laundry-business owner who, the indictment says, had limited English, considered Paulino a friend, and had given him personal information and banking credentials for tax work.

Prosecutors allege Paulino submitted an SBA application in the client’s name from an email address he controlled, later raised the loan to $347,500 without the client’s knowledge, and in November 2021 moved $200,000 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. He collected a $17,000 origination fee, the indictment says.

U.S. Attorney Leah Foley, speaking at a press conference that also covered a separate indictment of Lawrence Mayor Brian DePeña, called the alleged conduct “appalling.”

“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,” Foley said.

The indictment seeks forfeiture of property tied to the alleged offenses. Paulino had not publicly commented as of the report, and his office did not respond to requests for comment.