BOSTON — Massachusetts State Representative Francisco Paulino (D – 16th Essex District) was arrested on Wednesday, Aug. 26, 2026, and charged with fraudulently obtaining over $700,000 in pandemic unemployment insurance benefits and small business loans and using the money to buy real estate and loan money to clients of his mortgage business.
According to the U.S. Attorney’s Office for the District of Massachusetts, Paulino, 46, of Methuen, was 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.
Paulino, whose district includes Lawrence and Methuen, was scheduled to make his initial appearance in federal court in Boston at 2:00 p.m. Wednesday.
The indictment alleges that between 2020 and 2021, Paulino fraudulently obtained Pandemic Unemployment Assistance (PUA) benefits in the name of a 77-year-old relative without the relative’s knowledge.
According to federal prosecutors, Paulino submitted an online PUA application in April 2020 falsely claiming the relative had worked for his business, Madison Tax, LLC, in 2019. Paulino allegedly submitted fabricated documents in support of his PUA application and then filed false weekly certifications with the Massachusetts Department of Unemployment Assistance (DUA). He also directed the DUA to electronically deposit the benefits into a bank account held solely in his name.
As a result, the DUA paid more than $44,000 into Paulino’s account between April 2020 and September 2021. Paulino used the money to pay for real estate expenses, loan payments, and transfers into his political campaign account, according to the U.S. Attorney’s Office of the District of Massachusetts.
The indictment also states that Paulino fraudulently obtained three Economic Injury Disaster Loans (EIDLs) intended to help businesses suffering financial losses during the COVID-19 pandemic.
According to the charging documents, Paulino incorporated a business called Jackson Enterprise, Inc. as a fast food restaurant and cafe in November 2019. The business allegedly had no revenue before August 2020. Although tax returns Madison Tax filed with the IRS reported no revenue for Jackson Enterprise in 2019 and $116,925 in 2020, Paulino allegedly claimed in a June 2020 EIDL application that the company had generated $426,755 during the 12 months ending Jan. 31, 2020. The Small Business Administration approved the application and deposited $136,600 of EIDL proceeds into Jackson Enterprise’s bank account in July 2020. Paulino allegedly used $18,000 toward the purchase of real estate in Lawrence.
Federal prosecutors allege that Paulino also obtained a $109,200 Economic Injury Disaster Loan for Madison Tax in May 2020, and later asked the SBA to increase the loan amount. In June 2021, the SBA increased the loan amount by $292,600, bringing the loan’s total value to $401,800. After receiving the additional EIDL funds, in October 2021, Paulino allegedly transferred $100,000 into the bank account for Madison Mortgage, Inc., another business he owned, and used it to help fund a $600,000 mortgage for two people buying a home in Methuen. Then, in December 2021, Paulino transferred another $120,000 of the EIDL funds from his Madison Tax account to his Madison Mortgage account and used the money to help finance a $460,000 mortgage from Madison Mortgage to an LLC for the purchase of a house in Lawrence.
Prosecutors further allege that Paulino not only used $220,000 of the Madison Tax EIDL funds for an “impermissible purpose,” but he also profited by charging borrowers interest rates of 5.5% and 7.94%, along with $25,000 in “loan origination fees” to the home buyers.
The indictment further alleges that Paulino fraudulently obtained an increase to an EIDL issued to a Madison Tax client. In June 2020, Paulino allegedly encouraged the client to apply for an EIDL and offered to handle all the paperwork. After the client agreed, Paulino obtained a $104,300 EIDL for the client’s business. He later allegedly requested an increase without the client’s knowledge, and the SBA approved an additional $243,200 in September 2021. Paulino allegedly told the client that he had secured additional government loan funds for the client’s business, advised the client to leave the money in the business account, and said he planned to propose a business deal for the client.
Prosecutors further allege that Paulino instructed the client to lend him $200,000, which was transferred from the client’s account to Madison Tax’s account. Paulino then allegedly used the $200,000 to help finance a $680,000 mortgage for another Madison Mortgage client purchasing property in Lawrence, charging a 6.25% interest and a $17,000 “loan origination fee.”
Each wire fraud charge carries up to 20 years in prison, while each money laundering charge carries up to 10 years. Both offenses also carry up to three years of supervised release and a fine of up to $250,000 per count.
The charges were announced Wednesday by U.S. Attorney Leah B. Foley; Tom Demeo, special agent in charge of IRS Criminal Investigation in Boston; Ted E. Docks, special agent in charge of the FBI’s Boston Division; U.S. Department of Labor Inspector General Anthony D’Esposito; and the Commonwealth of Massachusetts Inspector General Jeffrey S. Shapiro.
Assistant U.S. Attorneys Kistina E. Barclay and Christine Wichers of the Public Corruption Unit are prosecuting the case.
