A sitting Massachusetts state legislator faces 11 federal counts after prosecutors say he used his tax preparation business to funnel more than $700,000 in pandemic relief money into personal expenses, loan payments, and even his own campaign account.
State Representative Francisco Paulino was arrested on wire fraud and money laundering charges tied to what federal officials describe as a brazen scheme to exploit COVID-19 unemployment benefits and disaster loan programs. The indictment alleges Paulino ran the operation through his company, Madison Tax, from roughly April 2020 through December 2021, according to federal prosecutors.
His arrest landed less than two weeks after Lawrence Mayor Brian DePeña was hit with a separate but strikingly similar 11-count federal indictment for allegedly scamming more than $1.5 million in COVID-19 small-business loans. Both men are Democratic officials in Massachusetts. Both allegedly treated pandemic relief programs as personal piggy banks while ordinary Americans struggled to keep the lights on.
Prosecutors say Paulino exploited two major pandemic relief pipelines: federal unemployment insurance benefits and Economic Injury Disaster Loans, the emergency lending program created to keep small businesses afloat during lockdowns.
The alleged fraud was not limited to Paulino's own accounts. The Washington Examiner reported that Paulino filed a fraudulent unemployment claim in the name of a 77-year-old relative and manipulated the accounts of a business owner with limited English proficiency. Those details paint a picture of a scheme that allegedly targeted people who were least equipped to detect or resist it.
The money, prosecutors allege, did not go toward any legitimate pandemic need. Instead, Paulino allegedly used the stolen funds for personal expenses, loan payments, and transfers to his campaign account. The total haul exceeded $700,000 across the roughly 20-month window outlined in the indictment.
Federal officials used the twin arrests of Paulino and DePeña to send a blunt message about public officials who allegedly exploited the pandemic. FBI Special Agent in Charge Ted Docks did not hold back when describing both cases.
"Simply put, both men are accused of treating the COVID-19 pandemic as their own personal cash cows."
U.S. Attorney Leah Foley struck a similar tone, framing the prosecutions as part of an aggressive, ongoing effort to root out pandemic fraud by officeholders. Foley reminded the public of what the stolen money was supposed to do.
"Everyone listening today knows how difficult it was for Americans during the pandemic. 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 added a direct warning aimed at any public official who might still be sitting on ill-gotten pandemic funds, as Fox News reported: "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."
The back-to-back arrests raise hard questions about how pandemic relief money flowed through Massachusetts and who was watching. DePeña's alleged fraud dwarfed Paulino's in dollar terms, with prosecutors putting that figure above $1.5 million. Both men face 11-count indictments. Both allegedly used pandemic loan and unemployment programs as personal funding sources.
Federal prosecutors have signaled that these cases are not isolated. Foley's language pointed to a sustained enforcement campaign, not a pair of one-off prosecutions. "We are dialed in and laser-focused on rooting out every bit we find," Foley said. "We will continue to hold fraudsters accountable until the stealing stops."
The timing matters. COVID-19 relief programs pushed trillions of dollars into the economy with minimal guardrails, and the federal government has spent years trying to claw back funds that went to people who had no legitimate claim to them. When those people hold elected office, the breach of public trust compounds the financial damage.
Paulino has been charged but not convicted. The 11-count indictment covers wire fraud, pandemic loan fraud, and money laundering. Investigators have not publicly confirmed whether additional defendants or co-conspirators may be linked to the Madison Tax operation. Prosecutors have also not said whether the 77-year-old relative or the business owner with limited English were cooperating witnesses or simply victims of the alleged scheme.
Wire fraud alone carries a maximum sentence of 20 years in federal prison per count. Money laundering charges carry their own steep penalties. If convicted on all counts, Paulino would face the possibility of decades behind bars.
Authorities have not disclosed whether Paulino's campaign account, which allegedly received some of the stolen funds, will be subject to forfeiture proceedings. That question could carry its own political and legal consequences, particularly if campaign expenditures were made using money prosecutors trace back to fraudulent pandemic claims.
Pandemic fraud prosecutions have become a growth industry for the Justice Department. The sheer scale of COVID-era spending created opportunities for grift at every level, from street-level scammers filing fake unemployment claims to, allegedly, elected officials running six- and seven-figure schemes through their own businesses.
What makes the Massachusetts cases stand out is not just the dollar amounts. Two Democratic officials in the same state, arrested within two weeks of each other, both accused of exploiting the same emergency programs designed to help people survive a national crisis. That is not a coincidence prosecutors are likely to ignore.
Foley's office has made clear it views these cases as part of a larger enforcement push, not a final chapter. The federal government poured money out the door during the pandemic with few controls. Now the bill collectors are knocking, and they are starting with the people who swore an oath to serve the public.
When the officials writing the rules are the ones allegedly breaking them, the system has a problem that goes well beyond accounting.
