A Massachusetts state rep. was arrested earlier this week and charged with fraudulently obtaining over $700,000 in COVID-19 unemployment insurance benefits and small-business loans. He allegedly used the proceeds to buy real estate and loan money to clients of his mortgage business before he was elected to public office.
Francisco Paulino, 46, of Methuen, MA, is charged in an 11-count indictment returned by a federal grand jury in Boston. Paulino is charged with eight counts of wire fraud and three counts of money laundering.
Court records say that Paulino fraudulently obtained Pandemic Unemployment Assistance (PUA) benefits in 2020-2021 in the name of an unknowing 77-year-old relative. The PUA program, which was created during the COVID-19 pandemic, provided unemployment benefits for people who were ineligible for regular unemployment benefits, including independent contractors.
In April 2020, Paulino allegedly submitted an online PUA application to the Massachusetts Department of Unemployment Assistance (DUA) for his relative, in which Paulino falsely claimed that the relative had worked for Paulino’s business, Madison Tax, LLC, in 2019. Paulino allegedly submitted fabricated documents in support of the PUA application and submitted false weekly certifications to the DUA. It is further alleged that Paulino directed the DUA to electronically deposit the PUA benefits into a bank account held solely in Paulino’s name. Between April 2020 and September 2021, the DUA paid over $44,000 in PUA benefits. Paulino allegedly used the money to pay for real estate expenses, loan payments, and transfers into his political campaign account.
According to the indictment, Paulino also committed fraud in connection with three Economic Injury Disaster Loans (EIDLs). During COVID-19, the U.S. Small Business Administration (SBA) offered taxpayer-funded EIDLs to eligible small businesses experiencing substantial financial disruptions due to the pandemic. The interest rate on EIDLs was 3.75 percent, and the loan use was limited. A business could only use EIDL proceeds as working capital to alleviate economic injury caused by COVID-19.