Massachusetts State Representative Charged With Pandemic Loan Fraud and Money Laundering
Massachusetts State Representative Francisco Paulino was arrested on August 26, 2026, after a federal grand jury returned an 11-count indictment charging him with eight counts of wire fraud and three counts of money laundering.
The U.S. Attorney’s Office for the District of Massachusetts alleges that Paulino, 61, fraudulently obtained more than $700,000 through pandemic unemployment benefits and Economic Injury Disaster Loans before he was elected to public office, then used part of the proceeds for real estate and loans made through his mortgage business.
Unemployment and EIDL allegations
According to the indictment, Paulino applied for Pandemic Unemployment Assistance in 2020 in the name of an unwitting 77-year-old relative, falsely claiming the relative had worked for Paulino’s Madison Tax, LLC. Prosecutors allege he submitted fabricated supporting documents and false weekly certifications, directing more than $44,000 in benefits into a bank account held solely in his own name. The funds were allegedly used for real-estate expenses, loan payments and transfers to his political campaign account.
Prosecutors also allege Paulino obtained EIDL funds for several businesses. Jackson Enterprise, Inc., which had allegedly reported no 2019 revenue, received a $136,600 EIDL after an application represented that it had generated $426,755 in revenue during the preceding 12 months. Paulino allegedly used $18,000 of those funds toward a property purchase in Lawrence.
Madison Tax received a $109,200 EIDL in 2020 and a further $292,600 increase in 2021. The indictment alleges Paulino transferred $100,000 and later $120,000 from Madison Tax to Madison Mortgage, Inc., another business he controlled, and used the money to help fund mortgages of $600,000 and $460,000. Prosecutors say he charged interest on those loans as well as $25,000 in origination fees.
In another alleged scheme, Paulino obtained an EIDL increase of $243,200 for a client without the client’s knowledge. The client was later allegedly instructed to lend Paulino $200,000, which was transferred to Madison Tax and used to help finance a $680,000 mortgage to another borrower. Prosecutors say Paulino charged 6.25% interest and a $17,000 origination fee.
Money laundering charges remain allegations
Paulino faces three money laundering counts, each carrying a statutory maximum of 10 years in prison. The eight wire-fraud counts each carry a maximum of 20 years. The case is being investigated by IRS Criminal Investigation, the FBI, the U.S. Department of Labor Office of Inspector General and the Massachusetts Office of the Inspector General.
The indictment contains allegations only. Paulino is presumed innocent unless and until proven guilty in court.
