Federal prosecutors arrested Massachusetts State Rep. Francisco Paulino early Wednesday morning on an 11-count indictment alleging he ran a scheme to steal more than $700,000 in pandemic relief money, making him the second Democratic officeholder in the state charged with COVID fraud this month.
U.S. Attorney Leah Foley announced the charges alongside details of a separate but related case against Lawrence Mayor Brian DePeña, who was arrested by the FBI roughly a week earlier on his own 11-count indictment. Both men face charges of pandemic loan fraud and money laundering. Both allegedly began their schemes in 2020, when federal relief dollars were flowing to Americans and small businesses hammered by lockdowns.
And both, federal prosecutors say, treated that emergency money as a personal piggy bank.
The federal indictment against Paulino lays out a fraud that allegedly started when the state representative signed up for COVID relief funding on behalf of “an unwitting 77-year-old relative.” Fox News Digital reported that Paulino then allegedly used the money for personal expenses, real estate costs, loan payments, and transfers into his own campaign account.
But prosecutors say the scheme went further than simple theft. Paulino allegedly took pandemic loan money obtained at low government-subsidized interest rates and re-lent it to other individuals at higher rates, pocketing the spread. In other words, he allegedly turned emergency relief into a private lending operation.
Newsmax reported that the 11 counts break down into eight counts of wire fraud and three counts of unlawful monetary transactions. Prosecutors allege the scheme ran from April 2020 through December 2021, with Paulino funneling more than $700,000 through personal accounts, businesses, and his campaign. He allegedly operated the fraud through Madison Tax LLC, his tax-preparation firm, filing a false pandemic unemployment claim in his elderly relative’s name that alone netted roughly $45,000, and then misusing SBA Economic Injury Disaster Loans on top of that.
Massachusetts House Speaker Ron Mariano called the charges “extremely concerning.”
That is a measured response for a case in which a sitting legislator allegedly exploited a confused elderly family member to steal from a program meant for workers who lost their jobs during the worst public-health crisis in a generation.
DePeña’s case runs on a parallel track. A federal grand jury handed down an 11-count indictment charging the Lawrence mayor with pandemic loan fraud and money laundering. The FBI said DePeña first began “diverting public funds” in 2020, when he was still serving on the Lawrence city council, before he became mayor.
DePeña allegedly applied for pandemic relief funds on behalf of Tenares Tire Services Inc., his tire shop in Lawrence. The money, prosecutors say, did not go to keep the business afloat. Instead, he allegedly used it to bankroll his mayoral campaign and pay off personal debts.
The Washington Examiner reported that DePeña’s case involved more than $1.5 million, a figure that dwarfs even the Paulino allegations. FBI Special Agent in Charge Ted Docks put it bluntly: “Simply put, both men are accused of treating the COVID-19 pandemic as their own personal cash cows.”
The federal government’s broader crackdown on pandemic fraud has produced a long roster of cases across the country. The FBI recently captured an alleged $32 million COVID fraud fugitive hiding in Jamaica under a fake identity, underscoring how far some suspects have gone to evade accountability.
What makes the Massachusetts cases notable is not just the dollar amounts. It is the fact that both defendants held elected office, positions of public trust, while allegedly looting programs designed for ordinary people in crisis.
Paulino sat in the state legislature. DePeña ran a city. Both had access to the levers of government and, allegedly, used that access to enrich themselves at the expense of taxpayers and struggling workers.
U.S. Attorney Foley did not hold back about the broader message. She told reporters that the pandemic relief money “was meant for hardworking Americans and struggling business owners, not for two greedy individuals who lied and stole for their own personal benefit.”
“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.”
Foley also signaled that more cases could follow, stating her office remains “dialed in and laser-focused on rooting out every bit we find. We will continue to hold fraudsters accountable until the stealing stops.”
The Justice Department has pursued large-scale fraud rings targeting federal benefit programs with increasing intensity. But cases involving elected officials carry a particular sting, they erode whatever trust remains between citizens and the people who claim to represent them.
The pandemic relief programs, unemployment insurance expansions, SBA disaster loans, Paycheck Protection Program funds, were designed and distributed at emergency speed. That speed was a deliberate policy choice. Officials at the time argued that getting money out fast mattered more than airtight verification.
The cost of that choice is now measured in hundreds of billions of dollars in estimated fraud nationwide. Individual cases like Paulino’s and DePeña’s represent only a fraction of the total, but they illustrate the mechanics: fraudulent applications filed through shell businesses or in the names of unsuspecting relatives, money diverted to personal use, and public officials exploiting the very programs they were supposed to help administer.
Neither Paulino nor DePeña has entered a plea, and no trial dates have been reported. The indictments are allegations, and both men are entitled to the presumption of innocence in court.
Still, the pattern of Democratic officials facing mounting legal and ethical scandals raises questions that go beyond any single courtroom. When elected leaders treat emergency funds as campaign seed money, voters are right to ask who is watching the people they elected to watch out for them.
The pandemic itself exposed deep fractures in how the federal government manages crisis spending. The fraud aftermath is exposing something else: how many people in positions of authority saw a national emergency and reached for the cash register. Cases involving money laundering and the exploitation of vulnerable individuals have become disturbingly common in federal dockets.
Several questions hang over both cases. What specific COVID relief programs did Paulino exploit beyond unemployment insurance and SBA loans? Who received the high-interest loans he allegedly made with government money? How did DePeña’s alleged $1.5 million fraud escape detection for years while he climbed from city councilor to mayor?
And perhaps most pointedly: did anyone in state or local government notice, or choose not to notice, that two elected officials in the same region were allegedly running parallel pandemic fraud schemes at the same time?
The federal government’s pandemic spending accountability failures have been well documented, including guilty pleas from officials who tried to hide COVID-era records. The Paulino and DePeña cases add elected officeholders to a growing list of people who allegedly saw the pandemic not as a crisis to manage but as an opportunity to exploit.
When the people writing the rules are the ones breaking them, the rules were never the real problem. The problem is who we trusted to follow them.
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