METHUEN, MA— A state representative for the cities of Lawrence and Methuen is facing federal charges after being accused of fraudulently obtaining more than $700,000 in COVID unemployment benefits and small-business loans.
State Rep. Francisco Paulino, 46, of Methuen, is accused of using the funds to buy real estate and loan money to clients of his mortgage business at high interest rates with fees through his tax business.
The accusations predate his election to Beacon Hill.
Paulino was charged in an 11-count indictment returned by a federal grand jury in Boston on Wednesday. He was charged with eight counts of wire fraud and three counts of money laundering.
Paulino was to make an initial appearance in federal court in Boston on Wednesday.
He is accused of applying for Pandemic Unemployment Assistance in the name of a 77-year-old relative under the program that provided COVID benefits to those, such as many independent contractors in the service and arts industries, who did not qualify for traditional state unemployment.
The U.S. Attorney's Office said Paulino submitted an online PUA application that falsely said the relative had worked for his tax company in 2019. The U.S. Attorney's Office said the relative was not aware of the application.
He is accused of submitting false documents in support of the PUA application and false weekly certifications to the Department of Unemployment Insurance. The U.S. Attorney's Office said Paulino directed the DUA to electronically deposit the PUA benefits into a bank account held solely in Paulino's name.
He was accused of receiving $44,000 in benefits into the account over the court of 17 months.
He was also accused of applying for a COVID Small Business Administration loan for a fast food restaurant cafe that did not exist prior to the pandemic, but that he claimed had revenues of $116,925 in 2020, according to IRS tax filings.
His SBA application stated that the cafe, under the name of Jackson Enterprise, had revenues of $426,755 from June 2020 through January 2020.
The SBA granted the application and deposited $136,600 in proceeds into Jackson Enterprise's bank account in July 2020. Paulino is accused of using $18,000 of the funds toward the purchase of real estate in Lawrence.
He is also accused of using SBA to fund property purchases in Methuen and Lawrence, for which he then charged clients higher interest rates than the original loan amounts, as well as tens of thousands of dollars in "loan-origination fees," according to the U.S. Attorney's Office.
The charges of wire fraud each provide for a sentence of up to 20 years in prison, up to three years of supervised release and a fine of up to $250,000.
The charges of money laundering each provide for a sentence of up to 10 years in prison, three years of supervised release and a fine of $250,000.
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