In a recent high-profile case of PPP loan fraud, Massachusetts state representative Francisco Paulino faces federal criminal charges over an alleged scheme to fraudulently obtain more than $700,000 in COVID-19 unemployment benefits and small-business loans and use some of the proceeds to finance real estate transactions and mortgages.
Paulino, 46, of Methuen, has been charged in a federal indictment with eight counts of wire fraud and three counts of money laundering. The allegations cover conduct that prosecutors say occurred before Paulino was elected to public office.
Alleged Fraud Involving Pandemic Unemployment Benefits
According to the indictment, Paulino allegedly obtained more than $44,000 in Pandemic Unemployment Assistance (PUA) benefits by submitting an application to the Massachusetts Department of Unemployment Assistance in the name of a 77-year-old relative who allegedly did not know about the application.
Prosecutors allege that Paulino falsely represented that the relative had worked for his business, submitted fabricated supporting documents and filed false weekly certifications. The benefits were allegedly deposited into a bank account controlled solely by Paulino and used for real estate expenses, loan payments, and transfers to his political campaign account.
Alleged SBA Disaster Loan Fraud
The indictment also alleges that Paulino fraudulently obtained several Economic Injury Disaster Loans (EIDLs) administered by the U.S. Small Business Administration.
In one instance, prosecutors say Paulino overstated the revenue of a business that had reported substantially lower revenue to the IRS, resulting in the approval of a $136,600 EIDL. Some of those proceeds were allegedly used toward a real estate purchase rather than permitted COVID-related business expenses, a pattern that mirrors other Massachusetts EIDL fraud prosecutions we’ve covered.
Paulino allegedly obtained another EIDL for Madison Tax and subsequently received a $292,600 increase. Prosecutors allege that he transferred $220,000 of those funds to his mortgage business and used the money to help finance mortgages for real estate purchases. The indictment further alleges that he charged interest and loan origination fees on transactions funded with government-backed EIDL money.
Paulino also allegedly obtained an increase to a client’s EIDL without the client’s knowledge and subsequently persuaded the client to transfer $200,000 to one of Paulino’s businesses. Prosecutors assert that the money was then used to help fund another mortgage transaction.
What Are the Charges?
Wire Fraud
Wire fraud generally involves using interstate electronic communications or other qualifying communications as part of a scheme to defraud. Each of the eight wire fraud counts against Paulino carries a potential maximum sentence of 20 years in federal prison, along with supervised release and a fine of up to $250,000.
Money Laundering
The indictment also charges money laundering, alleging that proceeds connected to the underlying conduct were transferred or used in financial transactions. Each money-laundering count carries a potential maximum sentence of 10 years in prison, supervised release and a fine of up to $250,000.These federal charges are substantial and far-reaching, especially because they involve a sitting public official, raising the added risk of public corruption charges alongside the fraud counts
Increased Enforcement of Pandemic and Benefit Fraud
Paulino’s arrest is a prominent example of a highly visible and publicized federal and state effort to crack down on government benefits and pandemic relief programs. Massachusetts established a Benefit & Voter Fraud Team in March 2026, while the U.S. Department of Justice announced the creation of a National Fraud Enforcement Division in April 2026 to investigate and prosecute fraud against federal programs and the American public.
For anyone accused of pandemic relief fraud, loan fraud, benefit fraud, or money laundering, the consequences can extend far beyond repayment of allegedly misused funds. Federal investigations can result in multiple felony charges, substantial financial penalties and significant prison time.
Facing Federal Pandemic Fraud Charges? Retain an Experienced PPP Loan Fraud Defense Attorney
If you are under investigation or have been charged with wire fraud, loan fraud, pandemic relief fraud, benefit fraud or money laundering, it’s important to understand that these investigations are large scale operations with many moving parts.
Prosecutors are motivated to obtain a conviction and cases are extremely complex, involving extensive financial records, electronic communications, government investigators and complicated questions concerning intent, authorization, the source and use of funds, and the relationship between multiple transactions. It’s important to retain an experienced criminal defense attorney early in the process. These cases reward a keen eye to detail and experienced counsel who can evaluate the government’s allegations, investigate the evidence and develop a robust defense strategy. If you or someone you know is being investigated for pandemic relief fraud, our award-winning white collar criminal defense team has decades of experience defending complex fraud cases in federal courts. Reach out to us today at 617-880-6155 or contact us online to learn more about how we can defend your rights and your future.
