A federal investigation into alleged pandemic-era fraud has reached deeper into Massachusetts politics, with Democratic State Rep. Francisco Paulino arrested Wednesday amid growing scrutiny of elected officials in Lawrence and the Merrimack Valley.
Paulino, who represents the 16th Essex District covering portions of Lawrence and Methuen, was arrested Aug. 26 in connection with a federal investigation involving COVID-era government relief programs.
The arrest comes less than two weeks after Lawrence Mayor Brian DePeña was arrested by federal authorities and accused of fraudulently obtaining more than $1.5 million in COVID-19 small-business loans.
Federal prosecutors charged DePeña, 61, on Aug. 14 with wire fraud and money laundering, alleging the mayor used pandemic-relief money to fund his political campaign, pay personal taxes and eliminate hundreds of thousands of dollars in high-interest mortgages secured by properties he owned in Lawrence.
According to the U.S. Attorney’s Office for the District of Massachusetts, DePeña allegedly obtained more than $1.5 million through the Small Business Administration’s Economic Injury Disaster Loan program for Tenares Tire Service Inc., his Lawrence automotive business.
Prosecutors allege portions of the money ultimately went toward DePeña’s campaign account and personal expenses, including paying off more than $880,000 in high-interest mortgages.
As of Aug. 5, federal authorities said approximately $1.65 million in principal remained outstanding on the business’s EIDL loan. DePeña had allegedly made only 16 payments.
DePeña has not been convicted of a crime, and the charges remain allegations.
Paulino’s arrest is particularly notable because Wednesday’s federal action was not the first time his Lawrence business interests have drawn the attention of the FBI.
In November 2024, FBI agents conducted what the bureau described as “court-authorized activity” inside an Essex Street property owned by Paulino.
The Boston Globe reported that investigators focused their attention on a Heav’nly Donuts located inside the building. Paulino had previously identified himself as the founder of the business, while corporate records showed his wife, Ruby Purohit, had subsequently become its president. Purohit has also served as Paulino’s campaign treasurer.
Paulino told the Globe following the search that he owned the building but not the business.
“I own the building, not the business,” Paulino said at the time.
Federal authorities did not publicly disclose what agents were investigating, and Paulino was not charged following the 2024 search.
Paulino’s business interests extend well beyond the State House.
Public records reviewed by the Globe showed Paulino connected to numerous businesses involving taxes, mortgages and real estate. His financial disclosure covering 2023 showed at least $300,000 in outside income from four private-sector jobs and ownership stakes in six businesses, according to the newspaper.
Among those businesses is Madison Tax, a tax-services company Paulino founded that operated from the same Essex Street property searched by federal agents.
Public business records have also connected Paulino to mortgage and real-estate companies.
The Globe reported in 2024 that Paulino owned approximately $5.8 million worth of property across three communities, including 20 units within the Lawrence building where the federal search occurred.
Paulino’s connection to DePeña is also political.
During the highly contested 2022 Democratic primary for the Massachusetts House, DePeña recruited and publicly endorsed Paulino in his challenge against incumbent State Rep. Marcos Devers.
Following that election, DePeña described Paulino and other endorsed candidates as part of an effort to build a Beacon Hill delegation capable of delivering additional resources to Lawrence.
“This was about putting together a team at The State House to bring in more funding for the city,” DePeña told the Valley Patriot after his endorsed candidates won their respective races.
A DePeña campaign advertisement published before the 2022 primary also prominently endorsed Paulino for state representative.
Paulino subsequently won the seat and entered the Massachusetts House in 2023.
The timing of Wednesday’s arrest also comes with a remarkable political footnote.
Just one day earlier, on Aug. 25, the Valley Patriot published an opinion column written by Paulino titled, “Opportunity Doesn’t Happen by Accident!”
In the column, Paulino argued government should help create opportunities for residents willing to work.
“Not handouts. Not empty promises. Real opportunity,” Paulino wrote.
Paulino described education, apprenticeships and workforce development as central to his philosophy in government, adding later that government “cannot guarantee success” but can create the conditions necessary for people to succeed.
Less than 24 hours after the column was published, Paulino was facing a vastly different political reality.
The cases unfold against a significantly expanded federal campaign targeting fraud involving taxpayer-funded benefit programs.
U.S. Attorney Leah Foley announced the creation of a Massachusetts Benefit & Voter Fraud Team in March, describing the initiative as a response to widespread fraud uncovered across the Commonwealth. The Justice Department subsequently created its National Fraud Enforcement Division as part of a broader effort to investigate fraud against federal taxpayers.
The federal government has spent years attempting to recover money stolen from pandemic programs that distributed billions of dollars rapidly as businesses struggled during government-mandated COVID shutdowns.
The allegations involving DePeña and the arrest of Paulino now place two politically connected Lawrence officials under extraordinary federal scrutiny.
The exact scope of the allegations against Paulino, including the amount of taxpayer money allegedly involved, which businesses or government programs prosecutors say were used, and whether investigators allege a direct financial relationship between Paulino and DePeña, is expected to become clearer as federal charging documents are released.
But He is Just another Mass. Democrat. Just like Maine Democrats spending the people’s money.