Federal authorities arrested Massachusetts State Representative Francisco Paulino on Wednesday, accusing the Lawrence lawmaker of exploiting pandemic relief programs for personal gain.

The case adds another grim chapter to the reckoning over emergency funds that Washington rushed out while basic safeguards apparently took a back seat.

A criminal complaint filed Tuesday in United States District Court in Boston charges Paulino with wire fraud and money laundering.

He represents the 16th Essex District, which includes the Massachusetts communities of Methuen and Lawrence.

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Prosecutors say Paulino owned and operated Madison Tax, LLC and Madison Mortgage Inc. in Lawrence.

Authorities allege his scheme began around April 2020 and continued through at least December 2021, when families and businesses were struggling under pandemic restrictions.

Investigators claim Paulino used the personal identifying information of other people to fraudulently obtain relief funds.

Madison Tax allegedly served as a vehicle for the operation, while intermediaries were used to direct taxpayer money into Paulino's personal and business bank accounts.

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Paulino appeared in federal court Wednesday afternoon and pleaded not guilty to all 11 counts against him.

Judge David Hennessy said Paulino was represented by a federal public defender because his regular counsel is based in Washington.

The court imposed several conditions on Paulino while the case moves forward. His travel is limited to Massachusetts and New Hampshire unless he receives permission, and he cannot change his address without notifying authorities.

Madison Tax must temporarily suspend its operations and inform clients about the suspension.

Paulino also must surrender his passport, which authorities have already seized, creating a rather inconvenient interruption for an elected official accused of treating public relief money like a private lending account.

Massachusetts House Speaker Ron Mariano called the charges "extremely concerning" and said the House would "closely monitor the legal proceedings and, upon their conclusion, take appropriate action if necessary to ensure accountability."

Voters may reasonably wonder why accountability in government so often seems to arrive only after federal agents get involved.

The arrest comes as Paulino faces Democrat Celina Reyes of Lawrence in the September 1 primary for his State House seat.

The criminal case now hangs over a contest that was already set to determine who represents a district containing two major Merrimack Valley communities.

Federal prosecutors also announced a separate grand jury indictment against Lawrence Mayor Brian DePeña involving alleged COVID relief fraud.

United States Attorney for Massachusetts Leah Foley said the indictment was unsealed Wednesday, placing another Lawrence political figure under a federal spotlight.

DePeña had previously been arrested at his Lawrence home on Friday, August 14.

A criminal complaint filed in federal court charged him with wire fraud and money laundering, although prosecutors stressed that his case and Paulino's case are not connected.

"The money these two individuals allegedly scammed was meant for hardworking Americans," Foley said during a news conference.

That point cuts to the core of the allegations, since emergency programs were intended to keep workers and legitimate businesses afloat during a national crisis.

Foley said Paulino allegedly lent pandemic relief money he received to other people at higher rates.

She described the allegations against both elected officials as "appalling," a fitting word for accusations that public servants exploited programs funded by taxpayers they were supposed to represent.

Ted Docks, the top FBI official in Boston, delivered an equally blunt assessment of the alleged conduct.

"We expect our elected officials to look out for our best interests. … We do not expect them to betray that trust by cashing in on a public health crisis and defrauding government programs to line their own pockets."

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Foley told reporters that the investigations into Paulino and DePeña began about three years ago and developed independently.

Both defendants remain entitled to contest the charges in court, but the accusations offer another reminder that hastily distributed government money can become an irresistible target for those willing to game the system.

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