The mayor of Lawrence, Massachusetts and the state representative for the same city were both charged this week over pandemic disaster loans, in indictments unsealed on the same day

Lawrence, Massachusetts is a city of about 90,000 people north of Boston. On Wednesday a federal grand jury returned an 11-count indictment against its mayor, and an 11-count indictment against the state representative whose district includes it, and both were unsealed the same day.

The two cases are separate. They share a city, a court, a grand jury term and the two Assistant United States Attorneys from the Public Corruption Unit who are prosecuting them. They also share a programme.

Brian A. DePena, 61, the mayor of Lawrence, is charged with four counts of wire fraud and seven counts of unlawful monetary transactions. Francisco E. Paulino, 46, of Methuen, the representative for the 16th Essex District, is charged with eight counts of wire fraud and three counts of unlawful monetary transactions. Both indictments carry forfeiture allegations. These are allegations, and both men are presumed innocent unless and until proved guilty.

The rate is the point

The Economic Injury Disaster Loan was the least discussed of the pandemic credit programmes, and its terms are why it turns up in both documents. The general allegations in the DePena indictment set them out: interest at 3.75 percent, a repayment period of thirty years, and a first payment usually deferred for twelve months. Measured against what a small business paid to borrow privately in 2020 and 2021, that was very cheap money, and the only thing standing between a borrower and it was a restriction saying the proceeds could be used solely as working capital to relieve economic injury caused by the pandemic.

That restriction was a representation on a form. The money arrived as a deposit in an ordinary business account.

What the grand jury alleges against the mayor

DePena owned a tyre sales and repair shop in Lawrence. The indictment says it received a $150,000 disaster loan in June 2020, most of which went into the business as working capital, and that the loan was then increased twice.

By early 2021, the indictment alleges, he needed cash: a campaign struggling to pay bills, back taxes owed to the IRS, and almost $900,000 owed to two private lenders charging 12 percent and 8 percent on loans secured against properties he owned in the city. The Small Business Administration approved a $350,000 increase that July. When the money landed the following month, according to the indictment, the balance in the account beforehand was $20.23.

Of that tranche, the indictment alleges, $85,000 went to the IRS to clear personal tax debts, and $120,000 moved to a personal account from which $90,000 was written in cheques to his mayoral campaign committee and recorded there as candidate loans. A second increase of $1,154,400 was approved in October 2021, taking the loan to $1,654,400. Approximately $883,293 traceable to it was used to pay off the two high interest mortgages, the indictment alleges, by two treasurer's cheques in December of that year.

Then the detail that makes the arithmetic land. As of 5 August 2026, according to the charging documents, sixteen payments had been made on the loan and every one of them had gone to accrued interest. The outstanding principal stood at approximately $1,654,420, which is slightly more than the sum borrowed.

What the grand jury alleges against the representative

The Paulino indictment is a different shape, and it runs across two programmes rather than one. He ran a tax preparation business and a mortgage brokerage, both in Lawrence.

It opens with pandemic unemployment assistance. The indictment alleges that in April 2020 he applied to the Massachusetts Department of Unemployment Assistance in the name of a 77 year old relative who did not know, claiming the relative had worked for his tax business, and directed the payments into an account held in his own name. It puts the total paid at $44,160, of which about $39,330 arrived by direct deposit.

Then the disaster loans, three of them. A company he incorporated in November 2019 as a fast food restaurant cafe, with no revenue before August 2020, was presented to the Small Business Administration in June 2020 as having gross revenues of $426,755 for the twelve months to 31 January 2020, according to the indictment. It further alleges that loan money obtained for his tax business was moved into his mortgage company and lent on to house buyers at 5.5 percent, 6.25 percent and 7.94 percent, with origination fees charged on top.

The third strand concerns a client of the tax business. The indictment alleges that he obtained an increase to that client's loan without the client knowing, told the client to leave the money where it was, and in December 2021 had $200,000 of it transferred at a bank branch into his own business account, which he used to help fund a $680,000 mortgage carrying a 6.25 percent rate and a $17,000 origination fee.

The apparatus behind both cases

Both releases close with the same two paragraphs, and they read as a statement of resources. The United States Attorney for Massachusetts announced a district-wide Benefit and Voter Fraud Team on 26 March this year. The Justice Department announced a National Fraud Enforcement Division on 7 April. Two units in six months, and the cases now surfacing concern money that left the Treasury in 2020 and 2021.

Wire fraud carries up to twenty years on each count. Unlawful monetary transactions carry up to ten. Neither indictment names defence counsel for either man, and neither document records a plea.

The second indictment, against the state representative, is published in full by the department.