Updated

Updated · The Associated Press · Aug 14

Lawrence Mayor Brian DePena Charged Over $1.5 Million Pandemic Loan, Diverting $90,000 to Campaign

Updated

Updated · The Associated Press · Aug 14

Lawrence Mayor Brian DePena Charged Over $1.5 Million Pandemic Loan, Diverting $90,000 to Campaign

Q: What hidden financial crisis pushed a sitting mayor to gamble his career by funneling business loans into personal mortgages?

The hidden crisis appears to have been a severe personal cash squeeze driven by three pressures at once: nearly $900,000 in high-interest private mortgage debt on Lawrence properties he owned, about $85,000 in personal IRS tax liabilities, and a financially struggling mayoral campaign. Court filings and local reporting say that by early 2021 DePeña was short of cash after buying a commercial property at 342 Broadway for $700,000 and carrying debt to private “hard money” lenders charging roughly 12% and 8% interest. Prosecutors say those mortgages, not his tire business, became the real target of the pandemic loan money. They allege he later used about $883,293 in EIDL proceeds to pay off those property loans. The complaint also points to immediate liquidity stress. When he was waiting for an SBA loan increase to be released in mid-2021, DePeña allegedly sent urgent texts to a financial adviser saying he was “in trouble,” had “no time to wait,” and had “no other option.” That language suggests he was under acute deadline pressure from debts already coming due. So the underlying problem was not a hidden crisis at City Hall or in the pandemic loan program itself. It was an alleged personal financial emergency: expensive real-estate leverage, overdue tax debt, and campaign cash needs converging at once. Prosecutors’ theory is that he used federally backed business relief funds as a bridge to rescue his personal balance sheet.

3 articles · Updated · The Associated Press · Aug 14

Federal prosecutors say Brian DePena fraudulently expanded a COVID-19 disaster loan for his tire business to $1.5 million, then used it for personal and political expenses instead of business losses.
More than $880,000 allegedly went to pay off high-interest mortgages on several properties, and $90,000 was routed into his mayoral campaign ahead of the 2021 election; prosecutors also say he used funds to cover back taxes.
DePena, 61, made an initial appearance in Boston federal court Friday and was released under conditions including surrendering his passport and seeking court approval before taking any new loans.
The FBI said the loan program was meant to keep businesses afloat during the pandemic, framing the case as misuse of federal relief by an elected official; DePena declined to comment and said only "God bless" when asked if he would resign.
If convicted, DePena faces up to 20 years on the wire fraud count and 10 years on the money laundering count.