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Orange County lawyer used EB-5 money for yacht: SEC
Here’s a quick lesson in how not to ride the EB-5 gravy train: Solicit lots of money from foreign investors and then spend it on a big fancy boat and other personal items.
That’s exactly what attorney Emilio Francisco did, according to a new civil fraud suit filed by the Securities and Exchange Commission. The suit alleges that Francisco defrauded more than 130 investors, squandering at least $9.5 million on personal expenses instead of on the development of assisted-living facilities and the expansion of the Caffe Primo coffeeshop chain.
Between 2013 and September of this year, Francisco raised more than $72 million in EB-5 money — mostly from Chinese investors — under his Costa Mesa consulting firm, PDC Capital Group, according to the Los Angeles Times. Since then, no assisted-living facilities have been built, although a few Caffe Primo storefronts have opened.
The EB-5 visa program, which grants foreign investors U.S. residency if they invest a minimum of $500,000 in designated business ventures that create at least 10 jobs, has seen several cases of fraud in Southern California in recent years.
The SEC sued a Redlands doctor last year, claiming that he misspent about $10 million from Chinese investors, as well as an Orange County couple, who also allegedly misused millions of dollars that were supposed to go toward a cancer treatment center, according to the Times.
The SEC asked the court to freeze Francisco’s assets. The Newport Beach lawyer is facing a ban from EB-5 solicitations and may have to pay his investors back.
Earlier this month, Congress extended the EB-5 program until April 28. But legislators are considering a new bill that would raise the minimum investment requirement from $500,000 to $800,000, among other revisions. [LAT] — Cathaleen Chen