U.S. Securities and Exchange Commission building in Washington, D.C. (Photo: Mike Scarcella/ALM)
Securities regulators accused a Newport Beach, California, lawyer on Tuesday of fueling a luxury lifestyle through a scheme that allegedly bilked millions of dollars from foreign investors who wanted to speed up their immigration to the United States.
In Santa Ana federal court, the U.S. Securities and Exchange Commission alleged Emilio Francisco raised $72 million from investors in China who wanted to participate in the EB-5 immigration program, which allows foreigners to apply to live and work permanently in the United States by investing in projects that create jobs.
Francisco purported to be raising capital for assisted-living facilities, new restaurants and the renovation of a production facility for environmentally friendly agriculture and cleaning products, according to the SEC complaint filed in the U.S. District Court for the Central District of California.
Instead, Francisco and his private-equity firm, PDC Capital, diverted investment funds from one project to another, the SEC alleged in the complaint. Francisco and PDC Capital, according to the SEC, “misrepresented to investors that their capital contributions would be used for the designated purposes stated in the offering materials.”
Francisco stole $9.6 million to support his own businesses and cover luxury expenses, including the purchase and maintenance of a yacht, according to the complaint.
“Emilio Francisco illegally enriched himself with investor money intended for specific EB-5 projects that create jobs for U.S. workers,” Michele Wein Layne, director of the SEC’s regional office in Los Angeles, said in a statement.
Francisco’s attorney, Seyfarth Shaw partner Christopher Robertson in Boston, was not immediately be reached for comment. Francisco, an active member of the California bar, also was not immediately reached for comment Tuesday.
Francisco was admitted to the California bar in 1976 after receiving his law degree from Western State University College of Law. According to bar records and the SEC’s complaint, his license to practice law was suspended for nine months in 2012, the year he founded PDC Capital. In the complaint, the SEC said the firm was formed “as a vehicle for managing EB-5 program investments.”
In 2012, Francisco admitted he failed to properly supervise nonlawyer “debt analysts” at his law firm who were involved with debt reduction and negotiation services, according to state bar records. He was also cited for lax supervision of a lawyer who “failed to obey court orders or make appearances.”
SEC lawyers have asked U.S. District Judge Cormac Carney to freeze assets and accounts associated with Francisco’s business ventures.