On December 27, 2016, the Securities & Exchange Commission (“SEC”) charged Emilio Francisco with defrauding investors seeking to participate in the EB-5 immigrant investor program. The EB-5 program, which is administered by the U.S. Citizenship and Immigration Service (“USCIS”), allows foreign investors to apply to permanently live and work in the U.S. by investing money in projects that create American jobs.
According to the SEC’s complaint, Mr. Francisco and his company, PDC Capital Group, LLC, used the program to aid his fraudulent efforts, raising roughly $72.05 million from 131 investors in 19 different offerings. The complaint states that from the $72 million raised, PDC Capital and Francisco misappropriated approximately $9.5 million of the investors’ capital contributions to support Francisco’s upscale lifestyle, which included the purchase and maintenance of a yacht, as well as to help support his businesses.
Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office, said, “As alleged in our complaint, Emilio Francisco illegally enriched himself with investor money intended for specific EB-5 projects that create jobs for U.S. workers.”
The SEC is charging Francisco, PDC Capital, and 20 other businesses controlled by Francisco with violating the antifraud provisions of Section 17(a) of the Securities Act of 1934, Section 10(b) of the Exchange Act, and Rule 10b-5. Furthermore, the SEC is seeking an emergency asset freeze and a court-appointed receiver over Francisco’s businesses involved in the illegal activity.
Due to the growth of the EB-5 industry, and the subsequent rise in illegal activity surrounding the program, there has been an increase in regulatory scrutiny. For assistance with assessing your EB-5 program, or if you are interested in learning more about the requirements surrounding this program, please give us a call at (619) 278-0020 to schedule a consultation.