​Feds freeze assets of Orange County firm accused in visa scheme

A federal judge has frozen the assets of an Orange County firm accused by officials of defrauding foreign investors who were seeking permanent U.S. residency.

In late December, the Securities and Exchange Commission filed a civil suit against Newport Beach, California lawyer Emilio Francisco and his Costa Mesa investment firm, PDC Capital, claiming he improperly spent least $9.5 million of investors’ funds to bolster his own luxury lifestyle.

The EB-5 program, which began in 1990, has faced scrutiny recently over its potential​ for fraud

The 131 investors, mostly from China, were seeking to participate in the federal EB-5 visa program, which allows foreign investors to apply to permanently live and work in the U.S. in exchange for investments in projects that create American jobs. Instead, prosecutors said, some of this investors’ cash went to pay for Francisco’s yacht, a yacht-club membership and his personal credit card debt. The SEC said PDC raised more than $72 million from investors between 2013 and last year.

The SEC charged Francisco, PDC Capital and 20 other Francisco-controlled businesses with violating securities laws and asked a federal court in Santa Ana to freeze the assets of his businesses.

Last week, District Judge Cormac Carney approved that request, reported the Los Angeles Times.

Carney said the SEC had presented “extensive, thorough and compelling evidence” of fraud and that the freeze was necessary to prevent Francisco from spending or hiding investors’ funds, according to the report.

Carney also ordered Francisco and his entities to not destroy documents.

Attorneys for Francisco and PDC didn’t comment for the article.

The EB-5 program, which began in 1990, has faced scrutiny recently over its potential for fraud. The SEC filed five EB-5 fraud cases last year and more this year, according to the L.A. Times.

The EB-5 program requires a foreign investor to invest at least $500,000 in a “Targeted Employment Area” that will create at least 10 full-time jobs for U.S. workers. If that and other conditions are met within a two-year period, the foreign investor may apply to live and work in the United States permanently.

http://www.bizjournals.com/losangeles/news/2017/01/13/feds-freeze-assets-of-orange-county-firm-accused.html

Mentions

• PDC Capital Group
• UNITED STATES SECURITIES AND EXCHANGE COMMISSION

States

• California