SEC: Senior Housing Developer Stole $9.5 Million in EB-5 Scheme
The Securities and Exchange Commission (SEC) has sued a private equity group with senior housing ties for engaging in a $9.5 million scheme by defrauding investors. The fraudster allegedly stole millions to pay for his lavish lifestyle, including the purchase and maintenance of a yacht as well as supporting his other businesses.
Emilio Francisco, a California-based attorney, raised $72 million from investors in China through his firm PDC Capital Group, LLC, the SEC alleges in its lawsuit.
PDC Capital has been underway with a $750 million plan for senior housing developments over the last few years. The scheme, which raised investor funds under the EB-5 Immigrant Investor Program, ran from 2013 through September 2016, the SEC alleges.
The EB-5 funding program allows foreign nationals to apply for residency in the U.S. in exchange for providing a minimum investment for developments within areas of high unemployment. PDC Capital planned to use more than $250 million of its $750 million earmarked for senior housing.
Francisco and PDC Capital Group defrauded at least 131 investors in 19 different offerings by misappropriating at least $9.5 million, according to the SEC. The defendants raised money from EB-5 investors, primarily from China, for offerings in assisted living facilities, Caffe Primo restaurants and a packaging company.
The EB-5 program has been a popular financing method for senior housing developers. However, the program has suffered from allegations of fraud and come under fire, with lawmakers eyeing it for potential reform.
The SEC’s complaint takes aim at Francisco, PDC Capital and some 20 other businesses controlled by Francisco, according to the SEC.
Francisco had not responded to a request for comment as of press time.
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