Newport Beach attorney agrees to pay $2.3 million as visa scam case widens

A federal judge ordered a Newport Beach lawyer to pay $2.3 million in restitution and fines stemming from an alleged real estate and visa fraud case on the very day that his business partner got charged with the same crimes, court documents show.

Both men are accused of scamming more than 100 Chinese investors out of $9.5 million, part of the $72 million they put up in hopes of earning U.S. residency under the controversial EB-5 program, according to court documents filed Thursday, Sept. 27.

The U.S. Security and Exchange Commission named Newport Beach attorney Emilio Francisco and his partner, Robert Ferrante, a Newport Beach real estate developer, as owners of Costa Mesa-based PDC Capital. The company they operated solicited investors, mainly from China, to invest in 19 developments, including eight Caffe Primo restaurants and 10 assisted living ventures.

The SEC accused Francisco and Ferrante of misappropriating at least $9.5 million from their investors’ accounts, diverting the cash to cover business and personal expenses, including the purchase of three boats.

Ultimately, none of the 135 overseas investors got green cards, the SEC maintains.

Without admitting or denying guilt, Francisco agreed in July to an SEC settlement requiring him to pay more than $1.8 million to cover some of the losses, plus $486,000 more in penalties and interest, according to a judgment entered Thursday.

The judgment bans Francisco from the sale of securities in the future or from operating any other ventures under the EB-5 program.

Also Thursday, the SEC filed a civil complaint accusing Ferrante in the same scheme, saying among other things, that Ferrante arranged for consultants to review investment offerings and to “fix” projects “in an effort to continue to conceal the misappropriation of funds.”

More than $900,000 in investor funds were used to pay Ferrante’s personal expenses, the SEC says. In addition, the complaint said, Ferrante and PDC Capital profited from the acquisition of properties for the assisted living ventures, buying one property for $1 million and another for $1.2 million, then reselling them to the ventures for $6 million — a gain of $4.8 million or more apiece.

Thursday’s complaint also charged Marilyn Thomassen, a Huntington Beach attorney overseeing PDC’s escrow accounts, with negligence and recklessness for allowing PDC access to those funds. Thomassen already has reached a settlement of her own case with the SEC, said Richard Weintraub, an attorney who represented her in settlement negotiations.

Neither Ferrante nor Thomassen could be reached for comment.

Under the federal EB-5 program, immigrants can get a green card for themselves and their families if they invest at least $1 million and create 10 or more jobs in the U.S. The minimum investment drops to $500,000 if the project is in a rural area, or one with high unemployment.

The program mushroomed from $321 million to $2.6 billion in the six years following the economic meltdown in 2008, when financing grew increasingly difficult to get for real estate development.

While up to 10,000 immigrants a year successfully get green cards under the program, as many as 15 percent of such applications are denied. Government assessments also found numerous cases of fraud.

https://www.ocregister.com/2018/09/28/newport-beach-attorney-agrees-to-pay-2-3-million-as-visa-scam-case-widens/

Mentions

• Emilio N.Francisco
• PDC Capital Group
• UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Litigation Cases

• UNITED STATES SECURITIES AND EXCHANGE COMMISSION vs Emilio N.Francisco & PDC Capital Group

States

• California