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.

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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. 

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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.

Written by Amy Baxter

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