Court records show that Caffe Primo, which in October 2015 moved into the lower State Street space formerly occupied by the Pierre LaFond Wine Bistro, closed this January immediately after a federal judge froze the assets of CEO Emilio Francisco amid fraud charges filed by the Securities and Exchange Commission. The judge cited “extensive, thorough and compelling evidence” presented by the SEC that Francisco improperly spent at least $9.5 million of investor money on a yacht, a yacht-club membership, his other businesses, and credit cards belonging to him, his brother, and his daughter. In addition to the Santa Barbara restaurant, at least three other Southern California locations operated by the Los Angeles–based Caffe Primo chain have closed as a result of the charges.
According to the SEC, Francisco — a Newport Beach attorney who runs investment firm PDC Capital — raised more than $72 million between 2013 and last year from investors looking to take part in the federal EB-5 visa program, which offers permanent residency to foreign entrepreneurs (along with their spouses and unmarried children under 21) who invest in a commercial U.S. enterprise and create at least 10 full-time U.S. jobs. More than 100 investors, most of them Chinese citizens, each gave PDC Capital $500,000 that Francisco promised would be used to build assisted-living facilities and open new Caffe Primo locations. Instead, authorities say, Francisco used a large portion of the funds to support a lavish lifestyle. Attorneys for Francisco and PDC did not return calls and emails seeking comment.
The EB-5 visa program, originally created in 1990 and administered by the Department of Homeland Security, has increased in popularity in recent years. It awards approximately 10,000 visas annually, 80 percent of them to Chinese investors. Supporters say the program funnels much-needed development capital to rural areas and poor urban communities. Critics, however, charge it is rife with fraud and does more to benefit wealthier cities like Manhattan and Las Vegas. Last April, federal prosecutors accused two Vermont developers ostensibly raising money to build a ski resort of “systematically looting” millions from foreign investors. One of the defendants was accused of using $50 million for personal expenses, including a luxury condominium at Trump Place in New York.