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Developer Indicted in $160M Visa Con

Thursday, September 4, 2014

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A Chicago man has been indicted after reportedly parlaying a U.S. visa program into a nine-figure fundraising opportunity that targeted Chinese nationals seeking U.S. residency.

Anshoo Sethi, 30, of Chicago, is charged with eight counts of wire fraud and two counts of making false statements in a 10-count indictment returned Aug. 27 by a federal grand jury.

Authorities say Sethi claimed to be building a $912 million hotel and convention center complex near O'Hare International Airport. By invoking a popular U.S. visa program that targets foreign investors, he managed to raise $160 million from about 290 Chinese nationals, according to the FBI.

Anshoo Sethi
lawandborder.com

Anshoo Sethi pitched his A Chicago Convention Center services and Intercontinental Regional Center Trust of Chicago to Chinese-born investors in the U.S. and China.

The U.S. Securities and Exchange Commission sued Sethi over the project in early 2013 and settled the case earlier this year, returning about $147 million to the investors. The new indictment seeks forfeiture of at least $11 million in "administrative fees" that Sethi collected from the investors.

Authorities said Sethi spent at least $320,000 from the proceeds on "luxury goods" for himself and his family; on a cosmetic surgery business; on the settlement of an unrelated lawsuit; and on other personal items.

Immigrant Investors

The indictment alleges that between January 2011 and February 2013, Sethi defrauded investors and deceived the U.S. Citizenship and Immigration Services (USCIS) in its review of visa applications by misrepresenting his project. The alleged lies involved what hotels were participating in the project, the project's appraised value, financing mechanisms, development data, and other major details.

The case involves the USCIS "Immigrant Investor Program" (also known as EB-5), which was created by Congress in 1990 to stimulate the U.S. economy through foreign investment.

EB-5

Approved in 1990 by Congress, the increasingly popular EB-5 visa program makes visas available to foreign nationals who invest $1 million in a new commercial enterprise in the United States. In March 2014, the program had issued nearly 6,900 visas toward the annual limit of 10,000, CNN reported.

Under the program, foreign nationals may obtain a visa qualifying them for U.S. residency if they invest $1 million in a new commercial enterprise, or at least $500,000 in a domestic project in a high unemployment or rural area, and their investment creates or preserves at least 10 jobs for U.S. workers.

Some EB-5 visas are also set aside for investors in projects that USCIS designates "Regional Centers" for their ability to promote economic growth.

A legal website called Immigration Law Las Vegas calls EB-5 "the easiest path to Green Cards for foreign investors who want to give their children an American education, or who want live or work or retire in the United States."

According to Reuters, the number of EB-5 visas issued nearly tripled from 2007 to 2010, and the number of businesses increased tenfold.

In March, CNN reported that "rich Chinese" were overwhelming the program, and Forbes recently described EB-5 as a "visa-for-sale" program. The program has run out of slots for Chinese nationals until the end of September, an official announced Wednesday (Sept. 3).

The Plan

Sethi's Intercontinental Regional Center Trust of Chicago gained USCIS Regional Center status in June 2011.

After that, authorities say, he solicited Chinese nationals who wanted EB-5 visas to invest $500,000 each, plus a $41,500 "administrative fee," in the center and in Sethi's management company, A Chicago Convention Center.

OHare Intl Airport
Wikimedia Commons / Mike8411251995

Sethi claimed to be building a $912 million hotel and convention center on a three-acre site near O'Hare International Airport in Chicago. The U.S. SEC  froze $147 million in Sethi's assets and returned the money to investors.

Each investor also applied for an EB-5 visa, but no visas were granted to any of those investors, the FBI said.

A Private Offering Memorandum stated that each investment interest constituted approximately 0.025 percent ownership of the three-acre project, and it projected raising $249 million through investor contributions.

The Pitch

Sethi also provided "numerous documents and marketing materials" replete with falsehoods and exaggerations "to distribute to investors in China" and made project presentations directly to investors in China, according to the indictment.

Sethi name-dropped prominent hotel chains that he said had signed on to the deal and even produced a forged letter about project financing from state and local agencies. He also distributed "a fake agreement and a fake city ordinance as evidence that the project had been approved for" $97 million in Tax Increment Financing from the City of Chicago, the indictment alleges.

EB-5
illvinfo.com

The EB-5 Immigrant Investment Visa has run out of slots for Chinese nationals until Sept. 30, program officials announced Wednesday (Sept. 4).

Finally, authorities said, Sethi told his investors that the $41,500 administrative fee was "fully refundable," even though he had spent nearly all of it.

The Penalty

Each count of wire fraud carries up to 20 years in prison and a $250,000 fine (or an alternate fine of twice the loss or twice the gain, whichever is greater); restitution is mandatory. Each count of making false statements carries up to five years in prison and a $250,000 fine.

   

Tagged categories: Airports; China; Commercial Buildings; Commercial Construction; Developers; Enforcement; Finance; Good Technical Practice; Government; Government contracts; Hotels; Laws and litigation; North America

Comment from Dennis Carrington, (9/4/2014, 9:18 AM)

Ahhh! Sweet home Chicago!


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