The Securities and Exchange Commission today announced charges and an asset freeze against an individual living in Illinois and two companies behind an investment scheme defrauding foreign investors seeking profitable returns and a legal path to U.S. residency through a federal visa program.
The SEC alleges that Anshoo R. Sethi created A Chicago Convention Center (ACCC) and Intercontinental Regional Center Trust of Chicago (IRCTC) and fraudulently sold more than $145 million in securities and collected $11 million in administrative fees from more than 250 investors primarily from China.
Sethi and his companies duped investors into believing that by purchasing interests in ACCC, they would be financing construction of the "World's First Zero Carbon Emission Platinum LEED certified" hotel and conference center near Chicago's O'Hare Airport.
Investors were misled to believe their investments were simultaneously enhancing their prospects for U.S. citizenship through the EB-5 Immigrant Investor Pilot Program, which provides foreign investors an avenue to U.S. residency by investing in domestic projects that will create or preserve a minimum number of jobs for U.S. workers.
The SEC alleges that Sethi and his companies falsely boasted to investors that they had acquired all the necessary building permits and that several major hotel chains had signed onto the project.
They also provided falsified documents to U.S. Citizenship and Immigration Services (USCIS) -- the federal agency that administers the EB-5 program -- in an attempt to secure the agency's preliminary approval of the project and investors' provisional visas.
Meanwhile, Sethi and his companies have spent more than 90 percent of the administrative fees collected from investors despite their promise to return this money to investors if their visa applications are denied. More than $2.5 million of these funds were directed to Sethi's personal bank account in Hong Kong.
Sethi and his companies prominently featured in their marketing materials the purported participation of three major hotel chains in the project: Hyatt, Intercontinental Hotel Group, and Starwood Hotels.
However, none of these hotel chains have executed franchise agreements to include a brand hotel in this project as represented to investors in the offering materials.
Two of the chains actually terminated prior deals with other Sethi-related entities more than two years before these offering materials were circulated to investors.
For more see the entire SEC Press Release.