SEC Halts $150 Million Scheme Promising Visas to Foreign Investors
The SEC said it has levied charges and frozen assets of an Illinois individual and two companies behind an investment scheme that allegedly defrauded foreign investors seeking profitable returns and a legal path to U.S. residency through a federal visa program.
According to the SEC’s complaint filed in U.S. District Court for the Northern District of Illinois, Anshoo R. Sethi created A Chicago Convention Center and Intercontinental Regional Center Trust of Chicago 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, the SEC said.
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, according to the SEC’s complaint.
The SEC alleged 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, which is 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% of the administrative fees collected from investors despite their promise to return this money to investors if their visa applications are denied, the SEC said adding, more than $2.5 million of these funds were directed to Sethi’s personal bank account in Hong Kong.
The EB-5 program enables foreign investors to possibly qualify for a green card if they invest $1 million or $500,000 in a “Targeted Employment Area” with a high unemployment rate in a project that creates or preserves at least 10 jobs for U.S. workers, excluding the investor and his or her immediate family, the SEC said.
Sethi and his companies used the lure of a pathway to U.S. citizenship to convince investors to wire a minimum of $500,000 apiece plus a $41,500 administrative fee to U.S. bank accounts, according to the complaint. These administrative fees are separate from the investment capital that the EB-5 program requires to be deployed into a job-creating enterprise, the SEC said.
More than $11 million in administrative fees were collected with the claim that they were fully refundable to investors if their visa applications are rejected. Sethi and his companies have instead been spending those funds, the SEC said.