250 Investors Duped For More Than $145 million – A Chicago Convention Center
IN THE JANAURY 2013 issue of EB5info.com, we ran an article titled, “SEC & USCIS Take Action to Stop EB-5 Visa Scheme Committing Fraud.” The article reviewed how the SEC and USCIS have coordinated to stop the activities of Anshoo Sethi and the EB-5 designated Intercontinental Regional Center Trust of Chicago (IRCTC) from continuing to misappropriate funds from overseas immigrant investors in connection with the “A Chicago Convention Center LLC” offering that he and Chinese migration agents were heavily promoting to investors.
The Securities and Exchange Commission (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. Click here for the full story.
Not Acting Alone
EB5info.com Managing Director Michael Gibson stated, “The U.S. firms participated in this offering by making it a reality without doing any KYC investigations or independent due diligence to verify the claims being made by Sethi. If you look at all of the U.S. professionals who are responsible for putting together an offering package and subsequent I-526 application for residency, you will see a list of firms and service providers who should have known better:
• Securities attorneys
• Immigration attorneys
• Escrow Agents
• Financial Institutions (Loop Capital)
• Public officials (State and local, ie. the Governor of Illinois)
• Feasibility study providers
• EB-5 “consultants” & finders
“Together they provided Sethi the credibility that he needed to promote this fraud and convince people to invest. Without the support of the above, some of which traveled to China to promote the investment, he would never have been able to persuade the Chinese investors to subscribe.
“The Chinese migration agents are only the point of the spear in this conspiracy. It is easy to overlook the involvement of an entire industry of U.S. persons who directly or indirectly support these fraudulent offerings by creating the documents, structure and legitimacy that are required by these con men to perpetrate their fraud on unsuspecting investors.
“That Sethi committed fraud in misrepresenting the risks involved in the investment appears to be clear, that is not unique in the EB-5 program. The real story here is how many U.S. firms and individuals contributed to the losses suffered by the investors through providing him the structure, marketing material and legitimacy that he surrounded himself with to support the fraud over a very long period of time.
“That Chinese migration agents don’t care about their clients should not be news to anyone here on this board. The truth is that many U.S. firms, attorneys and service providers don’t care either as they are more concerned with capturing the finders and commission based fees involved in the transaction and not at all concerned about the activities of the issuers or the well-being of their investor clients (in the case of immigration attorneys).
“Hopefully the SEC / DOJ will continue their investigation into the activities of the U.S. firms and individuals that participated in the offering and marketing that supported the fraud committed by Sethi / IRCTC. If not the regulators, then the investor’s attorneys who could easily go after the assets of the U.S. firms involved to bring relief to their clients for their losses.”
Also see news article from China.