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A 30-year-old Indian American businessmen has been indicted on charges for exploiting a US visa program to fraudulently raise approximately USD 160 million from nearly 290 Chinese nationals who invested in the project while seeking US residency.
Chicago-based Anshoo Sethi, who purported to be building a USD 912 million hotel and convention center complex near O'Hare International Airport, was charged on Tuesday with eight counts of wire fraud and two counts of making false statements in a 10-count indictment returned by a federal grand jury.
The indictment filed before a Chicago-court seeks forfeiture of at least USD 11 million in administrative fees that Sethi allegedly collected from Chinese investors and expended as part of the fraud scheme.
Mr Sethi, the founder and a managing member of A Chicago Convention Center LLC, misappropriated at least USD 320,000 of the fees to purchase luxury goods for himself, his family, and friends, and for an unrelated civil lawsuit settlement to fund a cosmetic surgery business, and for other personal expenses, according to the indictment.
The US Securities and Exchange Commission (SEC) sued Mr Sethi over the purported project in early 2013 and the case was settled earlier this year.
Approximately USD 147 million, which had been escrowed by Mr Sethi and frozen by the SEC, was returned to Chinese investors.
According to the indictment, Mr Sethi solicited Chinese nationals who were interested in obtaining EB-5 visas to invest USD 500,000 each plus a USD 41,500 administrative fee in A Chicago Convention Center and the Intercontinental Regional Center.
He said that the USD 500,000 would be used for construction of the complex and the USD 41,500 would be used for administrative and marketing expenses, the indictment alleges.
Under current US laws, foreign nationals get green card or permanent residency if they invest USD 1 million, or at least USD 500,000 in a domestic project in a high unemployment or rural area and their investment would create or preserve at least 10 jobs for US workers.
Each Chinese national who invested USD 541,500 in the project also applied for an EB-5 visa with US Citizenship and Immigration Services (USCIS), but no EB-5 visas were actually granted to investors through the convention center project, federal investigative agencies said.
The indictment alleges that Mr Sethi falsely represented that the project had executed franchise agreements with established hotel brands, namely Hyatt, Starwood, and Intercontinental Hotel Group, to operate at least three separate hotels at the complex, knowing at the time that no such agreements existed.
Mr Sethi also allegedly falsely represented that that the State of Illinois and the federal government were investing funds and providing tax credits for the project, including circulating a forged letter stating that the project qualified for financing through the Illinois Finance Authority.
He also falsely represented that the City of Chicago had agreed to provide approximately USD 97 million through Tax Increment Financing and distributed a fake agreement and a fake city ordinance as evidence that the project had been approved for TIF financing, the indictment alleges.
Mr Sethi further falsely represented that the USD 41,500 administrative fee was fully refundable if the investors' EB-5 visas were not approved, even though he knew that he had spent nearly all of the administrative fees collected and did not have the resources to repay the investors.
Each count of wire fraud carries a maximum penalty of 20 years in prison and a USD 250,000 fine, or an alternate fine of twice the loss or twice the gain, whichever is greater, and restitution is mandatory.
Each count of making false statements carries a maximum sentence of five years in prison and a USD 250,000 fine.