On February 6, 2013, the U.S. Securities and Exchange Administration ("SEC") filed a civil lawsuit against an Illinois man and two of his companies, alleging that they swindled investors out of close to $150 million due to false statements made in connection with the EB-5 investor program. SEC v. A Chicago Convention Ctr. LLC, No. 1:13-cv-00982 (N.D. Ill. 2013). Under the EB-5 program, a FN can secure U.S. lawful permanent residence by making certain qualified investments that are at least $500,000 to $1 million.
In its complaint, unsealed on February 8, 2013, the SEC alleges that Anshoo Sethi established two firms to lure principally Chinese investors to invest in what he characterized as the "world's first zero carbon emission platinum LEED certified" hotel and conference center in Chicago. He advised these investors that three prominent hotel chains had signed on to the project, and that construction would begin in the summer of 2012. According to the SEC, none of these representations were truthful. To compound the problem, Mr. Sethi also provided false and misleading information on the investor's behalf to the USCIS in connection with each EB-5 visa application.
Mr. Sethi purportedly collected $500,000 from each immigrant investor, plus a $41,500 "administrative fee" that he represented was refundable if the investor's application was denied. The SEC alleges that Mr. Sethi and his companies spent more than 90 percent of these funds on matters that had nothing to do with the project that the investors provided funds to support. Shortly after the complaint was filed, the court issued a temporary restraining order freezing the remaining $145 million in investor assets that had not yet been misappropriated.