WASHINGTON: A 30-year-old Indian American businessmen has been indicted on charges for exploiting a U.S. visa program to fraudulently raise approximately $160 million from nearly 290 Chinese nationals who invested in the project while seeking U.S. residency.
The indictment filed before a Chicago-court seeks forfeiture of at least $11 million in administrative fees that Sethi allegedly collected from Chinese investors and expended as part of the fraud scheme.
Sethi, the founder and a managing member of A Chicago Convention Center LLC, misappropriated at least $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 U.S. Securities and Exchange Commission (SEC) sued Sethi over the purported project in early 2013 and the case was settled earlier this year.
Approximately $147 million, which had been escrowed by Sethi and frozen by the SEC, was returned to Chinese investors. According to the indictment, Sethi solicited Chinese nationals who were interested in obtaining EB-5 visas to invest $500,000 each plus a $41,500 administrative fee in A Chicago Convention Center and the Intercontinental Regional Center.
He said that the $500,000 would be used for construction of the complex and the $41,500 would be used for administrative and marketing expenses, the indictment alleges.
Under current U.S. laws, foreign nationals get green card or permanent residency if they invest $1 million, or at least $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 U.S. workers.
Each Chinese national who invested $541,500 in the project also applied for an EB-5 visa with U.S. 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 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.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 $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.
Sethi further falsely represented that the $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 $250,000 fine, or an alternate fine of twice the loss or twice the gain, whichever is greater, and restitution is mandatory.