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Friday
Aug292014

Chicago promoter indicted for $160 million visa fraud against Chinese investors

A Chicago man was indicted Wednesday for defrauding 290 Chinese investors in an alleged visa scheme that ran for two years until it was stopped by a whistleblower complaint to the SEC.

Anshoo Sethi, 30, raised $160 million from Chinese nationals who invested in his purported plan to build a convention center complex with up to five hotels near O’Hare International Airport, the U.S. attorney’s office in Chicago said.

Sethi, pictured, allegedly told the Chinese investors they could obtain U.S. visas in exchange for investments of at least half a million dollars apiece, plus a $41,500 administrative fee.

The Justice Department said Sethi deceived the investors about the U.S. government’s  review of visa applications.

A tip to the SEC in 2010 by Michael Sears, 62, led to the shutdown of Sethi’s scheme.

The SEC awarded Sears $14.7 million in October 2013 in a record-setting whistleblower payment under the Dodd-Frank law.

Sears’s identity was revealed earlier this month in a lawsuit filed by his business partner, John Tung.

Sears and Tung worked together in a small Virginia-based firm called Global Capital Markets Advisors, which manages real estate investment funds.

Tung claims he is owed a share of the $14.7 million whistleblower award because the SEC tip came from their joint efforts.

Sears said in court papers that he became suspicious of Sethi’s visa-related project while traveling in China and reported it himself to the SEC.

Sethi was charged with fraud by the SEC in a civil complaint in February 2013. He settled the charges with fines and other sanctions this March, without any admission or denial of guilt.

He has reportedly returned $147 million to the investors as part of his settlement with the SEC.

Sethi falsely told the Chinese investors he had made deals with Hyatt and other hotel companies and had secured tax incentives from the city of Chicago, the U.S. attorney’s office said.

"Each Chinese national who invested $541,500 in the project also applied for an EB-5 visa with USCIS, but no EB-5 visas were actually granted to investors through the convention center project," the U.S. attorneys office said.

Sethi was charged Wednesday with eight counts of wire fraud and two counts of making false statements in the federal grand jury indictment returned Wednesday.

Each count of wire fraud carries a maximum penalty of 20 years in prison and a minimum of a $250,000 fine. Making false statements is punishable by up to five years in prison and a $250,000 fine.

The indictment also seeks forfeiture of at least $11 million in administrative fees that Sethi allegedly collected from the Chinese investors during the fraud scheme.

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A version of this post appeared earlier in Whistleblower Today and is published here with permission.