Compliance

SEC Halts $150 Million Investment Scheme Targeted At Foreign Investors

Eliane Chavagnon Reporter 12 February 2013

SEC Halts $150 Million Investment Scheme Targeted At Foreign Investors

The Securities and Exchange Commission has frozen the assets of Anshoo Sethi and his two firms behind a fraudulent investment scheme that netted some $145 million in securities and collected $11 million in administration fees from over 250 foreign investors seeking US residency.

The SEC alleges that Sethi and his Chicago, IL-based firms - A Chicago Convention Center and Intercontinental Regional Center Trust - “duped investors” into believing that by purchasing interests in the former firm, they would be funding construction of the “world’s first zero carbon emission platinum LEED certified” hotel and a conference center near Chicago’s O’Hare airport.

“Investors were misled to believe their investments were simultaneously enhancing their prospects for US citizenship through the EB-5 Immigrant Investor Pilot Program, which provides foreign investors an avenue to US residency by investing in domestic projects that will create or preserve a minimum number of jobs for US workers,” the authority said in a statement. 

According to the SEC's complaint, Sethi and his firms told investors they had acquired all the necessary building permits and that several major hotel chains had joined the project. However, falsified documents to US Citizenship and Immigration Services were given in an attempt to secure the agency’s preliminary approval of the project and investors’ provisional visas.

Sethi and his firms spent over 90 per cent of the administration fees collected from investors, “despite their promise to return this money to investors if their visa applications are denied,” the complaint says. Some $2.5 million of these funds were directed to Sethi’s personal bank account in Hong Kong.

The SEC has obtained an emergency court order to safeguard the remaining $145 million in investor assets that were at risk of being “similarly misappropriated” by Sethi and his firms.

The complaint was filed in US District Court for the Northern District of Illinois and alleges that Sethi, ACCC, and IRCTC violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. In addition to the temporary restraining order and asset freeze granted by the court, the SEC’s complaint seeks permanent injunctions and other monetary relief.

The investigation continues.

 

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