A Chicago man fraudulently raised $160 million from Chinese nationals who invested in his purported plan to build a convention center complex with hotels near O'Hare International Airport, the U.S. attorney's office in Chicago announced Wednesday.
Charges were lodged Wednesday against Anshoo Sethi, 30, who was the founder and managing member of A Chicago Convention Center LLC, which told investors it planned to build a hotel and convention center on 3 acres of land east of O'Hare.
The indictment alleges that between January 2011 and February 2013, Sethi defrauded 290 Chinese investors and deceived the U.S. government in its review of visa applications through false statements and representations.
According to the indictment, foreign nationals may obtain a certain kind of visa if they invest money in domestic projects. Sethi solicited Chinese investors interested in obtaining this visa to invest at least half a million dollars apiece, plus a $41,500 administrative fee.
But Sethi allegedly lied to the investors, telling them he had made franchise agreements with established hotel brands like Hyatt and secured tax increment finance funding from the city of Chicago and other investments from the government. He also misrepresented the appraised value of the project site, according to the U.S. attorney's office.
Sethi is also accused of using $320,000 of the money he raised "to purchase luxury goods for himself, his family and friends," according to the release from the U.S. attorney's office. He was charged with eight counts of wire fraud and two counts of making false statements in an indictment returned by a federal grand jury Wednesday.
Patrick Collins, an attorney for Sethi, said Wednesday in an emailed statement the indictment makes Sethi's "good faith efforts to return all funds provided by the investors" more difficult.
Sethi has returned about $147 million to the investors as the result of a settlement this year of a Securities and Exchange Commission lawsuit, according to the U.S. attorney's office. Collins said Sethi is committed to repaying investors the fees associated with the investment.
Collins' statement also suggests Sethi's professional advisers on the project were involved in "key aspects of the very conduct charged in the indictment."
"While Mr. Sethi made serious mistakes in judgment, he was grossly ill-served by certain of the so-called '(visa) experts' and advisers that he engaged.
"In addition, the evidence will show that there were individuals who used the project to pursue their own private interests to the detriment of Mr. Sethi and the investors."
The Tribune reported in July 2012 that at one point, Sethi's project, described as building five environmentally progressive luxury hotels near the airport on land where his family's run-down hotel once stood, had preliminary support from Democratic Gov. Pat Quinn.
Quinn appeared in a promotional video shot during a trip to China in fall 2011. "We know how to make convention centers," Quinn said in the video. Warren Ribley, then head of the state Department of Commerce and Economic Opportunity, also appeared in a promotional video for Sethi's project.
State economic development officials later said Ribley's appearance in the video was a mistake and that he had "overstepped his role" by doing the endorsement without approval from the governor's office. And the spokeswoman said Quinn's appearance in Beijing was misrepresented.
State officials sent Sethi emails demanding he stop using Quinn's image and the Illinois seal in promotional materials, according to correspondence obtained through an open records request.
Records show Sethi donated $1,001 to Quinn's campaign fund in early February 2009, a few days after the governor was sworn in following the impeachment and removal of then-Gov. Rod Blagojevich.
A spokesman for the governor's office declined to comment Thursday on Sethi's indictment.
Sethi will be arraigned at a yet-to-be determined date in U.S. District Court.
Conviction on each count of wire fraud carries a maximum penalty of 20 years in prison and a minimum of a $250,000 fine. Each count of making false statements could carry a maximum sentence of five years in prison and a $250,000 fine.
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