You might think if 261 would-be EB-5 immigrant investors – all rich residents of China – were caught up in an immigration fraud case that: 1) the Department of Homeland Security would bring the case, and 2) there would be a demand for criminal convictions.
You would be wrong on both counts.
The case was brought earlier this month by the U.S. Securities and Exchange Commission (SEC) in Chicago's federal courts (apparently with some cooperation from USCIS). It is a civil suit designed to prevent the investors from losing more money. There are no criminal charges and there is not a whisper in the court documents of any indictment for breaking immigration law.
Fortunately, the SEC lawyers seem to have moved quickly enough to prevent the issuance of EB-5 visas to the investors, though that is not crystal clear. (That the visas may not be issued seems to be a fortuitous byproduct of the litigation, not its objective.) There would have been a large number of them; if each investor had a spouse and, on average, one child, there would have been 783 of them.
The bad guys in the case are not the Chinese investors but the nearly successful fraudsters at the center of the conspiracy, Anshoo Sethi, 29, and presumably his relative, Ravinder Sethi. They created, presumably with USCIS approval, a regional center for the funneling of EB-5 moneys, the International Trust Center of Chicago. Their pitch was that they were going to build a huge hotel complex near O'Hare Airport, through an investment vehicle they also controlled called A Chicago Convention Center (ACCC).
The SEC's relatively brief press release on the case includes a link to the highly detailed, 26-page civil complaint filed in court.
The Sethis used a flood of lies and misstatements to raise more than $150 million: they said that they had formal deals with major hotel chains for the operation, such as Hyatt, when they did not; they said that ACCC owned the land needed for the development and that it was valued at $177 million when a city appraisal put the value at about $600,000. They said that they had a full set of building permits in place for the construction, when they had only a handful of them, including one for the erection of a tent for a groundbreaking ceremony.
Despite these major flaws (which would have shown up during the most casual due diligence) the Sethis managed to get $145 million in escrowed funds from their investors and, more significantly, raised more than $11 million in fees from the same set of would-be EB-5 investors. Fortunately the Sethis did not yet have control of the $145 million, but they had just about exhausted the $11 million, including substantial payments to their own banking accounts in China.
The federal judge moved quickly to freeze the moneys, as requested by the SEC.
I find it both interesting and depressing that the SEC, not known for its vigorous enforcement of the banking and investment laws, generally, was so much more on top of this case than USCIS. It is equally depressing to note that 261 Chinese millionaires are so eager to get visas to the United States that none — none — of them noticed the fraud being inflicted on them until very late in the game.
Presumably most of the 261 would-be immigrants do not really care about their money, so we have a program (EB-5) in which we cannot count on the investors to look after their own financial interests, and we certainly cannot count on DHS to look after the interests of the rest of us. Grim.
But cheers for the SEC!