Beijing, Feb 15 (IANS) More than 250 investors have been allegedly cheated by an American, Anshoo R. Sethi, who led them to believe their investment could boost their prospects of US citizenship.
According to the US Securities and Exchange Commission, Sethi created two companies and "fraudulently sold $145 million in securities and collected $11 million in administrative fees from investors", a report said Friday.
The commission has halted the scheme and filed charges, the Shanghai Daily reported. It has also frozen Sethi's assets.
"Sethi orchestrated an elaborate scheme and exploited these investors' dreams of earning legal US residence along with a positive return on their investment in a project that was not nearly the done deal that he portrayed," said Stephen Cohen of SEC's enforcement division.
"The good news is that we intervened early and stopped him from getting very far, and the asset freeze preserves nearly all of the money invested."
Sethi and his companies have spent more than 90 percent of the administrative fees collected from investors despite a promise to return the money to investors if visa applications were rejected.
More than $2.5 million of these funds were directed to Sethi's personal bank account in Hong Kong, said SEC.
It has obtained an emergency court order to protect the remaining $145 million in investor assets.
It is not known whether Sethi, 29, who lives in Illinois, has been arrested.
Investigations are ongoing, the SEC said.
SEC alleges that Sethi misled people that their investments would help them gain them US citizenship through the EB-5 Immigrant Investor Pilot Programme.
This programme provides foreign investors with an avenue to US residency by investing in projects that will create or preserve jobs for US workers.
The SEC said Sethi and his companies "made a number of misrepresentations about the project to dupe investors".
By purchasing interests in Sethi's companies, the investors were told that they would be financing construction of the "World's First Zero Carbon Emission Platinum LEED certified" hotel and conference center near the Chicago airport.
The SEC alleges that Sethi and his companies falsely told investors they had acquired all the necessary building permits and that several major hotel chains, such as Hyatt, Intercontinental Hotel Group and Starwood Hotels, had signed onto the project.
However, none of those hotel chains has a signed agreement to include a hotel in the Chicago project, according to the SEC's investigation.