Developer Pleads Guilty To $158M EB-5 Fraud Scheme
Developer Ashoo Sethi pleaded guilty to defrauding Chinese EB-5 investors of $158M in a failed hotel development near O'Hare International Airport.
The 995-key project at 8201 W Higgins never moved past the planning stages. Sethi admitted to using forged and fake documents to secure the financing from 290 investors. EB-5 financing grants foreign investors permanent residency if they invest in qualified business ventures like real estate developments. But the program has come under fire for being susceptible to fraud. As we learned at our hotel development and investment panel last month, the federal government is working to improve EB-5's integrity, transparency and compliance.
Crain's reports that Sethi has repaid all but $11.5M of the money he raised, and is working to collect the balance. Federal sentencing guidelines call for a prison term between 78 and 97 months. The charge carries a maximum sentence of 20 years. [Crain's]
