Dive Brief:
- An Illinois developer was sentenced Tuesday to three years in federal prison for using a government visa program to deceive 290 foreign investors out of almost $160 million, according to The Chicago Tribune.
- Prosecutors said Anshoo Sethi — who pleaded guilty last year to wire fraud — fabricated a marketing package to attract EB-5 visa investment from Chinese nationals for a $900 million hotel and convention center near O'Hare International Airport, which never made it past the planning stages.
- Sethi returned $146 million in investor funds after the Securities and Exchange Commission launched an investigation in 2013 and has also been ordered to pay an additional $8.8 million in restitution as part of his sentence.
Dive Insight:
The EB-5 foreign investor program has come under increased scrutiny over the last few years due to some high-profile fraud cases associated with it. Seattle-area developer Lobsang Dargey pleaded guilty in January to fraud charges after admitting that he spent $240 million in EB-5 funds on projects that were not qualified by U.S. Citizenship and Immigration to receive them, as well as on luxury items for himself, family and friends. The typical EB-5 investment ranges from $500,000 to $1 million and puts foreign investors at the head of the green card application line.
Congress will likely tighten up controls on the program in the near future and raise minimum investment to $800,000 in response to questions about its susceptibility to fraud, David S. Jones, partner at Fisher Phillips, told Construction Dive last month. What is unlikely to happen, however, is the elimination of the program altogether, as many successful developments, like New York City's Hudson Yards, have used the program for a significant portion of their financing.
