The EB-5 Program and the Case That Changed It

The EB-5 Immigrant Investor Program was designed to bring foreign capital into American infrastructure — creating jobs, growing communities, and helping entrepreneurs launch transformative projects. But in the case of Anshoo Sethi, the program didn’t empower innovation. It crushed it.

Sethi, a young Chicago entrepreneur, envisioned a $900 million zero-carbon hotel and convention center near O’Hare International Airport. With a green design, massive job creation potential, and interest from top hotel brands, the project should have been a showcase of what EB-5 was made for.

Instead, it became a cautionary tale — and not because the project was fake, but because a competitor in the EB-5 industry filed a whistleblower complaint, falsely alleging fraud.

That whistleblower, who had no financial stake in the project, received a $15 million payout from the federal government for triggering the investigation.

 A Real Project, Undermined by False Allegations

The SEC did not discover fraud through audits or investor complaints. In fact, investors were engaged, optimistic, and later refunded nearly all of their contributions.

What triggered the SEC’s involvement was a whistleblower submission from a competing EB-5 operator, claiming Sethi had fabricated key project elements.

The irony? The whistleblower was wrong. The project was very real. And the claims — while containing some technical truths — were based on incomplete and misleading information.

 The Legal Filing That Sparked a Firestorm

At the heart of the confusion were expired hotel franchise agreements. The delay in USCIS approval — common in EB-5 projects — meant those agreements couldn’t be re-executed until a construction start date was confirmed. The hotel brands understood this and were standing by, ready to re-sign when the timing aligned.

But Sethi’s legal compliance team made a fatal error: they submitted the expired agreements to USCIS without disclosing their pending renewal status.

That single act — unintentional but irresponsible — gave the government cause to act. What followed was a full-blown investigation and media spectacle, driven not by financial fraud, but by a legal misstep combined with a competitor’s calculated strike.

 Who Was Harmed? Not the Investors

Despite headlines suggesting wrongdoing, no investors lost money. Over $147 million of the $158 million raised was recovered and returned. Many investors were even given the option to roll their funds into another EB-5 project.

What This Case Tells Us About EB-5 and Incentives

The people who truly suffered were Anshoo Sethi and his parents, who lost millions of their own capital and watched their reputations erode — all while a competitor profited immensely by attacking a legitimate, visionary project.

The EB-5 program, while powerful, is vulnerable. The Sethi case exposed several flaws:

Whistleblower incentives can reward distortion — especially when money, not truth, is the motivator.

Regulatory timelines can cripple projects before they begin.

Legal technicalities can overshadow intent, even when the underlying business is viable and honest.

In this case, a project that could have created tens of thousands of jobs and set a global precedent in green development was killed — not by fraud, but by paperwork, politics, and an opportunistic competitor.

 Time for Reform, and for Reflection

The Sethi case is still cited in EB-5 reform discussions. It influenced how compliance is handled, how documents are verified, and how developers are advised. But it also left a deep injustice unaddressed: that someone with a real vision, and no intent to deceive, can still be brought down by systemic flaws and weaponized regulation.

And while one man lost everything trying to build something good, another walked away with $15 million for helping destroy it.

If that’s not a call for change, what is?