Anshoo Sethi, the young owner of a failed O'Hare-area motel, managed to trick Illinois' political heavies into supporting his grand ambition to erect a massive $913 million hotel-and-convention center near the airport despite having no building permits, construction plans or legit franchise deals with Hyatt and other chains.
A compelling story in Fortune's latest issue gives the play-by-play on how Sethi, then in his 20s, smooth-talked Gov. Pat Quinn, House Speaker Mike Madigan, U.S. Sen. Dick Durbin and former White House adviser David Axelrod's son with an irresistible-yet-empty pitch: He would add 8,495 jobs to the state's troubled post-crash economy through a federal immigration program that issues American visas to foreign investors who contribute $500,000 toward start-up businesses in high-unemployment areas.
Sethi exploited the program, called EB-5, to lure $147 million from 300 Chinese investors but he could not access that money -- or get their visas approved -- until demonstrating proof of how he'd finance the rest of his venture, per a request from the United States Citizenship and Immigration Services (USCIS). Pressure mounting, he forged documents from Hyatt as well as a fake investor in Qatar and even arranged a high-profile champagne ceremony feting the sham project in late 2012.
He was eager to wrangle support from state government, which he saw as beneficial in securing the millions -- not to mention goodwill from hotel companies -- necessary to fund his outrageous vision.
"Sethi retained Michael Axelrod, son of David Axelrod, President Obama’s former strategist, and a consultant specializing in Latin American business, to raise EB-5 funding in Mexico," write Fortune's Peter Elkind and Marty Jones. "Axelrod also called contacts at USCIS, prodding them to approve the visas, which would release the escrowed Chinese funds. They told him the visas remained 'in review.' A second lobbyist enlisted calls from Illinois Sen. Richard Durbin’s staff. Sethi arranged another meeting with the Illinois Finance Authority for mid-February, where he hoped to make progress on winning the state financing he’d promised his investors. He also persuaded an official of the Clinton Foundation to make a high-level inquiry on his behalf."
He'd also consulted Madigan, an attorney with a private practice, to secure a 50 percent tax break on the property that housed his terribly-reviewed, delapidated motel and where the convention center would go up to replace it.
Sethi did a number on Quinn during the governor's business trip to China in fall 2011.
A guarantee of government backing "is immensely alluring for Chinese investors, who are accustomed to a government that controls everything," say Elkind and Jones, writing that Sethi scored a meeting and photo-op with Quinn after talking up a "Kodak opportunity" to tout "why the state of Illinois is great for investment."
"With help from Quinn’s commerce secretary—who taped a video endorsing the convention project—Sethi did even better. Belatedly recognizing they’d been bamboozled ('They know how to use us,' complained one aide in an email), Quinn’s staffers demanded he cease using the governor’s image and the Illinois state seal. Sethi ignored them," according to the Fortune piece.
Acting on a whistleblower's tip, the feds eventually busted Sethi in early 2013 and froze the Chinese money. A settlement was reached in March of this year that mandated he return the $147 million and pay a $3.9 million fine. The 30-year-old is now embroiled in a foreclosure lawsuit over the vacant, never-developed airport-centric property. He's neither admitted nor denied allegations of fraud.