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Today’s must-read

Thursday, Jul 24, 2014

* Springfield’s top lobbyist, Gov. Pat Quinn, House Speaker Michael Madigan, David Axelrod’s son and many others were all apparently bamboozled by a guy who took advantage of a lucrative federal program to raise millions from overseas investors for a complete turkey of a project. Fortune Magazine

On Nov. 15, 2012, about 100 people gathered in a parking lot near O’Hare Airport in Chicago for a ceremonial occasion: the demolition of a fleabag motel to make way for what was intended to be a world-changing construction project. Next door to a Hooters restaurant, just off the Kennedy Expressway, was to rise a commercial and environmental wonder—the “World’s First Zero Carbon Platinum LEED-certified and 100% Allergen Free convention center and hotel complex.” Lest anyone doubt its global eco-import, the project’s developer was branding it as a “Kyoto Protocol Centre.” At a projected cost of $913 million, it was to include three connected towers—14, 17, and 19 stories tall—containing five upscale hotels with 995 suites and rooms, four levels of convention space, a green roof with a spa and yoga studio, a miniature golf course, and a 1,720-car “automatic robotic” parking garage. All this would be financed with the help of a government immigration program known as EB-5, which allows wealthy foreigners to obtain U.S. citizenship by sinking $500,000 apiece into a venture that creates American jobs. Spellbound by the sales pitch—which included “guarantees” that the project would deliver visas and juicy returns—nearly 300 eager Chinese investors had anted up a total of $147 million.

Go read the whole thing. Fascinating stuff.

- Posted by Rich Miller        

23 Comments
  1. - Under Further Review - Thursday, Jul 24, 14 @ 11:24 am:

    This place is near the intersection of Higgins and Cumberland — opposite the expressway. Nothing going on at the motel and there is a sign for a restaurant that never opened.

    Hard to imagine that such small property generated so much controversy.


  2. - Cassiopeia - Thursday, Jul 24, 14 @ 11:35 am:

    Truly fascinating article.

    Wonder what the folks at DCEO have to say about all of this and especially about the China trip with the Governor?


  3. - DuPage - Thursday, Jul 24, 14 @ 11:40 am:

    It looks like a federal government situation. My understanding is Illinois is a “sanctuary state” anyway.

    Non the less, P.T. Barnum would be proud!


  4. - Adam Smith - Thursday, Jul 24, 14 @ 11:42 am:

    I understand how this clown got to Madigan. He hired him to appeal his property taxes. That’s Madigan’s business.

    But how on earth did this guy snooker the Governor’s office and get anywhere near a trade mission? This is a very damning story for Quinn. He and his office appear to be simpletons who were easily duped by a con man who was exposed by another businessman who saw through his BS in a second.

    This checks all the Rauner message boxes. It shows the Quinn administration as incompetent, corrupt and lacking in leadership.


  5. - OneMan - Thursday, Jul 24, 14 @ 11:46 am:

    The whistle blower part of the whole thing was an interesting read as well.

    Also kind of telling when it comes to the due diligence (or lack therein) the Quinn folks did when they worked with the guy in China….

    Also if those revenue comments are right, that would have been easy to catch.


  6. - Rich Miller - Thursday, Jul 24, 14 @ 11:49 am:

    ===But how on earth did this guy snooker the Governor’s office and get anywhere near a trade mission?===

    He had over a hundred million sitting in escrow. People saw that mountain of money, plus the promise of 6,000 jobs and were completely bamboozled.


  7. - RNUG - Thursday, Jul 24, 14 @ 11:51 am:

    - OneMan - Thursday, Jul 24, 14 @ 11:46 am:

    Agree, the whistleblower part was real interesting. $14.7M payday for filling out a form saying you think something is fishy.


  8. - yo - Thursday, Jul 24, 14 @ 11:57 am:

    thanks for link. very interesting. think I may be taking a trip to a developing country soon… EB5 visas for everyone!


  9. - OneMan - Thursday, Jul 24, 14 @ 11:57 am:

    But how much did he have in Escrow Around September 8th 2011 that’s the more interesting question since he was still raising money after the visit…

    The Trib has some more on this in an older story

    http://articles.chicagotribune.com/2012-07-15/news/ct-met-china-investment-visas-sethi-sidebar-20120715_1_eb-5-hotel-proposal-foreign-investors


  10. - Empty Suit - Thursday, Jul 24, 14 @ 12:08 pm:

    Some how Shakespeare comes to mind;
    Henry The Sixth, Part 2 Act 4, scene 2, 71–78


  11. - Been There - Thursday, Jul 24, 14 @ 12:08 pm:

    I agree with OneMan about the whistle blower part of the story. I assume the 10% came out of the escrowed money. Add in the $14 mil in fees paid the EB-5 investors are out a good chunk of money.


  12. - Interested Observer - Thursday, Jul 24, 14 @ 12:27 pm:

    This may come as a surprise to some of you, but I venture to guess that most of those Chinese investors cared less whether they recovered a dime of their investment. They were all extremely wealthy people who were doing nothing more than buying a green card. Indiana’s Gov. Mitch Daniels got bamboozled by a Chinese immigrant much the same way after one of his top aides, a former Illinois guy who used to work for Gov. Thompson, Mitch Roob, became a bit too close to her. Unlike Sethi, she met with an untimely death. She was working with an EB-5 attorney from Chicago who was with her when he died before her crimes could be prosecuted and her corrupt relationship with a bunch of Indiana pols could be exposed http://archive.indystar.com/article/20121215/EXCLUSIVE01/212160304/Chapter-1-Who-Monica-Liang-


  13. - Adam Smith - Thursday, Jul 24, 14 @ 12:30 pm:

    No possible way to spin this as anything other than a huge embarrassment for Quinn that makes him and his team look hapless. Anyone who’s been in this biz for more than a cup of coffee knows that a 29 year-old who comes out of nowhere with a “too good to be true” deal needs some serious scrutiny.


  14. - oz - Thursday, Jul 24, 14 @ 12:34 pm:

    Can’t wait till they start taking peoples property under eminent domain laws because rich foreign investors want it. The process will be deemed ‘necessary’ and hailed to create much needed jobs for the children and who is going to argue those idealistic altruism’s?

    Never mind if the land will be used to build a Foxconn-like sweatshop or if the nation is giving up its sovereignty because corporation are seen as people and can buy politicians for a buck.

    Yeah, it’s all good. /sarc.


  15. - oz - Thursday, Jul 24, 14 @ 12:45 pm:

    Corrupt money looking for a safe haven as the global economic system continues to crumble under investment banking scams, rigged stock market, and debt.

    Where else to launder the money than in US real estate as places like China crack down on ill gotten gains? Look at the NYC market.


  16. - OneMan - Thursday, Jul 24, 14 @ 12:57 pm:

    Corrupt money looking for a safe haven as the global economic system continues to crumble under investment banking scams, rigged stock market, and debt.

    Not really, money looking to get a green card more likely…


  17. - Arthur Andersen - Thursday, Jul 24, 14 @ 2:04 pm:

    I kinda remember reading about this when it was announced, because the cost was so out of whack relative to the number of rooms that I figured one had to be a typo. Also that I couldn’t see all that fitting on the little piece of ground were that crappy HoJos sat for many years.

    Back in the day, there were any number of folks at DCCA that would have smelled that stinker and waved off the Governor right away. In today’s De-Cay-O, those people are retired, departed or laid off.


  18. - dupage dan - Thursday, Jul 24, 14 @ 2:44 pm:

    breathtaking


  19. - Tom Joad - Thursday, Jul 24, 14 @ 2:57 pm:

    I met one of these legal experts who was going to raise a lot of money from Iraquis. He had a law office in downtown Chicago and hired several newly admitted lawyers. He wanted to raise the money in exchange for a 50% stake in the business. He also wanted me to help sell the investors in the suburban counties. He never did offer to pay me though.


  20. - vinron - Thursday, Jul 24, 14 @ 3:00 pm:

    This would make a good movie. Oceans EB-5.


  21. - Streator Curmudgeon - Thursday, Jul 24, 14 @ 4:19 pm:

    The tip-off should have been the miniature golf course.


  22. - Southsider - Thursday, Jul 24, 14 @ 5:52 pm:

    What does the Illinois Finance Authority do and who is on the committee?


  23. - walker - Thursday, Jul 24, 14 @ 5:58 pm:

    A very American story. He thought himself a junior Donald Trump. If it makes me more money, it must be OK.

    Amazing how many of the actually successful tycoons in this country (Ross Perot comes to mind) made their fortunes almost entirely on Federal gov’t. money or guarantees.

    At least we’re selling green cards and citizenship to the top.(snark) It used to be if you’re super-rich enough, just show up, tell me your new address, and everything’s cool.


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