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Details on the Case Underlying the SEC's $14 Million Whistleblower Award

Bruce Carton | February 27, 2014

Details on the most significant whistleblower award issued to date by the SEC's Office of the Whistleblower finally emerged today. The $14 million award, which was issued on September 30, 2013, sent a jolt through the companies and counsel that focus on whistleblower issues.  Until now, however, no details were available on the underlying case that led to the award because the recipient of the $14 million requested anonymity. This forced the SEC, which undoubtedly would have loved to trumpet the details of the case, to keep this information quiet.

Today, however, the WSJ reports that the case that led to the huge whistleblower award was filed by the SEC in February 2013 against Anshoo R. Sethi and two Chicago-based companies. The SEC's February 8, 2013 press release concerning the case claimed that Sethi and these companies

fraudulently sold more than $145 million in securities and collected $11 million in administrative fees from more than 250 investors primarily from China. Sethi and his companies duped investors into believing that by purchasing interests in ACCC, they would be financing construction of the “World's First Zero Carbon Emission Platinum LEED certified” hotel and conference center near Chicago's O'Hare Airport. Investors were misled to believe their investments were simultaneously enhancing their prospects for U.S. citizenship through the EB-5 Immigrant Investor Pilot Program, which provides foreign investors an avenue to U.S. residency by investing in domestic projects that will create or preserve a minimum number of jobs for U.S. workers.

On April 23, 2013, the SEC announced that U.S. District Court Judge Amy St. Eve had ordered the return of all investors' principal investment in the fraudulent securities offering--more than $147 million that was sitting frozen in escrow after the SEC obtained an emergency court order against Sethi and his companies. The award of $14 million therefore constitutes 10% of the funds returned to investors, which is the low end of the 10%-30% range established under the Dodd-Frank Whistleblower Program,.

The WSJ reports that an SEC spokesman declined to comment on the award.