Sethi's father, Ravinder Sethi, allegedly used $35,000 of investor money deposited in a Hong Kong bank to pay settlement costs related to a separate federal lawsuit filed in 2011 by the Wyndham hotel chain for breach of contract.
The lawsuit also accuses Sethi of doctoring financial documents to make the convention center project appear more viable.
Immigration Services that indicated financial interest from several hotel chains turned out to be expired. One, under the Hyatt hotel chain's letterhead, was fabricated, the lawsuit alleges.
"We were surprised and dismayed when we were informed that Mr. Sethi had falsified Hyatt documents representing that he had reached agreements with the company, which he clearly had not," the company said in an emailed statement.
A "comfort letter" Sethi said was from the Qatar Investment Authority, based in the Arabian Peninsula, was also a fake, according to the lawsuit. The letter said the firm would finance $340 million for construction of the convention center if Sethi failed to persuade Illinois authorities to help pay for the project through government bonds and loans.
Under a court order, Sethi has until Saturday to provide an accounting of funds outside the U.S. that are related to the convention center project. He has yet to file a response to the lawsuit.
Sethi is also temporarily forbidden from marketing his project, though the websites of some immigration companies in China continue to promote the convention center as a golden opportunity.
Other Chinese websites have carried news of the SEC's lawsuit, with some online commenters asking for more details about the "29-year-old mastermind" behind the alleged scheme.
A filing in the SEC lawsuit provides some information about Sethi's history. It calls attention to his claim to potential investors of 15 years of experience as a developer, which would mean he would have started when he was 14.
From 2002 to 2006, the filing notes, Sethi was licensed as a pharmacy technician.