On September 16, 2014, Senator Larry Tidemann sent former governor Mike Rounds a batch of supplemental questions concerning his awareness of and involvement in activities related to his Office of Economic Development's use of the EB-5 visa investment program. The last question was this complicated query:
When you were served legal matters of the Darley petition in July of 2009 to force South Dakota into arbitration because of Joop Bollen's actions, why didn't you fire Joop Bollen and why didn't you initiate legal action against SDRC, Inc. which had pledged to hold harmless and indemnify the state of South Dakota? [Senator Larry Lucas, included by Chairman Larry Tidemann, Government Operations and Audit Committee, letter to Michael Rounds, 2014.09.16]
On September 22, 2014, Rounds responded to that question thus:
The governor's office "was not served". The BOR was [M. Michael Rounds, letter to GOAC Chairman Larry Tidemann, 2014.09.22].
"BOR" stands for Board of Regents, which was in charge of the South Dakota International Business Institute, which was directed by Joop Bollen, who got South Dakota in trouble by pretending he was a lawyer and losing the case Darley brought against the state in federal court in July 2008 (not the one Senator Lucas asked about). The Board of Regents was able to argue its way out of that trouble by arguing, in part, that Darley failed to deliver service on the right officers of the state—i.e., the Governor and the Attorney General:
In order to commence an action against the SDIBI or the Board of Regents, Petitioner Darley International, LLC ("Darley") was required by South Dakota law to serve both South Dakota's Governor and Attorney General. There is no evidence on record that either has ever been served with process in this action; in fact, the South Dakota Attorney General has no record of such service [James Lynch for Board of Regents, Memorandum of Support, Darley v. SDIBI, 2009.03.20].
The Regents' March 2009 memorandum footnotes SDCL 15-6-4(d) and adds:
There is no State statute designating another person to accept service of process for the Board of Regents [Lynch/BOR, 2009].
The Regents' argument persuaded Darley to dismiss its own petition in June 2009. But one month later, in July 2009 (this is the one Senator Lucas is talking about), Darley filed a similar complaint against SDIBI in Los Angeles County Superior Court.
Pause. Put yourself in Darley's lawyers' shoes. The company has paid you beaucoup bucks to spend a year suing this weird little South Dakota Ponzi scheme, and you find out your suit is invalid because, among other things, you didn't serve the Governor and the Attorney General of South Dakota. Darley says, "We want to try again. File another suit, and don't screw this one up." What do you do?
You turn the Regents memorandum into a checklist of things not to screw up, and Item #1 is, "Serve Governor Mike Rounds and Attorney General Larry Long."
Mike Rounds says his office was not served in Darley's July 2009 suit. But the Board of Regents said in March 2009 that it could not be served. State law said the Governor had to be served. And Darley's retread lawsuit moved forward, suggesting Darley served the proper entities the second time around... and suggesting that either I've missed some simple and obvious detail or Mike Rounds has erred in his recollection of s significant fact.