In an astute comment under John Tsitrian's vigorous critique of Mike Rounds's buck-passing, Wayne Gilbert says that the GOP Senate candidate appears to view the GOAC investigation of the EB-5 scandal as a campaign opportunity rather a serious legislative matter with legal implications.

Gilbert is right: Rounds's formal response to the Legislature's inquiry reads as if it were written by his campaign manager, not by his lawyer. Rounds makes campaign promises. He recites his own campaign propaganda as fact. He bullies lawmakers, threatening them with defamation charges for having the temerity to ask him questions (and it's debatable whether such charges can even be brought). He accuses Democrats of concocting conspiracy theories. And in snark that exceeds sloppiness, Rounds consistently writes "democrats" with a small d.

Enter Jeff Barth to focus Rounds's legal attention. Yesterday the Minnehaha County Commissioner filed a petition asking the United States District Court of South Dakota to order Mike Rounds, Aberdeen lawyer Jeff Sveen, and former Board of Regents exec Tad Perry to "preserve evidence" related to South Dakota's EB-5 program.

For the first time in the EB-5 scandal, Rounds is being called to account in court. Rounds may think he can politicize the GOAC hearings, but he doesn't dare try politicizing a federal courtroom. Facing a federal judge, Rounds needs to get serious about the facts and law surrounding the abuses of power that occurred under his administration. (He can start by reading legal eagle Todd Epp, who brilliantly explains the legal details of Barth's petition.)

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Oh, look—white kids dressed up in mock Indian garb:

Photo of Watertown HS homecoming (known locally as "Ki-Yi") royalty, Watertown Public Opinion, 2014.09.19, screen cap 2014.09.23

Photo of Watertown HS homecoming (known locally as "Ki-Yi") royalty, Watertown Public Opinion, 2014.09.19, screen cap 2014.09.23

Not having had the pleasure of graduating from Watertown, Home of the Arrows, I can't speak to the rich local tradition behind the branding of homecoming week as a celebration of Dakota culture. I invite locals and proud alumni to fill us in.

Homecoming activities evidently do not include having all students dress up as Indians. But to pile irony upon irony, student organizers kicked off the in-school celebrations by designating Monday as 'Merica Day (yes, with the apostrophe), on which students were to wear patriotic garb. Those who chose not to wear red, white, and blue could opt for nerd outfits.

Related Reading:

16 comments

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.

5 comments

We have Mike Rounds's responses to the Government Operations and Audit Committee's questions about his Office of Economic Development's use of the EB-5 visa investment program. The answers are by turns combative (he accuses legislators of defamation) and evasive.

Let me leap immediately on one persistent bit of hogwash. Asked how closely he worked with Richard Benda and Joop Bollen in the state's use of EB-5, Rounds offers no new information, simply saying as he did last week that he received "updates." He then launches into his hyperbole about EB-5 bringing over $600 million and over 5,000 jobs to the state. But check out the important addition to his phrasing:

The federal EB-5 program was a tool that, as reported, helped create more than 5000 jobs and $600 million in capital investment in South Dakota [emphasis mine; Mike Rounds, response to GOAC questions, 2014.09.22].

Rounds repeats this phrasing in his crafty non-response to the question of whether any beneficiaries of the EB-5 program made campaign contributions to any elected officials overseeing South Dakota's EB-5 program:

The "beneficiaries" of the federal EB-5 program number in the tens of thousands. As reported, 5000+ jobs, $600 million in capital investment, local property tax payers, schools, 27 or more projects in almost as many different communities, utility users, investors, indirect jobs created, service providers, and spin-off business. Where, precisely should we draw the line with "beneficiaries"?

If the questioner has a specific person in mind, political contributions are public information for both state and federal candidates [emphasis mine; Rounds, 2014.09.22].

The press has probably reported that the Rounds campaign has claimed that EB-5 created over 5,000 jobs. But the press has not reported any independent confirmation of this unsubstantiated claim. The only analysis of this claim that I've seen in the press is mine, which finds that counties where EB-5 investment has supported business projects have seen a total job growth since the inception of EB-5 of only 2,755.

It has been reported that Mike Rounds claims that EB-5 had great economic impact. It has not been reported that EB-5 really had that economic impact. Mike Rounds is trying to alchemize his airy campaign claim into a reported fact.

p.s.: Speaking of evasive, Mike Rounds has ignored Bob Mercer's 20 questions about EB-5 since May 4. Mercer says Rounds's campaign manager is promising a meeting between Mercer and Rounds to answer any questions not addressed in the GOAC responses.

28 comments

The Democrats have won the EB-5 debate.

I didn't say that. If I did, I still wouldn't put it in the present perfect. Present progressive—are winning—sure, but not have won.

Jon Schaff said it. Conservative political science professor and former Joop Bollen campus-mate Jon Schaff said it. The good professor breaks a far too long blog silence to add some context to his now politicized assessment that "Rounds is in trouble" in the U.S. Senate race.

Professor Schaff does not retract his "trouble" comment. Nor does he say that reporter Denise Ross somehow warped its meaning. He simply posts the entire e-mail response that he sent to Ross to inform her September 19 report and says "I stand by everything" in it. Here is point #6 from that e-mail:

Rounds is in trouble.  He is relying on Pressler and Weiland splitting the non-Rounds vote.  It is not good that now in multiple polls have 55-60% of voters supporting someone other than Mike Rounds.  The Democrats have won the EB-5 debate and will continue to beat Rounds with this.  Rounds will likely have to get aggressive.  We’ll see if Kristi Noem and John Thune come to his rescue.  I’d be interested if those to politicians agree to campaign with Rounds or appear in ads with him.  Weiland has run an almost perfect campaign and Rounds will have to work hard to win, which I still think he will [Jon Schaff, e-mail to Denise Ross, quoted in Jon Schaff, "My Thoughts on the Senate Race," South Dakota Politics, 2014.09.21].

"Weiland has run an almost perfect campaign and Rounds will have to work hard to win." One could not pen a more explicit rejection of the GOP's wishful assertion that Weiland is an awful candidate. The GOP's persistent fabrication of their preferred narrative may be leading them to ignore the fact that Mike Rounds cannot coast to victory. He actually has to work, something he's not used to.

Lest we Democrats fall into a Rounds-like complacency, Schaff's comment makes clear that "Democrats have won the EB-5 debate" does not equal "Democrats have won the Senate seat." Schaff still thinks Rounds will win. Democrats could indeed win on all the facts on corruption and mismanagement in Mike Rounds's Office of Economic Development, and Mike Rounds could still million-dollar-buffalo a winning plurality of South Dakota voters into sending his forced smile to Washington.

Democrats have a winning argument in EB-5, but they still have to work five times as hard as Rounds to sell the fundamental character argument that EB-5 raises about Rounds's fitness for office. On top of that, they still have to beat Rounds on the issues and show that their agenda makes more South Dakota common sense than any of Rounds's false platitudes.If we have won the EB-5 debate, we have to make sure everyone knows we've won, and explain why that victory matters enough to vote for Rick Weiland instead of Mike Rounds. Keep working, Dems!

26 comments

As a supplement to our discussion of the teacher shortage and the Legislature's and Governor's keen desire not to focus on teacher pay as a solution, I offer the average starting salaries for teachers in the seven-state region (in the 2012–2013 school year):

  Avg Start Salary Avg Salary
Wyoming $43,269 $57,920
Minnesota $34,505 $56,268
Iowa $33,226 $51,528
North Dakota $32,019 $47,344
Nebraska $30,844 $48,931
South Dakota $29,851 $39,580
Montana $27,274 $49,999
Nat'l Avg $36,141 $56,383

The disparity between South Dakota's starting salary and the amount available out-state isn't as drastic as the disparity between average salaries. We might even have some leverage in recruiting Montana grads to come make $2,600 more during their first year. But if they want to clear $30K a year and grab a rung on a tall long-term salary ladder, they head somewhere besides Montana and South Dakota.

On the bright side, on starting salary, we're not the worst. We're only second-worst. Yay.

3 comments

Hey, Burt Elliott! Pat Hale! You're paying attention to this letter to the editor in the Aberdeen paper, right?

Ed Fischbach of Mellette notes that Senator Al Novstrup (R-3/Aberdeen) was all about open records when the James River Water Development District stonewalled him. Fischbach thus finds it puzzling that Novstrup, who is now running for District 3 House, isn't fighting to open records in the EB-5 scandal:

Now there is an EB-5 scandal that is bigger than life in his own legislative district, and we don't hear a peep out of him. The EB-5 scandal has no-bid contracts, no open records, no accountability, pending lawsuits against the state involving upwards of $147 million, and he says nothing. The handling of EB-5 money in this state has everything that Sen. Novstrup complained about when he went after James River Water District and more, but this open government and open records legislator is now silent.

You won an award, Sen. Novstrup, so start demanding records and accountability from Mike Rounds, Dennis Daugaard and other state officials just like you did from James River Water District. Or, return your award [Ed Fischbach, letter to the editor, Abderdeen American News, 2014.09.21

Senator Novstrup hasn't been entirely silent on the EB-5 scandal. Last December, he agreed with the need to look into affairs in the Governor's Office of Economic Development, but he didn't sound terribly eager to do so, or to expand the scope of any investigation to look into local EB-5 failure Northern Beef Packers:

...[T]o Sen. Al Novstrup, R-Aberdeen, seeking a special session less than three weeks before the start of the regular session seems like a waste of money. If it’s needed, extra digging can be called for once the session begins in January.

One thing the state doesn’t have the authority to do is scour the finances of Northern Beef. It’s a private company, and even if there were fraud, the Legislature wouldn’t have that power, he said.

With EB-5 being a federal program, it seems appropriate that Johnson, a federal prosecutor, is looking into what happened, Al Novstrup said. But, he said, the Legislature can take a look at whether the state’s contract with the SDRC to do EB-5 work was properly followed. If it wasn’t, there might be penalties the state can impose, he said [Scott Waltman, "More Answers Wanted: Area Lawmakers Call for More Investigation of State Economic Development Efforts," Aberdeen American News, 2013.12.15].

Open-records crusader Novstrup certainly isn't among those calling now for Novstrup's neighbor Joop Bollen to testify under oath about his questionable profiteering as the state employee in charge of EB-5 from 2004 to 2009.

Elliott, Hale, Tornberg, Nelson, Page, Nordstrom, this is how you tune the EB-5 scandal to your local legislative races. Ask your Republican incumbents why they aren't fighting for more answers about a scandal that may have cost this state more than Mike Rounds's structural deficit. Ask your Republican incumbents why they aren't asking who knew what was happening in the Governor's Office of Economic Development and when they knew it. Don't let them hide behind their reheated stammerings of "But EB-5 is federal!" Legislators' willingness to investigate or ignore the apparent corruption in our state's economic development program raises a fundamental question of character that every candidate should answer this fall.

5 comments

Remember that great fundraising concert that Dr. Kevin Weiland hosted for his brother Rick's Senate campaign? Well, if you couldn't make the drive to Piedmont, cheer up: Rickstock rides again!Rickstock East, October 5, 2014, Strawbale Winery, Renner, SDThe Weiland campaign brings a plethora of prairie talent to Renner's Strawbale Winery for Rickstock East on Sunday, October 5. Here's the musical line-up:

That's a lot of music for a measly nine bucks. Plus, your cash helps elect a Senator who's a lot more fun (not to mention more accessible) than that insurance salesman who wants the job.

Rickstock East! Bring your lawn chair, bring your spare change, and bring your friends!

4 comments

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