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NSU to Legislature in 2008: EB-5 Investors Only Want Big Projects

Last updated on 2014.09.09

Chairman Gant and Legislature Missed Opportunity for Strong Oversight

My friend Scott Meyer asked in a provocative column last weekend why then-Governor Mike Rounds and current Governor Dennis Daugaard chose to focus South Dakota's EB-5 visa investor program on huge industrial scale products instead of lots of small, nimble startups with greater potential return on investment.

Evidently part of the problem is that the Chinese and Korean investors South Dakota went after shared our misguided "bigger is better" mindset. Or so said Northern State University interim president Laurie Stenberg Nichols in 2008:

SDIBI forwards eligible potential projects to the overseas agents who will analyze the projects and determine which ones can be successfully marketed. Eligible projects have to be located in the geographical area of the Regional Center and must meet all other requirements as outlined in the attached USCIS approval letter. SDIBI does not decide on the project to be funded but the overseas agents do as they understand what can be realistically sold in the every increasing [sic] competitive EB-5 market. The trend has been that only large projects of $50,000,000 or bigger, with little need for conventional financing, remain competitive. This trend also forced SDIBI to deviate from the initial dairy projects which now are just too small and require too much bank financing to be competitive [Laurie Stenberg Nichols, interim president, Northern State University, letter to Senator Jason M. Gant, Government Operations and Audit Committee, 2008.10.14].

President Stenberg Nichols was responding to an inquiry from Senator Jason Gant, chairman of the Legislature's interim Government Operations and Audit Committee, which in 2008 was reviewing the performance of NSU's International Business Institute, through which Joop Bollen ran South Dakota's EB-5 program. Bollen shortly thereafter morphed SDIBI into SDRC Inc., his own private company, which the feds are now investigating.

Notice the degrees of deniability being built here. If South Dakota was picking huge, arguably riskier projects over the smaller projects that dominated the early stages of the program, it wasn't the fault of anyone at NSU or SDIBI or the Governor's Office of Economic Development. It was overseas agents and market forces driving us to favor Aberdeen's Northern Beef Packers (now bankrupt) and Huron's Dakota Provisions turkey plant (beset with concerns about illegal immigration).

Senator Gant responded to Stenberg Nichols's explanation of SDIBI activities by requesting her presence at a December 1, 2008, hearing to help the committee "learn more about the State’s involvement with the Institute, funding sources utilized by the Institute, and what oversight the State has in place over the Institute." Stenberg Nichols brought her VP Academic Clyde Arnold and Joop Bollen himself to that hearing. What did Senator Gant and the GOAC learn?

Mr. Arnold testified that in 1989 Northern State University started offering a new major in international business. At that time it was decided to offer a program to train students in international business and tie it into economic development, thus starting the SDIBI. Mr. Bolin [sic] was hired in 1994 to assist in an export promotion program and hold educational workshops on how to engage in international business. Mr. Bolin testified that South Dakota is significantly ahead of neighboring states and the national average in conducting international business. There was no further discussion [Government Operations and Audit Committee, South Dakota Legislature, hearing minutes, 2008.12.01].

Senator Gant and the South Dakota Legislature had the chance to get much more information about how Joop Bollen was using the authority granted him by the state to coordinate investments of millions of dollars, some of which was heading to offshore accounts. But on December 1, 2008, "there was no further discussion." Oops.

Rep. Kathy Tyler is right: it is time for much further discussion about South Dakota's EB-5 program, about whether that program should continue, and about the wisdom of favoring huge industrial projects over numerous small Main Street businesses.

One Comment

  1. Robert Klein 2013.11.15

    I believe Dr. Stenberg-Nichols is currently at SDSU. I point that out only to assist in locating her if further inquiry is necessary.

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