...But Is Banking Commission Already on That Case?

The Brown County Commission today voted 4–1 in favor of a resolution brought by Commissioner Tom Fischbach to ask the State Banking Commission to determine whether GOED/NBP/EB-5 scandal figure Joop Bollen evaded bank franchise tax. Bollen managed loans and mortgages through his corporation SDRC Inc. but never got a lending license. If SDRC Inc.'s lending operations are subject to South Dakota's bank income tax, Bollen could owe the state $2.4 million in back taxes, $1.76 million of which, according to Fischbach's resolution, could go to Brown County. That would patch a lot of potholes between Hecla and Groton.

One commissioner, Mike Wiese, opposed the resolution. He doesn't oppose the idea of investigating Joop Bollen. But in the most important paragraph of Scott Waltman's report, Wiese says he thinks the state is already conducting that investigation:

Commissioner Mike Wiese voted against the resolution. After contacting the state Department of Revenue and state Department of Labor and Regulation, Wiese says he believes the issue is already being looked into and taken seriously. He said he wants Brown County to collect the bank franchise tax if the determination is it should have been paid. However, a resolution from the county commission will not carry much sway, according to Wiese [Scott Waltman, "County Commissioners Ask State to Look into EB-5 Taxes," Aberdeen American News, 2014.09.09].

A GOED/NBP/EB-5 issue "being looked into and taken seriously" by the state.* How rarely we hear such words, and how gratefully we hear them... "we" being all of us South Dakotans not being paid to make excuses for Mike Rounds.

*Update 18:03 CDT: Ben Dunsmoor confirms that the state is on the case:

The South Dakota Director of Banking, Brett Afdahl, confirmed Tuesday afternoon that he has already sent a letter to SDRC Inc. requesting information. Afdahl says it can take up to 30 days for a response from the company and then follow up questions will be asked before a final determination about the company’s status is made [Ben Dunsmoor, "Brown Co. Commissioners Ask If SDRC Inc. Is Bank," KELOLand.com, 2014.09.09].

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Rep. Kathy Tyler did not include that $2.4 million in the $140-plus million she calculates Bollen may have defrauded from the state by other means. The bank franchise tax hangs on an entirely separate statutory peg.

But that $2.4 million in tax evasion could have political implications equal to those we can derive from Rep. Tyler's argument. Recall that when it came to the EB-5 activities that the Governor's Office of Economic Development conducted to benefit Governor Mike Rounds's pet project, Northern Beef Packers, the Rounds Administration demonstrated a keen awareness of banking regulations. In 2010, when Northern Beef Packers arranged a $30 million bridge loan from the mysterious Asian bank Epoch Star Limited to tide it over until a new round of EB-5 investors wrote checks, the Rounds Administration sent GOED chief and EB-5 cognoscente Richard Benda to assure the Banking Commission that Epoch Star was not a bank, did not need a lending license, and did not have to pay bank franchise tax.

The Rounds Administration looked at a one-off offshore funding trick and said, "Jeepers, we'd better get a ruling from the Banking Commission!" The Rounds Administration then looked at its man Joop Bollen, who'd been constructing a fistful of loan funds from EB-5 dollars to supplant local commercial lending, and said... nothing.

Could the Rounds Administration not smell its own shtuff? Or were they so committed to shielding Joop Bollen and his profits that they couldn't risk the scrutiny of the Banking Commission... even if that meant stiffing Brown County $1.76 million?