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Rounds Cost State Millions by Letting SDRC Inc. Privatize NBP/EB-5 Fundraising

Mr. Ehrisman notices that David North of the Center for Immigration Studies has weighed in again on the GOED/NBP/EB-5 scandal that is occupying more of GOP Senate candidate Mike Rounds's time. North reviews David Montgomery's reporting from last November on the hefty fees Rounds's minions collected from EB-5 investors after they privatized administration of the program and makes this fiscal observation:

All of these fees, except the legal ones, would have gone to the state government had it not been for the contract with the Rounds administration.

Let's think about this conversion of a unit of a public university to a for-profit entity for a moment and discuss a hypothetical analogy:

Suppose the dean of the Engineering School at the hypothetical Maryland State Institute of Technology, discovered that some patents the school owned were about to become very valuable. Do you suppose the dean could persuade the president of MSIT to spin off the engineering school (including the patents) to the dean's personal ownership, for a nominal return? That sound's pretty unlikely, but that is exactly what happened in South Dakota at Northern State University [David North, "A New Angle in South Dakota's Continuing EB-5 Scandal," Center for Immigration Studies blog, 2014.09.05].

North calls this a new angle. We haven't talked much about this angle, but I find it's not new to our own Rep. Kathy Tyler (D-4/Big Stone City), who raised this flag last April in an interview with Denise Ross:

For Rep. Kathy Tyler, D-Big Stone City, the question gets even more specific than the shift to a private entity. She wants the committee to look inot how SDRC Inc. set up a fee structure that gave itself a percentage of each deal it guided through the EB_5 process. When millions were invested in each of dozens of projects, that had to add up to millions in profits for the private corporation, she says.

"Think of the millions that were made that the state could have had," says Tyler, who is not a member of the Government Operations and Audit Committee but has been vocal about the Legislature's need to investigate this issue [Denise Ross, "State Program Became For-Profit Before Securing Northern Beef Financing," originally published in the Mitchell Daily Republic, reprinted in AgWeek, 2014.04.09].

Very much worth noting is the very next line of Ross's April 9 report, in which Mike Rounds, who was governor at the time this shift to a private entity took place, says he knew what was going on:

For his part, Rounds says he was aware in general that SDRC Inc. would need to fund its operations.

“We knew there had to be a way in place to fund the operation. We understood that,” Rounds says without elaborating further [Ross, 2014.04.09].

There's no time like the present to elaborate further, candidate Rounds. Why did we fund your tireless push for Northern Beef Packers by privatizing the visa investment program? And why did you give up millions that the state could have had?

11 Comments

  1. mike from iowa 2014.09.07

    yeah,but....the private sector(with serious help from Wingnuts) is more efficient at ripping off the taxpayer than Wingnuts in gubmint alone. Efficiency is what we are after. And if the koch bros benefit tremendously that is,afterall,the essence of capitalism.

  2. Bill Fleming 2014.09.07

    Interesting stuff. Remember when Mr. Powers erased his whole blog history so he could take a job at the SOS office? Was that a condition of his employment? Or just something PP thought he should probably do to keep himself and his new boss from being distracted by Pat's um... "colorful" past public record? Similarly, was Bollen's confiscation of all the States EB-5 records part of the deal? Or was it all just Joop's idea? It just seems peculiar to me that he's been allowed to keep those public records to himself "without permission." Anybody know the answer to this?

  3. Tim 2014.09.07

    Bill, I'm sure republican leaders have answers to all of those questions and many more, good luck getting them. Running out the clock.

  4. Bill Fleming 2014.09.07

    The State's agreement with Bollen should be online, right? SOS website maybe? I forget exactly where. But I think they're all there somewhere.

  5. 96 Tears 2014.09.07

    This has been the billion dollar question in the Rounds' Benda/EB-5 Scam: What did Mike Rounds do to a federal funding source for business development to turn it into a slush fund for pals and cronies?

    It ties Mike Rounds to the corruption and shows him in charge, deliberately eliminating any possibility for transparency as to where hundreds of millions of public money would go.

    The Republican scribes at the Argus have, indeed, written volumes on the mechanics of the program in the last year, but they stop at tying Mike Rounds to the corruption. Today, with less than two months before the election, one of the scribes is spinning the GOP line that Larry Pressler is taking a lot more votes from Rick Weiland than Mike Rounds. And that's what the Mike Rounds political aparatus wants the Argus to "report."

    The path forward for getting to the truth of the state's worst scandal is to keep the bead on Mike Rounds' involvement in the corruption and Dennis Daugaard's decision to continue involvement with SDRC until last September, which was about five months after Daugaard's political appointees learned Bollen's and Benda's laundering operation was the focus of a federal investigation.

    Deviating from this focus helps Rounds run down the clock.

  6. Bill Fleming 2014.09.07

    Great. Thanks Cory. Contract page 6, #14. Doesn't that say that we should be able to see all the records? I don't see any mention of the old records, other than that there should be copies of them to which we have access. Is that how you read it?

  7. bearcreekbat 2014.09.07

    96, I was both surprised and pleased that the RCJ ran Mercer's column in Sunday's paper.

  8. jerry 2014.09.07

    I think you only have to go as far as the words from Rounds mouth on why he did what he did. He claimed that "9 million" was what he needed to run his campaign. For an observer like myself, I would bet that is why he did what he did, to pocket the 9 million. Pretty good work if you can get it. Scam a bunch of Chinese dudes that are tired of Ramen Noodles along with some Korean hombres who are tired of Kimchi, charge them a half million each on some bogus grift and pretty soon, you have that 9 million all nice and clean. I have also been curious about the contractor excise tax on the work the Koreans did in Aberdeen on the beef kill place, were they approved contractors? How much did they get paid? What about the Workmen's Comp and the 2% that is supposed to go to the state (usins). Anybody know??

    Speaking of why we need Rick Weiland in the senate and not this little crook, did you see this from a Forbes magazine? http://www.forbes.com/sites/adamhartung/2014/09/05/obama-outperforms-reagan-on-jobs-growth-and-investing/

    Democrats have been dealt a stacked deck with house republicans voting against the best interests of Americans in what little time our dust bunny stays in Washington to work. With all of this NO from NOem, Obama is still rated much better at running this economy than even Saint Ronnie (I am getting the vapors even mentioning his name). Help out the economy and help out main street, put Weiland in and vacuum the dust bunny NOem with much gusto.

  9. Rorschach 2014.09.07

    Not only did Mike Rounds give away a potential $4 million per year state revenue stream, he actually PAID Joop Bollen $45,000 a year to take the state's revenue stream. Who in their right mind with a multi-million dollar business would PAY somebody to take it?! Would Mike Rounds pay somebody to take his insurance business?

    This is the real scandal, folks. It begs the question, How much has Joop Bollen paid Mike Rounds since Rounds left office? Has anybody asked Rounds? "How much have you been paid by Joop Bollen?" I venture to guess that Mike Rounds has made a lot of money "consulting" since the end of 2010. The question needs to be asked, and answered - under oath. Mike Rounds was entrusted to act in the State's best interest as the CEO of SD, but he PAID somebody to deprive taxpayers of a $4 million/year revenue stream. Kind of like he gave up millions in tax revenue to TransCanada in exchange for them doing what they were going to do anyway without a tax break. This guy is unfit to ever hold public office again!

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