I have contended that in allowing Joop Bollen to privatize South Dakota's EB-5 program, Mike Rounds sacrificed a key competitive advantage that we had over other private EB-5 regional centers.

Robert Stratmore, head of EB-5 recruiter Darley International, agrees. In his testimony on Day 2 of the Darley v. SDIBI arbitration hearing last April, Stratmore said that the association of our EB-5 agency with the state made it easier to recruit Chinese investors for South Dakota projects:

I actually was quite attracted to the fact that not only was it Northern State University but that it was the state of South Dakota and that would give a leg up for credibility in China that it would be a mandate that was given from the federal government to a state government [Robert Stratmore, transcript, Darley v SDIBI arbitration hearing, 2014.04.29].

EB-5 chief Joop Bollen pressed this advantage even after completely privatizing the EB-5 operation, as indicated by Chinese press material from October 2010.

If we accept Mike Rounds's thesis that EB-5 is a good program, if we accept the idea that raising capital from foreign investors more interested in green cards than business results is healthy, then we should expect state government to run the EB-5 program as competitively as possible. Yet Mike Rounds gave up the official state control of EB-5 that an EB-5 recruiter said would draw more EB-5 money.

16 comments

The Republican spin machine eagerly rebroadcasts an attack ad aired on KMSD Radio against Rep. Kathy Tyler (D-4/Big Stone City). Here's the text:

Being a state legislator has gone to Kathy Tyler's head. A small business man in Rapid City won a lawsuit against a customer that owed him money, but Kathy Tyler called and tried to overrule the judge. Kathy Tyler said she disagreed with the judge. She said she was a legislature [sic] and knew better. I don't know who she thinks she is trying to bully a small businessman. Kathy Tyler is a bully who misused her office. Please do not send Kathy Tyler back to Pierre. Give the little guy a break. Paid for by East River Concerned Citizens [political communication, transcribed from audio posted by Pat Powers, "Kathy Tyler Must Have Made the Wrong Small Businessman in Rapid City Mad," Dakota War College, 2014.10.22].

According to Rep. Tyler, East River Concerned Citizens has spent over $1,000 to broadcast this attack. East River Concerned Citizens is a PAC formed by Spencer Cody, vice president and assistant treasurer of South Dakota Right to Life. Cody attacked Rep. Tyler during the 2014 Legislative session, calling her a liar for opposing an abortion restriction that conservative Reps. Scott Munsterman (R-7/Brookings) and Steve Hickey (R-9/Sioux Falls) voted against.

East River Concerned Citizens is breaking state law. Governor Dennis Daugaard, Attorney General Marty Jackley, and the Republican spin machine eagerly roasted Dan Willard for violating this statute with robocalls against sitting Republican legislators in 2012. SDCL 12-27-16 requires the following of ads like Cody's:

(1)      Any person or organization that makes a payment or promise of payment totaling one hundred dollars or more, including an in-kind contribution, for a communication which expressly advocates for or against a candidate, public office holder, ballot question, or political party shall append to or include in each communication a disclaimer that clearly and forthrightly:

  1. Identifies the person or organization making the independent expenditure for that communication;
  2. States the address or website address of the person or organization;
  3. States that the communication is independently funded and not made in consultation with any candidate, political party, or political committee; and
  4. If the independent expenditure is undertaken by an organization not including a candidate, public office holder, political party, or political committee, then the following notation must also be included: "Top Five Contributors" followed by a listing of the names of the five persons making the largest contributions to an organization during the twelve months preceding that communication.

A violation of this subdivision is a Class 1 misdemeanor... [SDCL 12-27-16].

The ad gives the PAC name, but it gives no physical or web address for contacting the organization. The ad does not include the "independently funded and not made in consultation" disclaimer. If I get ambitious and look up their statement of organization filed with the Secretary of State on September 14, 2014, I still can't send the PAC a letter, because Cody omitted the city and state, which is sloppy if not illegal.

Cody asks his Facebook followers for more money to expand his attacks to "the district 8 Senate race, district 26 Senate race, district 33 Senate, district 2 house, district 3 house, district 9 house, and district 15 house." He might want to save his money for a lawyer: surely the Governor and Attorney General will find this violation of campaign finance law just two weeks before an election on a hotly contested district as egregious as they found Dan Willard's robocalls two months before an election in which many of the targeted legislators faced no challengers.

Update 06:20 CDT: Funny that the ad pretends to defend "the little guy." As I understand from sources, "the little guy" appears to be the customer who paid a Rapid City business $1,600 and never received the merchandise he ordered. I'm working on that angle of the story....

21 comments

A couple weeks ago, Kevin Woster wondered when Larry Pressler's friend Kevin Schieffer would throw some money toward his old boss's U.S. Senate candidacy.

Schieffer is now throwing, forming a Super PAC to spend "a couple hundred thousand" on this ad with former staffers sticking up for the old man:

Go get 'em, boss. I say this as a devoted Weiland supporter: you may have just heard the best battle cry of the South Dakota election. Add the gentle tones, the nostalgia—and oh my gosh, the 80's hair!—and you have a beautiful if absolutely substanceless response to every possible critique that anyone might launch against Pressler. Rick Weiland can say Pressler is weak against Big Oil and weak on Social Security; Mike Rounds can say Pressler will back President Obama's liberal policies; Gordon Howie can say Pressler ate too much Camembert in Paris. Pressler can just flash this ad like a snazzy fake ID at the club: Go ahead and make those negative ads! They just prove what a nice guy I am!

Arrggh! That's not debate! That's bunnies and babies and getting people to vote because their hearts flutter!

Dang... and that's a pretty smart use of $200,000 in a race where voters' heads may be spinning from acrimony and acronyms.

Told tonight of Schieffer's investment in his campaign, Pressler blurted, "Oh God, that's awfully nice." When he recovers from that shock, Pressler can turn to Stuart Rothenberg, who opined Wednesday that the mostly unanswered GOP and Dem attacks on Pressler "appear to have worked," and channel Captain Steven Hiller in Independence Day and shout, "I ain't heard no fat lady!"

20 comments

In responses to reporter Bob Mercer's questions about South Dakota's EB-5 program, Mike Rounds downplayed his involvement in the EB-5-promoting South Dakota International Business Institute and his interaction with SDIBI director Joop Bollen:

[Mercer]: EB-5 began for dairy development in South Dakota in 2003. What was your role in that decision?

[Rounds]: I was aware of the desire to expand the federal program beyond dairy development.... I wasn't involved in the transactional details — but I did agree with the concept to create those jobs and diversify South Dakota's economy.

...[Mercer]: Joop Bollen was in charge of EB-5 and dairy development while he was employed at the South Dakota International Business Institute at Northern State University. How did you come to know him?

[Rounds]: I was aware of Mr. Bollen's early efforts to expand dairy development in South Dakota, and I have always been supportive of dairy development in our state. Direct interaction was limited updates on SDIBI's efforts came by way of staff reports [Bob Mercer, "Rounds Answers Reporter's Questions on EB-5 Scandal," Black Hills Pioneer, 2014.10.02].

Once again, Northern State University counsel John Meyer's sworn testimony in the Darley v. SDIBI arbitration contradicts Rounds's claims. On Day 3 of the Darley arbitration hearing, April 30, 2014, Darley attorney Jennifer Elkayam asked Meyer about several letters of agreement between SDIBI and the Governor's Office of Economic Development from 2005 to 2009. These letters laid out the economic development activities, including EB-5 visa investment recruitment and management, that GOED expected SDIBI to perform.

[Elkayam]: Can you explain, to your understanding or if you know, why GOED would not directly engage in these activities that SDIBI is called upon to perform under these letters of agreement?

[Meyer]: Well, I would say, in terms of the history of that office, these functions would have been performed by personnel employed within Tourism and State Development located in Pierre, but what happened was Joop Bollen was loaned under this cost reimbursement structure to GOED, and that's how SDIBI got involved

MS. ELKAYAM: I'm sorry. You said "loaned"?

THE WITNESS: "Loaned."

MR. [Darley Attorney Max] BLECHER: "Loaned."

MS. ELKAYAM: "Loaned" [transcript, Darley v. SDIBI JAMS arbitration hearing, Los Angeles, CA, 2014.04.30, pp. 484–485].

This loan piqued the interest of the arbitrator, the Honorable Robert A. Baines:

[Baines]: ...Who initiated this loaning process? Is it something that started at GOED and came to SDIBI for help, or was it the other way around where SDIBI proposed to the State Department that it would do these functions for a certain amount of money for the State?

[Meyer]: Judge, I don't know firsthand, but I, in my own mind, know what happened. I believe that idea came from the governor of South Dakota.

[Baines]: Okay.

[Meyer]: And I believe, based on a statement that Joop Bollen mentioned to me once, that he had gone down and interviewed with the governor.

I believe that's where that came from. So it would have emanated from the governor through Tourism and State Development and GOED to Northern --
were, in GOED or the State.

[Baines]: Uh-huh [Darley v. SDIBI, 2014.04.30, p. 486].

Uh-huh. Mike Rounds says he was "aware" of the things SDIBI did. John Meyer says Mike Rounds had the idea that sent SDIBI down the EB-5 path. Mike Rounds says he was "aware" of Joop Bollen's efforts but interacted only indirectly, through staff reports. John Meyer says Mike Rounds interviewed Joop Bollen personally in Pierre to get the program going.

13 comments

The Washington Post has already picked up today's big story about Mike Rounds's admission that he knew his economic development chief Richard Benda was planning to cash in on the EB-5 funded Northern Beef Packers project that he and Rounds had promoted and did not question that conflict of interest. "New Development in Scandal Dogging Mike Rounds Could Spell More Trouble," headlines WaPo for all those national readers and potential donors. Dogging... more trouble... thank you, sir, may I please have another?

But now I see why some of my readers were initially so grouchy about that Sioux Falls paper's coverage of the story. The original headline posted online overnight* and on the printed front page is "Benda 'Misled' Me, Says Rounds."

That Sioux Falls paper, clip from front page of print edition, 2014.10.22

That Sioux Falls paper, clip from front page of print edition, 2014.10.22

At some point this morning, the editorial board realized the bigger story was not Rounds's continued effort to blame the dead guy (on the first anniversary of Governor Dennis Daugaard's get-ahead-of-the-story announcement that Richard Benda had been found dead of a gunshot wound), but Rounds's admission of silent complicity in Benda's (and Bollen's!) $550,000 gambit. "Rounds knew of Benda conflict in final days of term," reads the updated headline.

Dear readers, I'm interested to hear what you think of that Sioux Falls paper's evolving editorial position on this story.

Bonus Legs: As October Surprises keep rolling, KELO's Ben Dunsmoor wakes up and offers a one-sentence scoop: the FBI is still investigating South Dakota's EB-5 program.

*Update 17:08 CDT: Mr. Montgomery tells me the web headline hasn't changed since posted the story to his blog section of the paper's website last night. But just after midnight, someone at the copy desk posted the Benda-focused headline:

Earlier online headline, screen cap of Google Cache version of Montgomery's Rounds-Benda story, 2014.10.22 00:24 CDT

Earlier online headline, screen cap of Google Cache version of Montgomery's Rounds-Benda story, 2014.10.22 00:24 CDT

That's the version folks were sending me at breakfast. That online version has gone poof, leaving only the print world thinking the main point of the story is that Benda was naughty.

76 comments

Some of my readers think David Montgomery has sold out to the good-old-boys' network on whom he and his employer depend for access and advertising dollars.

If that were the case, I don't think that Sioux Falls paper would slap this headline on Montgomery's latest EB-5 report:

Rounds knew of Benda conflict in final days of term

This headline comes not from diligent investigative reporting but from Mike Rounds's own mouth. The Republican Senate candidate said in yesterday's live interview with 100 Eyes that he knew Richard Benda, his economic development chief, was going to work for an "investor" in Northern Beef Packers, the stalled economic development project toward which he directed $2.36 million in state grants during the last few weeks of his governorship.

Benda didn't identify which investor he would be working for, and Rounds said he didn't press. Benda went to work for SDRC Inc., a company managing EB-5 foreign investments for projects, including Northern Beef. On Tuesday, Rounds said he now feels Benda "misled" him by not disclosing where he was going.

At the time, though, Rounds didn't ask Benda for more details.

"I said 'Good, I'm glad to hear that he's going to be actively involved in the beef plant,'" Rounds said in a live interview on the Argus Leader's "100 Eyes" online show.

Rounds' focus at the time, he said, was on which of his Cabinet secretaries "should I meet with to find out if they need assistance in finding other opportunities" — not whether they were "leaving government with a conflict of interest," as Argus Leader managing editor Patrick Lalley asked Rounds. Benda already had lined up a job, so Rounds said he focused attention elsewhere [David Montgomery, "Rounds Knew of Benda Conflict in Final Days of Term," that Sioux Falls paper, 2014.10.22].

Permit me to paint a managerial scenario, and you tell me whether I'm viewing the situation with hindsight or South Dakota common sense:

  1. I'm an outgoing governor, tying up loose ends in the Capitol.
  2. Among the loose ends are various fiscal and policy decisions to keep one of my marquee legacy projects alive. It's running over two years late and way over budget.
  3. I'm taking a risk writing some pretty big checks to keep the legacy project alive.
  4. I can't afford any bad press dragging this precarious project down.
  5. I find out one of my cabinet members who's been key in saving that project is now going to work for that project.
  6. I say, "Wait a minute, Richard. What exactly are you going to be doing for the project?" I listen closely. If I sense any hedging, I say "Cut the crap" and get the full story.
  7. Whatever answers I get, I think ahead to appearances, if not legal questions, and I say to my cabinet member, "I think it's best that, for these last couple weeks, we put a big brick wall between you and any policy decisions affecting the folks you're going to work for."
  8. I review all of the checks and other papers I've signed over the past few weeks for the project and make sure everything looks kosher.
  9. And above all, I make sure my guy going to work for the project is not the guy who carries the million-dollar state check to that project.

Rounds gets to my step 5, then veers off the road of good management, saying, Rich has a job? Great! Now I can focus on helping all my other pals get golden parachutes.

Rounds said at Dakotafest in August that if he'd known what Benda had been up to with respect to Northern Beef Packers and EB-5, he'd have fired Benda. In yesterday's interview, Rounds said, "Richard Benda did some things in the last couple of weeks (of Rounds' term) that I did not know about, and that I'd like to ask him questions about." But when Benda was right in front of him, and the issues all hot on his plate, Governor Rounds chose not to ask.

And the day Mike Rounds didn't ask Richard Benda those questions at the end of 2010 may have been the day that Mike Rounds lost the election of 2014.

27 comments

Susan Wismer and Mike Myers go to Sioux Falls tonight to debate Governor Dennis Daugaard on KELO-TV for his job. Rick Weiland, Larry Pressler, Gordon Howie, and Mike Rounds go to Vermillion tomorrow night for their first big broadcast Senate debate.

Partial solar eclipse, animation of lunar penumbra and terminator, October 23, 2014. From NASA!

Partial solar eclipse, animation of lunar penumbra and terminator, October 23, 2014. From NASA! (Time in UTC; subtract 5 hours for Central, 6 for Mou

The gods evidently see more portent in the Senate debate; they are throwing a pre-game eclipse party! The new moon's shadow hits Kamchatka at their Friday dawn, then slides across Alaska, Canada, the Lower 48, and Mexico throughout our Thursday.

According to the United States Naval Observatory, the partial eclipse begins in Vermillion at 4:23 p.m. Central, and maxes out just after 5:36 p.m., when the moon will obscure just about 49% of the sun. The moon will still be taking a bite out of the sun when the sun sets at 6:33 p.m. Predicted cloud cover for Vermillion tomorrow p.m.: 14%–17%.

Out in Spearfish, the eclipse begins just before 3:10 p.m. Mountain, just in time for the kids to get out of school and see all the freaky shadow effects. Spearfish eclipse max is at 4:28 p.m. Mountain with 53% solar obscuration. The moon scoots past the sun completely at 5:38, about 22 minutes before Spearfish sunset. Predicted cloud cover: 28%–33%.

Go see the eclipse (but how many times do we have to tell you: don't look directly at the sun!), then see who eclipses whom at the SDPB Senate debate!

Bonus Third-Grade Science/Halloween Humor:

—How does a deaf astronomer know what ghosts are saying?
—She reads the eek-lips.

8 comments

I love South Dakota. I love ladies. So why doesn't South Dakota love ladies?

Never mind the syllogistic stretch; check out why 24/7 Wall Street says South Dakota is the seventh-worst state in the Union for women:

Median earnings for women in South Dakota were roughly 75% the earnings of their male counterparts in 2013, one of the lower rates in the country. The lower earnings may be due to the relatively small percentage of women in management occupations. As of 2013, slightly more than 31% of workers in managerial roles were women, well below the national rate of 39.2%. Working women in South Dakota cannot take paid time off to care for sick family members or tend to their own health or pregnancy. Moreover, South Dakota has not begun to implement the expansion of Medicaid benefits allowed under the Affordable Care Act. With women accounting for nearly 55% of all state residents living below the poverty line in 2012, expanding Medicaid benefits would likely improve the living conditions for women [Thomas C. Frohlich, Alexander Kent, and Alexander E.M. Hess, "The 10 Worst States for Women," 24/Wall Street, 2014.10.16].

I love South Dakota. I want to say good things about South Dakota. But candidates like Mike Rounds and Dennis Daugaard are claiming they deserve your vote because they've done good things for South Dakota, when in fact they have only left in place a political and economic system that denies a huge majority of moms (and dads!) the opportunity to leave one parent at home to raise their kids, then hurls those women into an oppressive business regime that excludes them from lucrative positions of power.

Women, you appear to have your doubts about Democratic gubernatorial candidate Susan Wismer. You should harbor even greater doubts about the economic status quo in which the Republicans vest their interests. Check your pocketbooks, and vote accordingly.

13 comments

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