Republican Senate candidate Mike Rounds is not inspiring confidence, even among the party faithful:

"Rounds is in trouble," said Jon Schaff, political science professor at Northern State University in Aberdeen. "It is not good that now in multiple polls we have 55 to 60 percent of voters supporting someone other than Mike Rounds" [Denise Ross, "Rounds Taking Heat for Skipping Debates," Mitchell Daily Republic, 2014.09.19].

Part of Rounds's problem may be surrounding himself with cronies who say stupid things, like spokesman Mitch Krebs trying to excuse Rounds from debates:

"We can't do all the requests. If we accepted every invitation to a debate and forum, we'd have our entire schedule filled with that. We've got to find time to actually talk to people," Krebs said [Ross, 2014.09.19].

Uh, Mitch, debating and actually talking to people are not mutually exclusive. Debates and forums are great chances to actually talk to people... if you drop your rehearsed, focus-grouped talking points and speak authentically for 60 minutes.

32 comments

In the brush-off to the Legislature's Government Operations and Audit Committee that he pens for former state employee and EB-5 profiteer Joop Bollen, lawyer Jeffrey T. Sveen makes this claim about Bollen's EB-5 management company:

SDRC, Inc. has previously provided information to government authorities when requested to do so. As the Committee is aware, an audit by the State of South Dakota has shown that all funds administered by SDRC, Inc., were properly applied [Jeffrey T. Sveen, letter to Senator Larry Tidemann, 2014.09.08].

Really? Let's review what that state audit from February 12, 2014, said about SDRC Inc.:

Finding No. 2003-001:

The former Department of Tourism and State Development (DTSD) and the current Governor’s Office of Economic Development’s (GOED) policies and procedures were inadequate for the monitoring of the contract with the SDRC Inc.

  • ...Although the SDRC was providing to the DTSD a monthly e-mail containing a report and the balances in the two funds, the report was not sufficient to ascertain that the correct amounts were being collected and deposited and copies of bank statements did not accompany the e-mail to corroborate the balances being reported.
  • Documentation was not adequate to determine whether the DTSD or the GOED was receiving the books, records and reports that were required to be provided to the CIS by the SDRC.
  • Inadequate internal controls existed over the payment of expenses from the Expense Fund. Five disbursements were made from the Expense Fund totaling $67,259.97. The invoices were signed by the former Secretary of the DTSD and the DSTD’s Administration Director. The invoices identified the expenses as being for meals, lodging and transportation. Other than the information contained in the invoices, there was no supporting documentation retained to evidence that the expenses were incurred, who incurred the expenses, or the purpose of the expenses.
  • The DTSD and GOED did not report Indemnification Fund One and the Expense Fund in the State’s Comprehensive Annual Financial Reports for FY2010 through FY2012.

As a result, there existed a potential for the loss of assets and two funds were not properly reported in the State’s Comprehensive Annual Financial Report [Department of Legislative Audit, "Governmental Funds of the South Dakota Governor's Office of Economic Development: Audit Report," 2014.02.12].

As I noted in my February analysis of the audit, "loss of assets" is a brilliant euphemism for theft.

Auditor General Martin L. Guindon also emphasized in his report the audit transmittal letter that his office only reviewed only the expense and indemnification funds SDRC Inc. managed for the state, not the entirety of money managed by SDRC Inc.

Sveen and Bollen's claim is thus false. The state audit did not show that "all funds administered by SDRC, Inc., were properly applied." The audit showed that Bollen told the state that its portion of SDRC Inc's business was being handled properly, but he did not provide sufficient evidence to prove that claim.

And in arrogantly rejecting Senator Larry Tidemann's invitation-not-subpoena to testify before the Government Operations and Audit Committee, Bollen is again refusing to provide that evidence and doing so by telling us... something less than the truth.

Chairman Tidemann, are you ready to issue that subpoena yet?

14 comments

Mike Rounds posts a new ad, much like his last one, trying to deflect discussion of the very real corruption he countenanced in his Office of Economic Development:

Rounds again avoids the issues by saying South Dakotans "know better" than to listen to "negative advertising." Rounds's dodge also dismisses the latest ad from Every Voice Action calling Rounds to account for his costly cronyism as an attack from "third-party interests from outside our state." This complaint comes as the GOP spin machine cheers John Thune's daughter for her recognition as a bright young star working for the RiNO RightNOW Women PAC, a third-party interest from outside our state.

Meanwhile Democratic Senate candidate Rick Weiland talks to us directly that he values the hard work of South Dakotans, while big-money candidates like Mike Rounds make it harder for working folks to get ahead:

Sure, it's "negative" to say that big-money interests are only interested in putting more money in their pockets and not in making sure that working folks can put food on the table, get their kids through college, and look forward to a secure retirement. But it's also true. And South Dakotans should know better than to fall for Mike Rounds's whiny attempt to keep us from seeing and voting on the truth.

14 comments

My inbox lights up with a campaign fundraising e-mail from fake Libertarian candidate for attorney general Chad Haber. Short form:

  1. Haber touts his wife's disastrous, money-gobbling, law-breaking Senate campaign as a reason to send him money.
  2. Haber shows his irrelevance to the GOED/NBP/EB-5 debate by treating as news the predictable excuses Northern Beef Packers lawyer Rory King gave to Bob Mercer back in December 2013 for Benda's diversion of Future Fund Grant #1434.
  3. Haber calls me (well, not personally, but the blogs and the press in general) lazy and afraid of the truth. (Lazy? Chad, remind who here has a job and who doesn't.)

The only part of Haber's pitch worth mentioning lies at the bottom. After Haber signs off with his beg line, the e-mail displays this footer:

Life and Liberty Group - 640 E. St. Patrick Street, PO Box 866, Rapid City, SD, 57709, United States

Life and Liberty Group... that's Gordon Howie's company!

I called Howie and asked what the presence of his company's name at the bottom of Haber's campaign e-mail means. According to Howie, Life and Liberty Group sent the campaign e-mail to addresses on its e-mail list at the request of someone promoting the Haber campaign, with a promise to pay Life and Liberty Group for that service. The e-mail does not say who is paying for it.* Howie did not name the client, but he says he is confident that Life and Liberty Group will receive payment for this service. The monetary value of that service will appear, of course, on Chad Haber's pre-general campaign finance report.

Howie said the Life and Liberty Group e-mail list is available for rent by almost anyone. Howie says his company has turned down some e-mails, but he is willing to do business with the Marty Jackley campaign and the Madville Times, not to mention far less shady characters.

Howie emphasized that the e-mail included and constitutes no endorsement of Haber by the Life and Liberty Group or by Howie's Independent Senate campaign. Howie says he does not plan to endorse any candidate in any race.

There have been prior inkles of collaboration between Haber and Howie. I asked Howie what relationship he has with Team Haber-Bosworth. "We are friends with a lot of people that frankly would amaze a lot of the public." Howie cites his own video series with me last spring as an example of his ability to build positive relationships with people of all sorts of worldviews (there's a campaign pitch in there somewhere).

Howie confirmed that his Senate campaign paid Haber-Bosworth's paid spokesman for some consultation and media production. However, Howie says that engagement was "terribly insignificant" and nowhere near the level of engagement between that spokesman and Bosworth and Haber. We will see that insignificant payment on Howie's Q3 FEC report.

Howie says his relationship with the Haber campaign is purely business, no different from the relationship demonstrated by the presence of ads from former Republican Senate candidate Stace Nelson and current Independent gubernatorial candidate Mike Myers on this liberal blog.

Now let's just hope Howie doesn't have to take Haber to court to get paid.

Update 17:23 CDT: No "Paid for by..." statement? That seems odd. The Secretary of State says all candidates are supposed to "Display or clearly speak the statement: 'Paid for by (Name of political action committee)' on any printed material or communication. This disclaimer is not required on buttons, balloons, pins, pens, matchbooks, clothing, or similar small items upon which the inclusion of the statement would be impracticable." Does printed material include e-mail?

If this e-mail was arranged by an independent expenditure promising to pay $100 or more (and Gordon, you're nuts if you didn't charge that much), the source may want to review the following part of state campaign finance law, which does not distinguish between print, electronic, or other communications:

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 [South Dakota Codified Law 12-27-16].
19 comments

The arrogance continues. Joop Bollen wants to hide his activities as a state employee behind the façade of his private corporation, yet he demands the same deference as the highest state employee in South Dakota.

On August 21, 2014, Senator Larry Tidemann (R-7/Brookings), chairman of the Government Operations and Audit Committee, sent a letter inviting Bollen to attend GOAC's September 24 meeting. "This is not a subpoena," Senator Tidemann emphasized.

Since you were instrumental in the development of the EB-5 program in South Dakota, I believe a presentation by you of the chronology and details of the operation of the program would be beneficial to the Committee [Senator Larry Tidemann, letter to Joop Bollen, 2014.08.21].

For 18 days, Bollen remained silent. Then he had his lawyer and EB-5 confederate Jeffrey T. Sveen pen this response:

As you know, Mr. Bollen operates a private business, SDRC, Inc, which until recently administered the EB-5 Program in South Dakota. Due to the nature of the EB-5 Program, SDRC, Inc. is obligated to maintain appropriate confidentiality. SDRC, Inc. has previously provided information to government authorities when requested to do so. As the Committee is aware, an audit by the State of South Dakota has shown that all funds administered by SDRC, Inc., were properly applied.

The press has published many inaccurate and misleading articles about the EB-5 Program. Mr. Bollen does not desire to participate in the political and media frenzy which has surrounded the actions of NBP and GOED personnel. Therefore, Mr. Bollen respectfully declines your invitation to appear in front of GOAC. I understand the Committee has requested that former Governor Rounds and Governor Daugaard respond to written questions from the Committee. Please be advised that Mr. Bollen is open to the same approach to provide appropriate information to the Committee [Jeffrey T. Sveen, letter to Senator Larry Tidemann, 2014.09.08].

We need to break this down.

1. "Mr. Bollen operates a private business, SDRC, Inc,...." Bollen developed and administered the EB-5 program as a state employee from 2004 through 2009. Bollen was a state employee when he signed the January 2008 contract that shifted EB-5 to SDRC Inc.'s bailiwick and set the stage for exactly this kind of dodge of public scrutiny.

2. "Due to the nature of the EB-5 Program, SDRC, Inc. is obligated to maintain appropriate confidentiality." Who said GOAC would ask anything about confidential business matters? SDRC Inc. didn't exist until January 2008; why cannot Bollen answer the Legislature's questions about the development of EB-5 prior to SDRC Inc. and the state's side of interactions with SDRC Inc. after its formation?

3. "SDRC, Inc. has previously provided information to government authorities when requested to do so. As the Committee is aware, an audit by the State of South Dakota has shown that all funds administered by SDRC, Inc., were properly applied." It sounds like Sveen and Bollen are keenly sensitive to money questions that Senator Tidemann never asked in his invitation.

4. "The press has published many inaccurate and misleading articles about the EB-5 Program." Wait? Really? Like what? Joop, Jeff, call me. Help me clear up those inaccuracies. Or just come to committee and put those misleading articles to bed once and for all.

5. "Mr. Bollen does not desire to participate in the political and media frenzy...." Senator Tidemann is not inviting you to a political frenzy. He is inviting you to a hearing of a committee of the South Dakota State Legislature, to take questions from the elected representatives of the people who wrote your checks.

6. "...which has surrounded the actions of NBP and GOED personnel." Oh! Catch the blame shift! The "media frenzy" isn't about Joop Bollen and SDRC Inc. It's about people who worked for Northern Beef Packers and the Governor's Office of Economic Development! (I'm telling you, press Bollen, and he will turn on his former patrons with a vengeance to save his own skin.)

7. "Therefore, Mr. Bollen respectfully declines your invitation to appear in front of GOAC." Note that Bollen is not offering a legal reason for refusing a Legislative request to provide information about his activities as a state employee. The reason is purely personal. If I were a Legislative committee chairman, I would assert the superiority of the state's interest to Bollen's personal pettiness with a vengeance.

8. "I understand the Committee has requested that former Governor Rounds and Governor Daugaard respond to written questions from the Committee. Please be advised that Mr. Bollen is open to the same approach to provide appropriate information to the Committee." And finally, the ego trip. That deference you're showing the elected head of this state? I expect the same treatment. Kiss my ring, too, and I'll be "open" to answering your questions. 

Bollen has dismissed other investigators with the same arrogance. Now, Senator Tidemann, Joop Bollen is flipping that bird at you and at all the people of South Dakota. Senator Tidemann, on behalf of the people of South Dakota, I say it's time to stop taking that bird. He has given you no good reason not to accept your invitation to explain his activities as a state employee and contractor whose checks your appropriations bills wrote. Senator Tidemann, issue that subpoena.

28 comments

Senator Larry Lucas (D-26/Pickstown) smells conflict of interest in the Mike Rounds–Joop Bollen relationship. Recall that Joop Bollen quit his state job running EB-5 investment for the Governor's Office of Economic Development on December 21, 2009, then signed a no-bid five-year contract with Rounds's GOED to run EB-5 investment for the state through his private company SDRC Inc. the next day.

Senator Lucas has proposed an amendment to state law on conflict of interest that would make such a swift revolving-door deal illegal. SDCL 5-18A-17 currently prohibits any "state officer or employee who approves, awards, or administers a contract involving the expenditure of public funds or the sale or lease of property" (like Joop Bollen, from 1994 to December 21, 2009) from having "an interest in a contract that is within the scope of the officer's or employee's official duties." Lucas would extend that prohibition to remain in effect for one year after the interested party leaves state employment. The Government Operations and Audit Committee will discuss this proposed amendment on Wednesday morning, September 24, as part of its discussion of the EB-5 program.

The GOED–SDRC Inc. contract came one day after Joop Bollen quit his state job. It thus did not violate the statute Senator Lucas suggests amending.

But remember: the state gave Bollen's SDRC Inc. one earlier no-bid contract. On January 15, 2008, Joop Bollen, in his state job as director of the South Dakota International Business Institute, signed a contract giving SDRC Inc., the company he incorporated just five days earlier, authority to manage EB-5 activities for the state. That contract, issued by a state employee to a private company that state employee owned, violated state conflict-of-interest law as written.

The Lucas amendment deserves discussion. But Bollen-SDRC Inc. contract of 2008 deserves prosecution.

9 comments

Mike Rounds and the South Dakota Republican Party are having an awful time coming up with answers to the substantive charges of corruption surrounding Mike Rounds's economic development policies. Consider the latest revelations about misconduct under the Governor's Office of Economic Development and the frightened, deceptive responses from the flagging Rounds campaign.

Democratic lawyer Patrick Duffy stepped forward yesterday with a new charge against Rounds's EB-5 investment director Joop Bollen—securities fraud:

“Where was the state securities commissioner in all these LLCs and LLPs that were generating securities (the Bollen set up through the EB-5 program)?” Duffy asked rhetorically. “Most of this falls in our wheel house. It should have been investigated a long time ago.”

Duffy said the limited liability companies and limited liability partnerships that Bollen set up for projects were funded by EB-5 funds and were soliciting for investors. He says they should have been registered with state or federal regulators and prospectuses issued to potential investors [Todd Epp, "With Absentee Voting Starting Friday, South Dakota Senate Race Heats Up," Northern Plains News, 2014.09.18].

You can read my analysis of possible securities violations by Rounds's people in this December 2013 article.

Duffy reiterated the question of accountability that has bubbled to the top of the Rounds-EB-5 scandal. With so many violations of law, policy, and South Dakota common sense, why didn't Mike Rounds fire Joop Bollen?

As usual, the Republicans offer no answer to that question. They do not refute any of the charges of wrongdoing against Bollen. They do not refute that the Rounds Administration knew about Bollen's infractions. They do not refute that they rewarded Bollen after his infractions with a no-bid contract.

Instead, the Republicans blow smoke. Presenting no documents or direct testimony, Dick Wadhams, the out-state spokesman Mike Rounds recruited, shouts "sleazy" and "slimy" (oh, the irony) about an out-state PAC ad summarizing the Rounds-EB-5 scandal. Wadhams accuses Democratic Senate candidate Rick Weiland of campaign collusion with that PAC but offers no hard evidence. And still wishing for the campaign that wasn't, Wadhams tries again to drag Brendan Johnson into the Senate campaign, contending, not just without evidence but contrary to evidence, that there is no federal investigation of South Dakota's EB-5 activities. Knowing full well that a U.S. Attorney would violate the integrity of the criminal justice process by commenting on an ongoing investigation, Wadhams shouts that U.S. Attorney Johnson should comment on an ongoing investigation.

Noodling just a little closer to real issues at hand, SDGOP communications director Rob Burgess offers this helpless sputter:

Through it all Mike Rounds has been found innocent of any wrongdoing. Democrats are raising this issue because it’s quite simply the only thing that they have [Rob Burgess, quoted in Ben Dunsmoor, "SD Dems Want to Know Why Joop Bollen Wasn't Fired," KELOLand.com, 2014.09.18].

Burgess's bleat is non-responsiveness par failure-ance. "Found innocent"? In what trial? In what investigation? Democrats have laid out pretty specific evidence that Joop Bollen broke rules in carrying out Rounds's economic development policies, that the Rounds Administration knew about that rule-breaking, and that the Rounds Administration then rewarded the rule-breaker. Burgess answers none of those charges.

Burgess resorts to the "Democrats are saying it, so it ain't so" fallacy. Suppose Mike Rounds's enabling of Joop Bollen's corruption was all that Demcorats talked about for the rest of the campaign. That fact alone does not make what they are saying about Rounds and Bollen false.

Republicans need voters to believe that Democrats are playing from a light bag of tricks. But Democrats are presenting document after document, policy after policy, law after law, showing that something went very wrong in Mike Rounds's administration of economic development policies. The diversionary responses from Wadhams, Burgess, et al. make it look like it's Republicans who have no good answers in their bag.

11 comments
Mickelson Trail, South Dakota. Photo by Cory Allen Heidelberger, June 26, 2013.

Mica along the Mickelson Trail, heading up and south from Hill City toward Crazy Horse

Kevin Woster notes that the Mickelson Trail is drawing some positive press for the Black Hills. Bicycling includes the Mickelson Trail on its list of the ten best car-free bike paths in the country:

Fat tires were created for adventures like this 109-mile rail trail in South Dakota’s Black Hills, known by the Lakota natives as Paha Sapa and “the heart of everything that is.” It’s a movable feast for the eyes as you pass ponderosa pine forests, prairie lands, rugged mountain terrain, grazing cattle, swimmable creeks, and rocky canyons, feeling with every pedal stroke that you’re traveling on sacred ground. Though the route peaks at 6,100 feet of elevation, it rarely exceeds a four percent grade [Lauren Matison, "Ten Best Car-Free Bike Paths in the USA," Bicycling, 2014.09].

Contrary to Woster's report, the cycling magazine doesn't explicitly rank the Mickelson Trail the best of the best; the Mickelson is just the first item to click in a list that includes the Trail of the Coeur d'Alenes in Idaho, John D. Rockefeller Jr.'s Carriage Trails in Maine, and (closest to South Dakota) the Katy Trail in Missouri. But I'll vouch for the Mickelson Trail's visual stunningness and geological and ecological diversity. It's the best bike ride I've ever had, solo and with my family.

9 comments

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