If South Dakota won't go after corruption in the EB-5 visa investment program, maybe the private sector will. Scott Waltman reports that California firm Darley Commercial is subpoenaing the crap out of South Dakota's EB-5 program. Two rounds of EB-5 funding for the bankrupt Northern Beef Packers in Aberdeen, three rounds of EB-5 funding for the Dakota Provisions turkey plant in Huron, EB-5 money for the Deadwood Mountain Grand Casino and a handful of other favored projects—Darley wants pretty much every scrap of paper that Joop Bollen and the Hanul Law Firm of California can come up with.

Plus, Darley wants to depose Bollen, who ran South Dakota's EB-5 program through NSU's SDIBI and then through his own private corporation SDRC Inc. and several shell partnerships until the state yanked his contract last September amidst a federal investigation of financial misconduct in the program. That's a deposition I'd love to witness... although I expect there will be a lot of brief answers using the word "Fifth".

Waltman can't tell what Darley is after. Darley has been on Bollen's case for a few years. As reported last November, the California company worked for SDIBI through Hanul to recruit Chinese investors for EB-5 projects in South Dakota. When SDIBI failed to follow through on a fish farm project that Darley promoted to potential EB-5 investors, Darley pressed for payment. Bollen cleverly shifted operations to the private corporate umbrella of SDRC Inc. and got a California judge to rule in 2011 that Bollen as SDRC Inc. chief did not have to submit to arbitration to answer for violations of contract he may have committed as SDIBI chief. One might speculate that Darley is still pressing its case, trying to establish the simple fact that someone must still be around to answer for whatever monkey business went on in South Dakota's EB-5 program.

Darley, I hope you get a full response to your subpoena. And I hope you'll share that response with the thousands of South Dakotans who would like to know who's been profiting on this questionable federal intrusion into the free market.


John Tsitrian offers the best blogospheric summary of yesterday's noteworthy Legislative hearing on the Governor's Office of Economic Development and South Dakota's use of the EB-5 visa investment program. Tsitrian catches the two big bits of news to come from the the Government Operations and Audit Committee's four hours of testimony and questions:

  1. Three other federal agencies—the Treasury Department, the Department of Energy, and the Department of Housing and Urban Development—have joined the Department of Justice and FBI in investigating GOED's activities. Hmmm... is investigating too harsh a word? GOED chief Pat Costello says those departments have submitted "informational requests."
  2. The Daugaard Administration continues to preach irrational optimism with respect to Northern Beef Packers. Costello averred before the committee yesterday that the bankrupt EB-5 project is bound to bounce back, producing "a lot of jobs" and tax revenue within two years. Costello says the state has already recouped much of its $3.5-million investment in NBP through taxes on NBP construction, equipment, and operations.

Costello also continued the state's logical strategy of making dead and disgraced Richard Benda the fall guy for all that was ill and unholy in the GOED/EB-5 mess. (Cathy, are you sure you want to keep collaborating with a state to which Richard Benda is now nothing but easily exploitable damage control?)

The main policy response discussed yesterday, tightening the rules for state employees submitting vouchers for reimbursement, specifically targets Richard Benda's questionable voucher practices. The other, background checks for state employees, won't weed out decent guys who get into state government and then start misusing their power.

Rep. Kathy Tyler (D-4/Big Stone City) isn't on the operations and audit committee. But she says the committee and the rest of state government lack the will to get to the bottom of the GOED/EB-5 affair:

The big audit by the Department of Legislative Audit summarized major issues with SDRC, Inc, the EB-5 contractor, but nothing will be done.  The committee was lead to believe that the state can’t look into SDRC, Inc.’s records, but according to their contract, it can. Also, the rules that the regional center must abide by are listed in a document that was not presented to the committee.  It states that the regional center (our state) has oversight responsibilities for any project.

It’s a huge, horrible mess that I don’t think anyone in charge really wants to dig into, and that’s too bad. It’s a black mark on our state. The losers are the citizens of South Dakota and small business that lost in the bankruptcy; the winners are the managers and friends of SDRC, Inc., who have garnered millions of dollars from various aspects of the program and off the backs of hard working South Dakotans [Rep. Kathy Tyler, "Legislative Session #89, Week Eight," Kathy's Corner, 2014.03.08].

Rep. Tyler's pessimism finds support in the premature agnosticism of assistant majority leader and committee member Rep. Justin Cronin (R-23/Gettysburg), who says everything's fine, nobody's hiding anything, and we know all there is to know:

Republican State Representative Justin Cronin says any efforts by the committee to dig even deeper won’t result in new information.

“We haven’t started to correct the problems that were identified.   And, I don’t know that we can dig far enough find a problem that is going to require us to call all these folks back and basically chew them out, which is some of the feelings I’m getting here today.   That we have something that they’re hiding, and I don’t think anything that has been hidden here,” says Cronin [Charles Michael Ray, "State Government Committee Probes EB-5, GOED Audits," SDPB Radio, 2014.03.07].

Rep. Cronin evidently was not paying attention to his own committee hearing: Tweet-reporting live from the hearing, David Montgomery said that the Department of Legislative Audit looked at "third-party documents" in its investigation of GOED and EB-5 but signed confidentiality agreements, which by definition means somebody is hiding something.

The Government Operations and Audit Committee declined to set a date for another meeting. But Senator Larry Lucas (D-26/Mission) said he'd like to hear from big EB-5 player Joop Bollen. Sen. Larry Tidemann (R-7/Brookings) said eliciting testimony from Bollen "may require a little bit more than a letter of invitation." Let us hope we get at least one more hearing to test Bollen's willingess to speak.

*   *   *

§ 2-6-6. Refusal to testify or produce evidence before Legislature as misdemeanor.

Any person who, being present before either house of the Legislature or any committee thereof authorized to summon witnesses, willfully refuses to be sworn or affirmed, or to answer any material and proper question, or to produce upon reasonable notice any material or proper books, papers, or documents in his possession or under his control, is guilty of a Class 2 misdemeanor [South Dakota Legislature, Joint Rules, Eighty-Ninth Legislative Session, downloaded 2014.03.08].


More EB-5 alphabet soup...

When South Dakota began dabbling in the EB-5 visa investor program in 2004, the U.S. Customs and Immigration Service assigned the authority to administer that program to the South Dakota International Business Institute, a subentity of the Board of Regents operating on the campus of Northern State University. But by 2013, the program was run by SDRC, Inc., a private company created by SDIBI director Joop Bollen in 2008. How'd that change happen, and was it legal?

Among the great piles of documents the Legislature's Government Operations and Audit Committee will begin reading in their opening EB-5/GOED hearing on Friday is a Memorandum of Understanding (MOU), dated Janaury 15, 2008. I present images of that MOU's five pages here:

MOU-SDIBI-SDRC 20080115 p1 MOU-SDIBI-SDRC 20080115 p2 MOU-SDIBI-SDRC 20080115 p3 MOU-SDIBI-SDRC 20080115 p4 MOU-SDIBI-SDRC 20080115 p5

This Memorandum of Understanding is a creative legal fiction in which Joop Bollen talks to himself. The MOU shows James Park, lawyer for the Hanul Professional Law Corporation of California and South Korea, signing as the director of SDRC Inc. However, the only person mentioned on SDRC Inc.'s articles of incorporation on January 10, 2008, and on SDRC Inc.'s December 30, 2008, annual report is Joop Bollen. Park was made the registered agent of SDRC Inc on April 7, 2009, but a June 2009 corporate amendment names Bollen as the only director. Park's name appears on no subsequent SDRC Inc. corporate document in the Secretary of State's public corporate database.

Park did collaborate with Bollen in recruiting and processing EB-5 investors for South Dakota. But having Park sign this MOU appears to be a convenient way to make Bollen's shell corporation look, in the USCIS's eyes, like a separate entity. And as we've seen, creating SDRC Inc. gave Bollen cover from legal liabilities incurred by the SDIBI.

But if courts can buy the argument that pieces of paper like this memorandum can make Joop Bollen into two separate legal persons who are not responsible for each other's actions, then let's look closely at the language of this piece of paper. The memorandum reminds us that SDIBI was an approved and designated EB-5 Regional Center. As far as I've seen, SDIBI is the only South Dakota entity ever so recognized by Customs and Immigration and Homeland Security. The MOU says the SDRC Inc. was "organized for the purpose of creating an EB-5 Alien Entrepreneur Investment Project within SDIBI" [emphasis here and subsequently mine]. The MOU says SDIBI's director will have amongst his/her principal duties and responsibilities the ongoing coordination, oversight and liaison" for EB-5 recruitment. The MOU says SDRC Inc. will provide "assistance" to the EB-5 project "within" SDIBI.

This language suggests that SDRC Inc. was to operate as a subsidiary of SDIBI. Paragraph 6 does declare that SDRC Inc. "will act in an independent capacity and not as officers or employees of SDIBI/DEDR or the State of South Dakota," language intended to shield Bollen and the state from scrutiny and liability. But the overall language of the MOU makes clear that SDRC can engage in EB-5 activities not by dint of its own designation as a Regional Center but only in its subsidiary relationship to the Regional Center of record, SDIBI.

Here's the problem: SDRC Inc. continued to do EB-5 business under the Rounds and Daugaard Administrations even after SDIBI ceased to exist. Joop Bollen quit his job as SDIBI director on December 21, 2009. He took nearly all of SDIBI's EB-5 records. The next day, the Department of Tourism and State Development contracted directly with SDRC Inc. to conduct EB-5 activities for the state. In that contract, signed by Bollen (not Park) and DTSD Secretary Richard Benda (there he is!), the Department erroneously claimed unto itself the Regional Center designation that USCIS issued specifically and solely to SDIBI.

And in 2010, the Board of Regents axed the SDIBI director from its budget, ending the functional existence of SDIBI and leaving no one in South Dakota authorized by USCIS to do EB-5.

It thus appears that SDRC Inc. engaged in EB-5 activities without legal authorization. The contract under which SDRC Inc. operated from December 22, 2009, to September 19, 2013, came from a state agency that did not have the authority to grant it.


Hat tip to David Newquist for irony of the week!

Joop Bollen has made a living by coordinating government intrusions in the marketplace. For nearly twenty years, as director of the South Dakota International Business Institute under the Board of Regents and as boss of private contractor SDRC Inc., he has marshaled state and federal resources to secure foreign investment in favored businesses.

But let local government express a desire in stimulating activity in a business sector where Bollen has a stake, and Bollen suddenly views government as a sloppy, ill-informed interloper that has no business challenging his market position.

Aberdeen has had a tough time providing housing. A November 2010 housing study found a need for more income-based and low-income rental housing. A study completed last month finds the need persists. To address this need, the Aberdeen Housing Authority would like to build a 40-unit subsidized apartment building to serve low-income folks in the over-55 age range.

Joop Bollen, who lost his economic development contract with the state in September and now must rely on his extensive rental property holdings to keep him and his wife Charisse jetsetting, is raising all sorts of objections to this effort to help Aberdonians find decent places to live. He tells the Aberdeen City Council the housing study must be flawed:

Joop Bollen who owns various properties in Aberdeen, including the Fifth Avenue Apartments, said he is concerned with the validity of the study.

“I’m very concerned that the study is skewed,” Bollen said questioning whether the study takes into account recently constructed apartments in Aberdeen and the recent closure of the beef plant.

“You should review the study and make sure it’s accurate,” Bollen said. “If you sign off on that letter, you state you’ve seen the study and feel there’s a need. My concern is whether or not there’s a real demand” [Elisa Sand, "Landlords Disagree with Need for Housing Authority Request," Aberdeen American News, 2014.02.19].

Giggles turn to guffaws when Bollen turns on his old profession and declares his private market off-limits to government subsidy:

In addition to concerns about the study, Bollen also questioned whether it’s the city’s role to subsidize public housing [Sand, 2014.02.19].

Mayor Mike Levsen can't leave that silly assertion alone:

“The idea that government has a role in housing is established policy for the past 50 years,” Mayor Mike Levsen said [Sand, 2014.02.19].

David Newquist finds both irony and self-serving counterfactuality in Bollen's protest:

Many students, especially single parents, found help in subsidized housing, which made it affordable for them to attend college.  The real complaint that some landlords have about subsidized housing is that they may have to lower their rents to compete.  City housing makes it possible for many people to live decently, something that is of no concern to the private rental market.   The study shows that there is a 3.9 percent vacancy rate in Aberdeen.  The private landlords want to be subsidized by eliminating the competition provided by the city [David Newquist, "Watch Out: Here Comes a Huge Load of Irony," Northern Valley Beacon, 2014.02.19].

Bollen has raised alarms of convenience against government intervention in his marketplace before. In 2008, Aberdeen code enforcement officer Mike Holsten found a plague of rental units in abominable conditions. When the city proposed a plan for annual inspections, Bollen leapt to opposition:

However, some local landlords think the ordinance is too drastic. Joop Bollen, who owns more than 300 rental units, said requiring annual inspections would be a logistical nightmare and might not be as necessary as the city thinks.

“From a management standpoint, who's going to be there to do these inspections?” Bollen asked. “Do I have to take time off work? What if (the tenant) isn't home?”

Bollen said he can't form an opinion until his questions are answered. He also thinks paying for more than 300 annual inspections could be a financial burden. The city should first determine whether there is a problem, Bollen said.

Anyone can create a slide show portraying a big problem - just choose the worst pictures, he said [Jackie Burke Grumish, "Rental Housing Horrors," Aberdeen American News, 2008.02.03].

If Joop Bollen is sincere about his free-market conservatism, he should go apologize to the small dairies he's put out of business, the workers whose hopes he raised and dashed, and the foreign investors whose millions he made disappear with his rabid promotion of government intervention in the market with the EB-5 visa investment program.


"The plot has become much thicker," writes journalist Bob Mercer on reading the audit report on the Governor's Office of Economic Development. Indeed, the Department of Legislative Audit finds significantly more GOED/EB-5 mischief conducted under the Rounds administration (and carried over into the Daugaard era) than Attorney General Marty Jackley noticed or admitted following his "investigation."

The DLA's audit paints a Governor's Office of Economic Development that has allowed sloppy financial oversight and unchecked conflict of interest. The audit report confirms what we have suspected since the first announcement of a federal investigation into GOED's activities: that GOED's problems revolve around the EB-5 visa investment program run by Joop Bollen, promoted by Richard Benda, and launched to its greatest heights by Governor Mike Rounds.

The audit finds that GOED did not adequately monitor the EB-5 program as run by SDRC Inc., the private firm Joop Bollen spun out of his state job on the NSU campus:

  • Bollen sent GOED monthly e-mails reporting balances in the indemnification funds and the expense fund his December 2009 contract established, but he provided no bank statements or other documentation to prove those balances were correct or that he was reporting all of the money he and Benda touched in the course of business.
  • DLA couldn't find the documentation Bollen was supposed to submit to GOED to show that he was doing his contractual and legal duty to provide the EB-5 books, records, and reports to the U.S. Customs and Immigration Service.
  • SDRC's expense fund was a bucket with big holes:

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 [Richard Benda] and the DSTD’s Administration Director [I believe that's Marty Davis]. 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 [Department of Legislative Audit, "Governmental Funds of the South Dakota Governor's Office of Economic Development: Audit Report," 2014.02.12].

  • GOED left the state funds managed by SDRC off the books for three years, until FY 2013.

DLA says this lack of oversight created "a potential for the loss of assets." That's a brilliant euphemism for theft.

Governor Dennis Daugaard took the surest corrective action to these problems last September, when he terminated Bollen's SDRC contract. Bollen surrendered the $28,240 left in the expense fund to the state on January 30. Per the GOED-SDRC contract, Bollen hangs onto the $989,946 left in SDRC's Indemnification Fund One until November 2019. The audit report says GOED intends to audit that fund "if and when the funds were reverted to the State."

DLA mentions a second SDRC indemnification fund that reverts to the shareholders of SDRC, who from SDRC's 2014 annual report appear to be no one other than Joop Bollen and his mysterious pal from Georgia Pyush Patel. You know, I don't think SDRC is done fleecing us or the EB-5 investors yet.

Who allowed this mismanagement to take place? The man who wants to be your next Senator, Mike Rounds.

In its second finding, the audit report says that GOED allowed Richard Benda to use his state position to set himself up for personal enrichment:

On December 2, 2010 Secretary Benda discussed a draft employment contract between Secretary Benda and the SDRC Inc. or a related entity for providing loan monitoring services related to NBP. On December 23, 2010, Secretary Benda amended two Future Fund grant agreements with the South Dakota Development Corporation (SDDC) for the purpose of making loans to Northern Beef Packers LP (NBP) which increased the aggregate total of the two agreements by $600,000 (from $1,450,000 to $2,050,000). On February 1, 2011, $1,200,000 of these funds was disbursed to NBP by the SDDC. $850,000 was returned to the Future Fund.

Secretary Benda’s employment with the State of South Dakota ended on January 8, 2011. On January 13, 2011, subsequent to his employment by state government, Mr. Benda was notified by e-mail that he could pick up a check written by the State of South Dakota to NBP for payment of a $1,000,000 grant to NBP for reimbursement of construction costs. This check was deposited by NBP on January 26, 2011 [DLA, 2014.02.12].

Who wrote the checks to underwrite Benda's conflict of interest? Mike Rounds.

In its third finding, the DLA says Benda's $5,559.80 double dip on plane ticket reimbursements was not an isolated incident. DLA finds Benda submitted six invoices totaling $14,700 for "translation services." This money supposedly covered writing up EB-5 pitch materials in other languages. Ping, ping, ping goes the scam radar:

All six invoices indicated that the payment on the invoice was to be made in cash. Five of the payments totaling $13,500.00 were associated with invoices from an individual that had handwritten on them “only invoice available” and the instruction on the invoice was to “pay by cash when next trip”. One invoice for $1,200.00 was on the letterhead of a Philippine hotel and had handwritten on it four names, “USD Cash $1,200.00”, “translation and interpretation”, and “only invoice available”. No receipts were included with the travel vouchers to support that payment was tendered for the services provided on the invoices. As a result, $14,700.00 in expenditures paid from the General Fund was not properly supported [DLA, 2014.02.12].

Cash only, for services at a Philippine hotel, recorded only on a handwritten note... and wait: how many investors did SDRC and GOED recruit from the Philippines? My translation: Richard Benda is toast.

Who let those expenses fly? Mike Rounds.

In its fourth finding, DLA confirms what Rep. Peggy Gibson learned a year and a half ago: GOED does a poor job of following up on the Future Fund money it hands out to businesses. In its fifth finding, DLA says GOED has been violating state law by not depositing receipts greater than $500 within one day.

Who allowed this poor oversight to be the status quo? Mike Rounds.

The audit doesn't mention the $550,000 Benda and Bollen diverted from from Future Fund Grant #1434 to SDRC Inc. ($450,000 of which went to Richard Benda's pocket; the remainder has not yet been fully accounted for). Auditor General Marty Guindon says in his cover letter to the audit that the diversion did not violate state law. But Guindon's conclusion on this matter isn't exactly exonerative:

Based on the evidence gathered during our audit, we did not determine that there was any noncompliance with state law on the part of DTSD in the issuance of this grant or noncompliance on the part of DTSD or NBP with the terms of the grant. Our audit does not provide a legal determination regarding this matter. Any criminal findings that may be associated with this matter are the purview of the state and federal criminal investigations being conducted and are not within the scope of our audit responsibilities. We do report a material weakness in policies and procedures concerning potential conflict of interest related to this matter in the audit finding on page 35 of the report. Finally, we believe that the use of the $550,000 is a matter between private parties and consequently not within the scope of our audit [DLA, 2014.02.12].

These findings tie Richard Benda to more suspiciously used tax dollars. Add the bankruptcy of Northern Beef Packers and the failure of his gamble on the Hyperion refinery, and we start to see a much bigger picture about the stress that Governor Daugaard says drove Richard Benda to kill himself. We also see why Joop Bollen has taken the Fifth in the press since November.

But more importantly, we see a much larger picture of a state economic development program run like a lemonade stand, without rigorous control of state finances. We see mistakes and abuses that reflect more than two employees' machinations. They reflect an institutional sloppiness and corruption that lie at the feet of the man in charge.

The man in charge of the Governor's Office of Economic Development is the man with the apostrophe s, the Governor.

The DLA Audit report raises a lot more questions for Richard Benda's friend and Governor, Mike Rounds.


In December, I speculated that Richard Benda and Joop Bollen had their eyes on Hyperion's proposed refinery in Elk Point as one of South Dakota's next great EB-5 visa investment projects. A document from the Governor's Office of Economic Development shows that I wasn't just speculating.

In January 2008, the South Dakota International Business Institute asked the U.S. Customs and Immigration Service to amend the state's regional center status to include projects beyond dairy operations into a variety of fields, including petroleum and coal products manufacturing. The request included this statement referring to Hyperion:

SDIBI Amend 2008 refinery clip1

The amendment request packet includes an attachment that makes the Hyperion–EB-5 connection explicit:

SDIBI Amend 2008 refinery clip NYT

That 2007 New York Times article announcing the Hyperion project makes clear EB-5 director Joop Bollen and GOED chief Richard Benda intended to help the Dallas entrepreneurs build their fantastic Elk Point refinery on cash from immigrants from China and other countries seeking to buy their green cards.


Northern State University has been raising some challenges to accessing records relating to the state's EB-5 program, which operated on the NSU campus under the banner of the South Dakota International Business Institute until the end of 2009. But in response to an ongoing public-records request, Northern State University President James M. Smith appends one important paragraph concerning EB-5 coordinator Joop Bollen's handling of state records:

Dr. James M. Smith, excerpt from open-records response, NSU, 2014.01.06

Dr. James M. Smith, excerpt from open-records response, NSU, 2014.01.06

Joop Bollen resigned his employment at NSU on December 21, 2009; he took virtually all records in his office relating to his EB-5 activities with him and he requested no permission of NSU to do so [Dr. James M. Smith, president, Northern State University, letter, 2014.01.06].

Read those words carefully:

  1. Joop Bollen was a Northern State University/Board of Regents employee.
  2. As a Regental employee, Bollen created and curated many documents.
  3. Documents created by Regental employees belong to their employer, the Board of Regents. (See BOR Policy 4-34 on Intellectual Property... or if you're really picky, go see BOR Policy 4-34 as it existed on December 21, 2009, before the Regents next amended that policy, at their August 11, 2011 meeting.)
  4. When Bollen stopped working for NSU/the Board of Regents, Bollen took state records that weren't his to take.

Documents created by Regental employees are also subject to the BOR Record Retention Regulations. Among those regulations is REG-23 on Correspondence, Federal, which one would assume comprised part of the records of a federally authorized immigration-related program:

This series contains both copies and originals of letters and memorandums sent to and received from any federal agency. This record series is maintained for reference and possible use when federal litigation, claims, or audits are pending. This record series is an open record.

RETENTION: Retain 1 year in office, then transfer to storage for 3 years. Destroy after 4 years provided all litigation, claims, and audit findings involving the records have been resolved and final action has been taken.

(Note: When litigation, claims, or audits are complete maintain for an additional 3 years, then destroy.)

[South Dakota Board of Regents, Records Retention and Destruction Schedule, REG-23, revised 2012]

You'll need to pay me $73.30 an hour (that's what NSU claims for legal fees) to page through the files and figure out if the records retention policy in effect on December 21, 2009 was significantly different from the current policy cited above. But Dr. Smith does not appear to have designated Bollen's garage or storm shelter as an official NSU records storage site.

If the above records retention policy does apply, then arguably, now that it's 2014, NSU would have disposed of those records, anyway. But consider: Governor Dennis Daugaard ordered an audit of the Governor's Office of Economic Development on November 27, 2013. That audit covers GOED activities back to Fiscal Year 2010. SDIBI worked with GOED (then the Department of Tourism and State Development, DTSD) in Fiscal Year 2010. GOED's activities with SDIBI during its last six months of work are thus subject to that audit. REG-23 says don't throw out documents subject to audits...

...all of which means that, under REG-23, whoever runs the NSU paper shredder would have gotten a memo on or about November 27, 2013, telling them hold off on their normal shredding of four-year-old records on campus that might relate to GOED.

But records relating to GOED in the SDIBI office are no longer on campus, thanks to the error—or foresight?—of Joop Bollen.

Whether Bollen's removal of files is tied to the "records gap" GOED investigators have encountered is an open question. But there's little question about the impropriety of removing state records from a state facility without state permission.


When Northern Beef Packers swung a second round of EB-5 visa investment worth up to $60 million in November 2010, the slaughterhouse was already two years behind schedule. NBP took another two years to start processing livestock, and it stayed in business for a mere nine months before declaring bankruptcy, dashing the hopes and daily budgets of hundreds of Aberdeen workers.

So who blew the deal? Who is responsible for the bad decisions that let $152 million in private and public investment go for naught?

Would you believe Joop Bollen, the man in charge of the EB-5 investment program?

Read the amended loan agreement between Northern Beef Packers and SDIF LP 6, the legal fiction Bollen created to manage the second round of EB-5 funding for NBP. That March 4, 2011, document includes Section 4.37, which carries the following language over from the Section 4.41 of the original November 4, 2010, agreement. The agreement required NBP "To not change the officers, directors or managers of Borrower or other employees earning more than One Hundred Thousand Dollars ($100,000) per year, or the location of the executive office or principal place of business of Borrower without Lender's approval."

In other words, if Northern Beef Packers CEO David Palmer was making boneheaded decisions, and if general partner Oshik Song or anyone else in a position to throw weight around at NBP wanted to sack Palmer and bring in management who could look at the books, figure out where the money was going, and stop the bleeding, the EB-5 Lender, SDIF LP6, had to approve that change. And since SDIF LP6 is no one but Joop Bollen, that means Joop Bollen had the final say over who ran Northern Beef Packers.

Well, almost final. The credit agreement did not authorize Bollen to terminate any NBP staff. But it did give him veto power over any changes in upper-level management.

And it could be that, since NBP still exists as a corporation, and since the credit agreement is pretty insistent about maintaining full force and effect even if NBP defaults on the agreement, the new owners of bankrupt NBP, White Oak Global, can't clean house and bring in new management without Joop Bollen's approval.


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