The South Dakota Banking Commission has yet to take any public action on Brown County's request that it investigate EB-5 czar Joop Bollen's SDRC Inc. for possible evasion of bank franchise tax. Director of Banking Bret Afdahl sent SDRC Inc. a letter requesting information in September; as far as we know, SDRC Inc. is almost 60 days past the normal 30-day reply time.

If the Banking Commission is alarmed, they aren't showing it. Bob Mercer reports that the Banking Commission is meeting Friday at the Minnehaha Country Club (hey, can public bodies meet at private country clubs?), and SDRC Inc.'s bank status is nowhere on the agenda.

Well, maybe not nowhere. There is an executive session at the end. So maybe, just maybe, there's an interesting conversation to be had after the duck à l'orange. We can only hope that somebody in Pierre is taking their obligation to get answers about EB-5 seriously.

  • chimpsSenator Larry Tidemann, Chair
  • Senator Phyllis Heineman
  • Senator Jean Hunhoff
  • Senator Blake Curd
  • Senator Larry Lucas
  • Representative Dan Dryden, Vice Chair
  • Representative Melissa Magstadt
  • Representative Justin Cronin
  • Representative Mark Mickelson
  • Representative Susan Wismer

These ten South Dakota legislators, the current members of the Government Operations and Audit Committee (GOAC), are responsible for a farcical travesty of legislative inquiry and public accountability. These ten legislators have foisted on South Dakotans the insult masquerading as a report fulfilling their duty to investigate the Governor's Office of Economic Development and South Dakota's troubled EB-5 visa investment program.

Lied to by former governor and now Senator-Elect Mike Rounds, bamboozled by lawbreaking EB-5 profiteer Joop Bollen, and spun by the shifting story of Attorney General Marty Jackley, these ten legislators have shrugged and endorsed the cowardly, sandy-headed fall-guy narrative that dead and defenseless Richard Benda was the source of all ills in the GOED/EB-5 scandal. GOAC essentially rewrote the campaign propaganda that the South Dakota Republican Party sent to tamp down concerns about EB-5 in October.

The report rubber-stamps the audits and reforms discussed last winter, before GOAC received its legislative charge to investigate GOED and EB-5. It accepts without challenge the Swiss-cheese stories told by Rounds and Bollen. The only new work products produced by GOAC itself are two pieces of legislation that would tighten conflict-of-interest restrictions on state employees and make those restrictions last for one year after an employee leaves the state payroll. Even in proposing those modest reforms (the sort of no-duh rules that we should be embarrassed that we don't already have), GOAC focuses solely on Benda's alleged crimes and completely ignores Bollen's conflict-of-interest violations that cost the state millions.

GOAC makes its stonewalling stupidity clearest on page 5 of its report. Making hay of Richard Benda's diversion of $550,000 from Future Fund Grant #1434 (a grant Mike Rounds signed for Northern Beef Packers, with Benda pressing, knowing that Benda was going to be involved with the beef plant when he left Pierre, which facts trouble GOAC not one whit), GOAC mentions that it asked Bollen about how that chunk of the grant got converted into Benda's hefty pay as NBP's EB-5 loan monitor.

When asked about the $550,000 loan monitoring fee collected by Richard Benda from NBP, Mr. Bollen stated that he had no specific knowledge of Richard Benda collecting the loan monitoring fee [GOAC final report, 2014.11.28, p. 5].

This reading of Bollen's comments is incorrect and inconsistent with GOAC's own bogus conclusions. In his arrogant and cynical written response to GOAC after the election (oh, did I mention conveniently delayed?), Bollen said he set up the loan monitor job for Benda [page 9]. Bollen said Benda worked for Bollen's EB-5 management company, SDRC Inc. [Question 15, p. 13]. When GOAC asked Bollen how SDRC Inc. compensated Benda, Bollen said "Mr. Benda was paid pursuant to the terms of a contract for loan monitoring the NBP project, which was required under the loan with NBP. The terms of the contract contain private business information" [Question 8, p. 12]. Bollen's response that he had "no specific knowledge" of "how and why... Benda [was] involved in collecting the loan monitoring fee" [Question 20, p. 14] was at best legalistic if not patently absurd: he created the loan monitor job, hired Benda, and knew the terms of the contract well enough to choose to hide them from GOAC.

Bollen knows exactly how and why Benda collected his hundreds of thousands of dollars. He hid that information, and GOAC went "Ro-de-do-de-do, we don't need to know!"

To top off their obtusity, Tidemann and friends ignore Bollen's dismissal of their whole Benda-as-fall-guy thesis. Bollen cites NBP lawyer Rory King's argument, floated to Bob Mercer a year ago, that the loan-monitoring fees were perfectly legitimate. Senator Tidemann, when you simultaneously cite a source to support your thesis then ignore that source's rebuttal of your thesis, you come out looking like monkeys.

I hate to include the Democrats on this committee, Rep. Susan Wismer and Senator Larry Lucas, in the monkey pile. Rep. Wismer did expose GOAC's stonewalling and bring the EB-5 issue back to life last summer. Senator Lucas brought forth most of the substantive questions about Benda, Bollen, Rounds, and other players in the EB-5 scam, but he also strangely and incorrectly declared Senator Tidemann's conduct of the GOAC hearings "fair and non-partisan." Senator Lucas says he's considering filing a minority report, although why he and Rep. Wismer haven't already written that report and demanded its inclusion on the record is beyond me.

But this shame falls on all ten members of the Government Operations and Audit Committee, on all of a Legislature that accepts Chairman Tidemann's conclusion that "no further action was necessary," and on all of South Dakota, for electing such gutless, incurious, and feckless legislators.

Update 06:15 CST: Senator Lucas tells AP that minority report will happen, along with a call for a special prosecutor and further GOAC investigation. But he also says "it’s our due diligence as state officials to make sure we have covered all our bases in the matter" and that "Right now I’d say we’re about on third base." Third base? I don't know what puritans Larry's been making out with, but in my backseat, GOAC hasn't even gotten to first.


Pat Powers notices that Mike Rounds got campaign money from TURPAC, the National Turkey Federation PAC. $5,000, according to Open Secrets, the fourth-highest amount TURPAC gave to any of its favored seventeen Senate candidates. Rep. Kristi Noem got $2,500 in turkey money, above the median for TURPAC donations to 74 House candidates. TURPAC gave Noem $2,000 in 2012. Prior to that, I find TURPAC contributing $1,000 to Stephanie Herseth in 2006, $1,000 to Tom Daschle in 2004 and $2,000 in 1998, and $500 to John Thune in 2000 and $500 in 1998.

The National Turkey Federation PAC has a ten-member executive board that since 2011 has included Jeff "Not Bollen's Partner" Sveen of Dakota Provisions in Huron, South Dakota. Sveen gave Rounds $3,000 of his own money to run for Senate. While Rounds was Governor, the state lent Dakota Provisions $3,000,000. Rounds's EB-5 program funneled another $55 million into Sveen's turkey plant, which used that money to refinance its debt. Jeff Sveen worked as Joop Bollen's lawyer and crafted the clever privatization deal that allowed Bollen to divert millions in EB-5 revenues from the state to his pockets.

Ah, friendship.

Related: The Government Operations and Audit Committee of the South Dakota Legislature quietly signed off Friday on blaming Richard Benda for everything wrong with the state's EB-5 program. I'll have more on GOAC's reprehensible report later.


Four weeks ago, Denise Ross posted a stunning article in the Mitchell Daily Republic that put then-Governor Mike Rounds in the room in 2009 with key players in the EB-5/Northern Beef Packers/Epoch Star financing scheme. That statement called into question Rounds's claim that he and the state had no involvement in securing the $30-million Epoch Star loan for Rounds's favored but failing NBP project. Ross also learned from California financier David Kang that EB-5 czar Joop Bollen and lawyer pal James Park had "complete control" of NBP's finances and wrecking NBP:

Financially it was an utter disaster. They didn't have any of the financial records organized. They didn't work with any of the lienholders [David Kang, quoted in Denise Ross, "Source: Bollen, Lawyer in Control of Northern Beef Operations, Finances,"  Mitchell Daily Republic, 2014.10.17].

Kang questioned Bollen's and Park's business acumen:

He describes Bollen and Park as, at best, inept.

"They were in over their heads. They didn't understand how to do development, construction projects, things of that nature. That's ultimately why they fell flat on their face," he said [Ross, 2014.10.17].

Evidently that article got Bollen's lawyer Jeff Sveen a little hot. He contacted the Mitchell Daily Republic to set the record straight... not about his beleaguered client, but about himself. You see, in the middle of her article, Ross mentioned this comment from Kang:

Richard Benda also was involved in the plant, Kang said, although not to the extent of Bollen and the Hanul law firm. He was working to promote the project but was not involved in day-to-day operations. Aberdeen attorney Jeff Sveen also was involved, Kang said, as "one of Joop's partners."

Sveen's signature appears on several documents related to Bollen's EB-5 company, SDRC Inc. Sveen is a partner in the Siegel, Barnett & Schutzlaw firm.

Northern Beef's CEO, David Palmer, and others were not allowed to make decisions or administer accounts, Kang said [Ross, 2014.10.17].

Four weeks later, late in Friday's news cycle, the Mitchell Daily Republic runs this correction:

In an Oct. 17 article that began on Page A1 relating to Joop Bollen and Northern Beef Packers, The Daily Republic quoted Los Angeles management consultant David Kang's statement that attorney Jeff Sveen of Aberdeen was "one of Joop's partners." Sveen has since advised The Daily Republic that he is not one of Joop's partners. Accordingly, The Daily Republic retracts its statement that Sveen was a partner of Joop Bollen ["Correction," Mitchell Daily Republic, 2014.11.14].

Jeffrey T. Sveen, lawyer, Aberdeen, South Dakota

Jeffrey T. Sveen, not Joop Bollen's partner

Role-play time! Pretend you are Joop Bollen's lawyer on October 17, 2014. You check your voicemail or your e-mail and you see Denise Ross was trying to get a hold of you (Denise Ross is a pretty good journalist; she'd have sought comment from Sveen for her story, wouldn't've she?). You click your Mitchell Daily Republic bookmark, and there's David Kang talking smack about your client.

Now remember, Joop is more than a client; he's a pal. He helped you swing $55 million in EB-5 money for your turkey plant in Huron in 2009. What do you do for a pal like that?

You call Ross right back. Denise! Sorry I didn't get back to you sooner. I see you've gone ahead and published. Do you have time for me to set a few things straight?

You tell Denise that Joop is a righteous dude with lots of good business sense. Look how he's been able to parlay his low-income Aberdeen rentals into vast personal wealth capable of collecting and donating Egyptian antiquities! You tell Denise she ought to publish that side of the story ASAP to counter Kang's criticism. And Denise Ross, good journalist that she is, surely hustles to put your story into print to round out the initial Kang story. The Kang article appears on a Friday; I bet by end of business Monday, we have your side of the story, and the bloggers are all like, Oh, that mainstream media, jumping to conclusions! Jeff Sveen sure set Denise Ross straight! Now where can I get a mummy mask....

But what really happens? Jeff Sveen gets hold of the paper and says, Partner? Don't go calling me Joop Bollen's partner! Somebody—maybe the paper, maybe Jeff Sveen—waits four weeks to get the counter-claim out. Four weeks? It doesn't take four weeks to say, "I'm not Joop Bollen's partner." Four weeks is more like the time one would spend haggling with lawyers about defamation... if there were any defamation here... and if there is, calling a guy Joop Bollen's partner seems the least of it.

So the Mitchell Daily Republic publishes a damning article about Joop Bollen, and all Bollen's lawyer gets retracted is one statement about Bollen's lawyer. That's either bad lawyering or a signal that Ross nailed the truth in her story about Bollen, Park, and the EB-5/Northern Beef Packers/Epoch Star shenanigans and that Jeff Sveen just doesn't want his name dragged into the mess.


EB-5 czar Joop Bollen's response to the Government Operations and Audit Committee's inquiry into his activities on behalf of the State of South Dakota is rich with innuendo, insult, and absurdity. The greatest absurdity packed into his literary fabrication is the suggestion that he intended his private corporation to be a revenue stream for the state and that the state willingly let that revenue stream go.

Recall that Rep. Kathy Tyler (D-4/Big Stone City) charged in September that when Bollen used his state authority to sign a contract with his own newly formed private company, SDRC Inc., in January 2008, he laid the ground work to divert EB-5 administrative fees into his own pocket. Rep. Tyler said that scheme ultimately defrauded the state of $140 million. Other estimates have placed the fraud figure at $120 million.

Amidst all the defenses of EB-5 offered by Mike Rounds and the South Dakota Republican Party during this year's Senate campaign, none of Bollen's protectors ever pushed back on that charge. Now Bollen himself, in a well-thought-out and long-delayed explanation, confirms the mechanism that Rep. Tyler outlines: the state, through its SDIBI office at Northern State University, could have kept control of SDRC Inc. and put more money in state coffers; privatization sent that money into Bollen's hands. Says Bollen in his November 10, 2014, letter to GOAC:

Also like NPII [Northern Plains International Incorporated], SDRC Inc. would create a fund of monies for NSU to use [p. 5]. initial intention for SDRC, Inc. was to create and income stream for SDIBI... [p. 8].

...taking SDRC, Inc. private was never my intention but rather it was supposed to create an income stream from FDI [foreign direct investment] activities for SDIBI just like NPII did in regard to export promotion [p. 9].

Bollen confirms Tyler's statement that recruiting and managing EB-5 visa investment activities could have provided the state with direct revenue—not just increased sales and property tax revenue down the road from businesses boosted by EB-5 money, but up-front fees from investors paid directly to Pierre.

That claim (and if Kathy Tyler and Joop Bollen both make the claim, are we ready to call it fact?) leads us to the 140-Million-Dollar Question:

What would motivate the State of South Dakota to give up a multi-million-dollar revenue stream?

Bollen says legal liability motivated that self-denial. Run SDRC Inc. honestly, write clear contracts with everyone you deal with (unlike Bollen, who's off-book operations brought us the Darley litigation), and there's no more liability to running EB-5 than there is to running public universities with dangerous chemistry labs and dormitories with slippery shower floors. The Darley litigation cost the state $510,000 over five years; keep SDRC Inc.'s functions under state control, and EB-5 pays its own lawyer bills and leaves millions for ongoing teacher pay raises (oh! Ha ha ha! Hee hee hee!) or road work or rebates for South Dakota taxpayers.

Politics could motivate South Dakota to turn down real money. Governor Dennis Daugaard rejects $250 million a year from Medicaid expansion because he doesn't want to help President Obama and those darn poor people who need to stitch some bootstraps to their bare ankles. But in 2009, EB-5 has no political component. Governor Rounds believes his EB-5 idea and his man Bollen are great for South Dakota. EB-5 boosts the budget without taking a dime from any South Dakota taxpayer.

We're running out of rational options.

Board of Regents executive Jack Warner told GOAC yesterday that they didn't fire Bollen because they needed Bollen's testimony to fight the Darley lawsuit. Perhaps privatizing EB-5 to SDRC Inc. was just a big carrot to keep Bollen cooperating. But why couldn't we use the stick? Pull Bollen out of his NSU office on February 1, 2009, hand Bollen his pink slip and a subpoena, declare SDRC Inc.'s agreement with the state null and void based on Bollen's lack of authority to sign that contract, and run EB-5 as the state revenue stream Bollen said it was supposed to be. By 2009, the state should see Bollen (and I think new NSU President James Smith saw Bollen) as an arrogant ass who is throwing around state weight that's not his to throw. If I'm in charge of South Dakota, I shut Bollen down. We don't need Bollen!

Or do we?

Or, more to the point, does somebody need Bollen to bring in the EB-5 money privately and use it for something more appealing than propping up the state general fund?

Let's just say it: privatizing EB-5 and denying the State of South Dakota millions of dollars is a bad idea. The most rational reason I can think of to let Joop Bollen deny the state millions of dollars is that I might get a cut of that money.

I invite alternative explanations. But when I add Joop Bollen's statements to all the stories we've been told about EB-5, I come to the conclusion that the most logical explanation on the table is that someone was on the take.


Among the highlights from the Government Operations and Audit Committee hearing happening right now on the EB-5 scandal, Board of Regents exec Jack Warner provides the first direct answer we've heard as to why the state didn't fire EB-5 czar Joop Bollen for his multiple violations of Regental policy and state law in 2008 and 2009. "If we were going to mount a successful defense" in the Darley litigation, "we needed to rely on Mr. Bollen's testimony."

Recall that in August, the Regents, the Attorney General, and the Governor's Office told us that Bollen got no immunity deal, even though he had pressed for one. But today, Warner is implying that in 2009, Bollen got something like immunity from firing in return for his help in beating back the Darley lawsuit. Does the need to beat Darley also explain why the state granted Bollen his private contract to run EB-5 for personal profit after 2009?

Attorney General Marty Jackley says he never granted Bollen immunity from prosecution, but Bob Mercer reported yesterday that Jackley apparently granted Bollen immunity from interrogation. AG Jackley told Mercer, "I did not meet with Mr. Bollen personally either during or after the investigation, nor have I talked with him." Mercer reported AG Jackley's statement that he had spoken with federal investigators and reviewed the information they received from Bollen. Incredibly, though, AG Jackley has never seen fit to conduct his own inquiry into Bollen's state-level misdeeds.

Strangely, AG Jackley felt the need to repeat himself today in a press release. let me quote in full, so there is no misunderstanding:


Pierre S.D. - Attorney General Marty Jackley confirms that on more than one occasion Joop Bollen voluntarily agreed to be interviewed by law enforcement authorities acting in joint cooperation.  This has been set forth in both Joop Bollen's recently filed responses to GOAC questions and the testimony of the Attorney General to GOAC on July 29, 2014.  Both the Division of Criminal Investigation and the Attorney General's Office have received Joop Bollen's interview information from federal authorities, along with voluminous other witness information as part of cooperative law enforcement efforts some of which were completed by DCI, FBI or both agencies jointly.  Based upon all of the investigation information, the Attorney General authorized moving forward with state criminal charges as more fully set forth in the criminal complaint and arrest warrant drafts of October 8, 2013, as provided to GOAC [South Dakota Attorney General's Office, press release, 2014.11.13].

In one of its rare allusions to EB-5 (an affair that has received minimal attention, investigation, or analysis from Pat Powers), the GOP spin machine claims that this press release "refutes" Mercer's claim that AG Jackley didn't interview Bollen. The GOP spin machine then dismisses the Mercer article as "shenanigans."

This assertion from Powers is problematic on many fronts.

  1. Bob Mercer makes no claim. He quotes Attorney General Marty Jackley directly. AG Jackley says (let's repeat it, to be clear), "I did not meet with Mr. Bollen personally either during or after the investigation, nor have I talked with him."
  2. The AG's press release does not refute anything Mercer reported. The press release says the AG received information from federal authorities. The press release does not say the AG spoke or met with Bollen. The press release does not say Mercer misquoted Jackley. The press release has no refutatory power against anything Mercer said (or for that matter, anything I said in my follow-up blog post on the topic).
  3. AG Jackley and the GOP gain no apparent advantage from making this claim. Saying Bob Mercer got his facts wrong just for fun is a bad idea, especially when one has no information to call into questions the facts he reported. The AG's press release only emphasizes the fact that he didn't do his own work on the EB-5 investigation. Yes, the DCI has apparently worked in conjunction with the FBI. But AG Jackley's convoluted verbiage here suggests that he has ignored an opportunity to do basic law enforcement and turn the heat up himself on a main player in a potential scam.

Attorney General Marty Jackley has acted shockingly incurious about Joop Bollen's clear violations of law, policy, and public trust. BOR's Jack Warner suggests that Bollen brilliantly boxed state officials into a deliberate incuriosity that let Bollen continue what smells more and more like a scam for personal profit.


In March 2013, South Dakota officials received eight subpoenas from federal officials seeking information about the state's use of the EB-5 visa investment program. Two men central to that EB-5 program were former Governor's Office of Economic Development secretary and EB-5 loan monitor Richard Benda and EB-5 czar Joop Bollen.

Attorney General Marty Jackley told us in November 2013 that his office never interviewed Richard Benda. Now AG Jackley tells us he didn't question Bollen, either:

“I did not meet with Mr. Bollen personally either during or after the investigation, nor have I talked with him,” Jackley said in an email.

“However, as he indicated in his responses because EB-5 is a federal program he met with federal authorities on several occasions, and I and DCI (state Division of Criminal Investigation) have reviewed those related reports during the state investigation,” he continued.

Jackley added, “I'm planning on further reviewing the materials recognizing what I've said from the beginning that EB-5 is a federal immigration program that federal officials have or are looking at for potential federal criminal violations” [Bob Mercer, "AG: Bollen Wasn't Questioned in Benda Investigation," Aberdeen American News, 2014.11.12].

Something goes wrong enough with a state economic development program being run by a couple former state employees that the FBI comes asking questions, and the Attorney General doesn't think it behooves him to talk with the leaders of that program? AG Jackley finds enough evidence against Benda to call a grand jury and prepare an arrest warrant against Benda for grand theft, but he never thinks he ought to talk to Bollen, the man running the company that had to process the money Benda allegedly stole?

Just as the federal aspect of EB-5 didn't stop Jackley from preparing to arrest and indict Benda, it should not stop him from questioning, not to mention arresting and indicting, Joop Bollen. Private investigation has uncovered multiple state laws and policies that Joop Bollen violated. Every one of Bollen's state-level violations—conflict of interest, fraudulent expropriation of state authority and revenue, etc.—stands independently of any detail of federal immigration policy and is entirely the South Dakota Attorney General's responsibility to prosecute.

So, Attorney General Jackley, do you think it might be time to play catch up and talk to Joop Bollen?


Joop Bollen is trying to distract the Government Operations and Audit Committee from his illegitimate contract with himself, his apparent mismanagement of Northern Beef Packers, and his multiple violations of state policy and law by claiming that reporters like Denise Ross and Bob Mercer have wrecked South Dakota's chances of making more money from the EB-5 visa investment program.

Joop Bollen appears to forget that Governor Dennis Daugaard yanked Bollen's contract and put EB-5 on ice before any journalists started digging into South Dakota's EB-5 program. Bollen's own narrative to GOAC suggests that many in the state wanted to back away from the "liabilities" of EB-5 (which were what, Joop, if everything was being run properly?) back in 2009; the program hung on only because Bollen, Richard Benda, and the Governor's Office wanted to keep that money train rolling. Bollen ignores the fact that South Dakota at his behest (and with Mike Rounds's support) gave up the key competitive advantage of public, state-run status for its EB-5 program, making it harder for us to stand out among the growing number of EB-5 Regional Centers.

Maybe Bollen should switch to blaming Obama. Monday, the President announced that the U.S. will offer new, longer visitor visas to Chinese citizens. Starting today (November 12), tourist and business visas for Chinese visitors jump from one year to ten years. Student and exchange visas stretch from one year to five years.

Keep in mind that one attraction of EB-5 visas has been for wealthy Chinese to buy their kids' way into the country so they can attend American universities. But EB-5 visas cost $500K in at-risk investment plus tens of thousands in fees for lawyers and middlemen like Joop Bollen. President Obama's visitor visas don't give permanent residency the way an EB-5 visa can, but five years on an extended visa for a $160 application fee might sound like a bargain to a lot of folks considering EB-5.

South Dakota reporters are not killing EB-5. South Dakota has lost its EB-5 edge due to decisions made by South Dakota's EB-5 czar and his collaborators in state government. The President's new visa deal with China may reduce EB-5 demand even further.


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