David Montgomery pieces together the most complete profile yet of Joop Bollen, the man who would be the most important witness in any state investigation of the EB-5 visa investment program... assuming any state officials were interested in really investigating the EB-5 visa investment program.

Montgomery provides a number of tidbits about the dashing Dutch EB-5 chief, Aberdeen landlord, and antiquities collector. He gets a little background on Bollen's longtime partnership with Georgia businessman Pyush Patel, who became Bollen's VP at EB-5-running SDRC Inc. after former USCIS official Maurice Berez left the scene.

Perhaps most usefully, Montgomery helps us understand the motivation for taking the EB-5 program out from under the Board of Regents and into a private corporation: Bollen saw a chance to put more money in his pocket.

In 2009, Bollen resigned his job at the International Business Institute to work for his own company, SDRC Inc., which was given control of South Dakota's EB-5 program the same day Bollen quit.

Jim Smith, Northern State's president, said EB-5 had became Bollen's passion — "the work he was doing and that he liked to do."

Working on his own also had financial benefits for Bollen. As a state employee, Bollen earned a fixed salary for promoting EB-5. SDRC Inc. received more money the more investors it recruited for South Dakota projects. Its fees for projects included annual payments to SDRC of $10,000 per investor, per year — millions of dollars all told, given the almost 1,000 approved investors the company signed up [David Montgomery, "EB-5 Secrets Lie with Silent Joop Bollen," that Sioux Falls paper, 2014.08.10].

And remember, Bollen made sure he wouldn't have to compete with other bidders for that payoff by keeping his official, non-commission salary under the $50,000 threshold that would have required the state to seek bids for EB-5 services.

People lost jobs. Foreign immigrants lost investments. South Dakota taxpayers lost $4.3 million. But EB-5 promoted all sorts of economic development in the Joop Bollen household. And it helped Emory University get a really nice mummy mask.

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Want more answers on the GOED/EB-5/Benda scandal? So do South Dakota's newspapers. Four—four!—big dailies across the state say the Legislature is not faithfully executing its charge to investigate the strange shuffling of EB-5 visa investment money that resulted in a bankrupt beef beef plant and a dead man.

The Yankton Press & Dakotan says Attorney General Marty Jackley's revelation that he was preparing to arrest Richard Benda before the former GOED chief's death in October 2013 raises questions the AG and the Legislature should be asking:

...why didn’t this come out many months ago as investigations at the state and federal levels began digging into this matter? This makes very little sense, and adds a new, frustrating mystery to this complex tale of corruption and suicide.

...Last week’s admission by the attorney general brought a curious new light to this subject, but the state doesn’t seem overly curious to wonder why it came out now and what else — if anything — had yet to be revealed.

South Dakotans deserve the whole story. At least they need to know that the veins of evidence have been thoroughly mined. Jackley’s actions last week suggest they haven’t ["EB-5: Why Did This Take So Long?Yankton Press & Dakotan, 2014.08.04].

(I've outlined many of the questions the Legislature has refused to ask here.)

The Watertown Public Opinion observes the 40th anniversary of Richard Nixon's resignation by backing my opinion that GOED/EB-5/Benda is South Dakota's Watergate:

The question yet to be asked, at least publicly, was how Benda could have done what he did without raising eyebrows until former Gov. Mike Rounds left office — he was the one who appointed Benda to his positions — and Dennis Daugaard became governor. Daugaard didn’t re-appoint Benda and it wasn’t too much later that the EB-5 scandal started heating up.

One can’t help wonder how Benda could do what he did without the help, or at least knowledge, of others. Were officials at Northern Beef Packers in Aberdeen, the recipients of EB-5 money, involved? How about SDRC President Joop Bollen, a private company in Aberdeen entrusted with handling EB-5 funds and making sure they got to where they were supposed to go? And how could a portion of the grant money intended for Northern Beef end up being diverted to SDRC in early 2011 to pay Benda’s salary in his new job at SDRC without raising red flags somewhere in state government?

Amazingly, no one on the Legislature’s Government Operations and Audit Committee, the group the attorney general addressed last week, asked him who else, if anyone, was involved, and Jackley said nothing about whether Benda acted alone or had help.

...So in the spirit of 40 years ago and taking liberty with paraphrasing, when it comes to EB-5, “Who knew what and when did they know it?” You’d think that question would be at the top of someone’s list. We can think of more then a few people who ought to be asking that question ["What Did They Know and When Did They Know It?" Watertown Public Opinion, 2014.08.04].

The Aberdeen American News, speaking from the scene of the crime (proverbially and perhaps literally), dishes outright ridicule and shame on South Dakota Republicans for stonewalling the investigation of a scandal in their own backyard:

While the GOP has been quite vocal about such “scandals” as “Benghazi,” “Obamacare” and Common Core, state Republicans are turning down the chance to investigate a real, live scandal in their own backyard.

One they actually have a chance to do something about.

But they don’t want to know anything more.

The EB-5 controversy has been a black mark on South Dakota and state leadership. It is a complex issue and investigation, made more cumbersome by the tangled personal and/or political relationships of former Gov. and Senate candidate Mike Rounds, Gov. Dennis Daugaard, Jackley and Benda.

We can’t believe that state legislators know all there is to know about how the state used EB-5, and who could have stopped its misuse.

What’s more galling is that those lawmakers don’t think you need to know anything more.

For shame ["GOP Fails on EB-5 Scandal," Aberdeen American News, 2014.08.06].

And this morning the Rapid City Journal, the paper I feel most comfortable dismissing as a Republican rag, looks its diehard conservative readership in the eye and says Democrat Susan Wismer is right and that Republicans should answer our questions about GOED, EB-5 and Benda:

The legislative panel should subpoena members of both the Rounds and Daugaard administrations who were involved in the EB-5 visas-for-investment program so the public can hear for themselves what was going on rather than be told what happened by parties who may have an interest in controlling the flow of information.

That doesn’t necessarily mean that there’s more to the story than Benda’s alleged misconduct. But when the Legislature’s committee -- which is tasked with finding out what went on in the EB-5 program and report its findings to the public -- goes into executive session and refuses to hear from anyone other than the attorney general, it invites speculation that we’re not being told all the facts ["Does EB-5 Probe Stop at Benda?" Rapid City Journal, 2014.08.07].

The GOED/EB-5/Benda scandal is real. It lost real money. It destroyed real jobs, It led to one very death. Mike Rounds, Dennis Daugaard, Marty Jackley, Joop Bollen, and everyone else involved in this scandal should answer our questions publicly so that we can understand what went wrong, hold accountable whoever is responsible, and forge better policy in the future.

35 comments

Senator Larry Tidemann (R-7/Tidemann) acts like he's afraid of his own shadow. He chairs the Legislature's Government Operations an Audit Committee. His committee has the power to subpoena witnesses to investigate crimes, corruption, and just plain sloppy work in state government.

Yet, as was the case in June, Senator Tidemann keeps looking for excuses not to use that subpoena power. Heading into today's GOAC meeting, during which the committee is supposed to discuss financial misconduct in the Governor's Office of Economic Development and the EB-5 visa investment program, Senator Tidemann tells David Montgomery that he doesn't think he can subpoena EB-5 chief Joop Bollen:

Tidemann said his committee has a limited scope in terms of investigating a complex scandal that combines government and private business.

“We are not the court system,” Tidemann said. “We can bring in things that deal with state government. I can’t bring you in to talk about your private funds. I don’t think that’s in the authority of GOAC” [David Montgomery, "," that Sioux Falls paper, 2014.07.29].

Even though Kurt Evans has taken the weight off my shoulders, permit me to do the attorney general's job for a moment.

GOAC, the Legislature, and all sorts of other public agencies have subpoena power:

1-26-19.1.   Administration of oaths--Subpoena powers--Witness fees--Disobedience of subpoena. Each agency and the officers thereof charged with the duty to administer the laws of this state and rules of the agency shall have power to administer oaths as provided by chapter 18-3 and to subpoena witnesses to appear and give testimony and to produce records, books, papers and documents relating to any matters in contested cases and likewise issue subpoenas for such purposes for persons interested therein as provided by § 15-6-45. Unless otherwise provided by law fees for witnesses shall be as set forth in chapter 19-5 and be paid by the agency or party for whom the witness is subpoenaed.

Failure of a person to obey the subpoena issued pursuant to this chapter may be punished as a contempt of court in the manner provided by chapter 21-34 [South Dakota Codified Law 1-26-19.1].

The Legislature itself acknowledged GOAC's subpoena power in HCR 1010, the resolution the Legislature passed last February to assure us that the Legisalture would do something about the GOED/EB-5 scandal and to forestall pressure for immediate and firmer action against GOED and SDRC Inc.:

...the South Dakota Legislature requests the Joint Committee on Government Operations and Audit to conduct hearings on issues related to the Governor's Office of Economic Development, beginning this 89th Legislative Session upon receipt of three independent audits. Hearings may include a review of all available audits and other information, ordering of additional audits, questioning of persons involved in related economic development projects, and opportunities for public testimony. The committee's powers to summon witnesses and issue subpoenas may be exercised as necessary... [2014 HCR 1010].

Review the rules of procedure for subpoenas in Chapter 15-6, and you find no language exempting private parties or private funds from subpoena. Senator Tidemann may defend his subpoenal reticence with SDCL 2-6-4, which defines the scope of GOAC's investigative power:

2-6-4. Investigative powers of Government Operations and Audit Committee. The Government Operations and Audit Committee may examine all records and vouchers, summon witnesses, and thoroughly examine all expenditures and the general management of each department [SDCL 2-6-4].

That statute refers to government departments. But remember, everything Bollen did in managing EB-5, even after he and Richard Benda finagled EB-5 authority into a private entity to better shield their get-rich-quick schemes from public oversight, he did under authority granted solely by a state contract with the Department of Tourism and State Development (now GOED). The funds Bollen managed were authorized by the state. The $989,946 indemnification fund that Bollen's SDRC Inc. is still holding belongs to the state.

Senator Tidemann, this isn't hard. Governors Rounds and Daugaard allowed the privatization of a state program. Under Bollen, SDRC Inc. was carrying out the functions of a state department. To suggest that state functions are rendered immune from state oversight by handing them to private contractors creates a perverse incentive and escape for corrupt state officials.

Subpoena Bollen. Find out how he used his state authority.

22 comments

Rep. Susan Wismer got the Government Operations and Audit Committee to add the GOED/EB-5/SDRC scandal to its agenda at the last minute last week. The conversation centered around whether the committee should subpoena Joop Bollen, the head of SDRC Inc., the private firm that Bollen spun off from the public agency he ran for the state to manage EB-5 visa investments in South Dakota.

GOAC Chairman Senator Larry Tidemann (R-7/Brookings) is trying to find out whether Bollen is worth subpoenaing:

Tidemann, R-Brookings, said he met Tuesday with state Attorney General Marty Jackley.

Tidemann said he has asked Jackley to present a subpoena template to the Legislature’s committee on government operations and audit.

That could happen at the committee’s next meeting July 29.

...Tidemann said the goal of a briefing by Jackley will be to explain to the committee whether Bollen would provide any useful testimony if a subpoena is issued [Bob Mercer, "Legislative Inquiry on EB-5 Might Seek Subpoena," Rapid City Journal, 2014.06.21].

Joop Bollen in China, April 2009. Downloaded from Facebook 2014.06.23

Joop Bollen in China, April 2009. Downloaded from Facebook 2014.06.23

That Senator Tidemann would turn to Attorney General Jackley to tell the committee whether Bollen has any information worth hearing indicates some two key assumptions:

  1. AG Jackley has information from and about Bollen that he hasn't shared with the rest of us.
  2. AG Jackley has asked Bollen all the relevant questions and looked for all the relevant documents that would help the public understand what he and Richard Benda were up to as they tried to get EB-5 dollars for huge projects like Northern Beef Packers, the Hyperion refinery, and the Keystone XL pipeline.

#1 is quite possible. #2 seems far less likely. AG Jackley has demonstrated his less-than-keen interest in investigating Bollen's management of the EB-5 program, claiming that he has no business inquiring about a fundamentally federal program.

Chairman Tidemann and the Legislature should not feel bound by the Attorney General's lack of curiosity. Bollen was the central figure in the GOED/EB-5/SDRC scandal. If anyone can tell us what happened, he can. Even if he would appear under protest and plead the Fifth to every question Chairman Tidemann, Rep. Wismer, and the other members might pose, Bollen needs to get the message that he worked for the state and that he must answer to the state. GOAC and the public have a right to look Bollen in the eye, ask "What the heck were you and Benda doing?" and hear his response, for the record.

Don't wait for the translation, Larry: issue the subpoena.

16 comments

Gordon Howie starts our week off right by airing Part 2 of our conversation about the EB-5 scandal, wherein we discuss the state documents Joop Bollen took AWOL and other details of the public–private transition of the EB-5 program:

You can view Part 1 here.

5 comments

Jonathan Ellis has a treasure trove of documents from the U.S. Customs and Immigrations Service exposing the corruption in South Dakota's EB-5 visa investment program. Last week Ellis found the connection between EB-5 and Keystone XL. Yesterday, Ellis revealed similar EB-5 abuses related to Iberdrola's South Dakota wind farm.

SDRC Inc., the private company the Rounds and Daugaard Administrations contracted to run EB-5 in South Dakota from 2009 to 2013, wanted to turn Iberdrola's Buffalo Ridge II project in Brookings and Deuel counties into their next big money-making project. SDRC Inc. exec Joop Bollen and state economic development chief Richard Benda had lined up 200 Chinese investors. But Iberdrola completed the project by 2010, without any EB-5 money. Bollen and Benda were trying to get EB-5 money as a reimbursement for Iberdrola, showing that, much like with TransCanada and Keystone XL, Bollen and Benda weren't using their authority to promote new economic development; they were simply looking for ways to draw big commissions for themselves and their pals by making EB-5 investments happen, regardless of necessity.

Ellis reports that USCIS sensibly rejected the EB-5 request for Iberdrola's finished project. But Bollen kept pressing for his profit... and he got South Dakota's biggest politicos, Republican and Demcorat, to back him:

When U.S. Citizenship and Immigration Services delayed its decision on whether the project would qualify, SDRC's founder, Joop Bollen, appealed to the state's highest elected leaders to intervene. The offices of Sens. Tim Johnson, John Thune, Rep. Kristi Noem and Daugaard responded with a letter signed by all of them asking the federal agency to review the denials it had rendered to the green-card-seeking investors.

Meanwhile, Bollen sent a memo to the investors of the project begging them not to withdraw their money, telling them repeatedly that South Dakota's "political powers" were working on their behalf.

"I can assure you," Bollen's memo said, "that the SDRC and your attorneys, together with the state of South Dakota's governor and its senators will press for and succeed in overcoming the USCIS' erroneous denial and achieve the desired approval of all your cases."

Bollen's memo badly overstated the situation. U.S. Citizenship and Immigration Services did not reverse its denial. Many of the investors in the project withdrew their money or were redirected to other EB-5 projects sponsored by SDRC. About two dozen of them moved their money to the Northern Beef Packers project, where they lost their investments after the plant declared bankruptcy last year [Jonathan Ellis, "S.D. Political Muscle Was Tapped to Intercede for EB-5," that Sioux Falls paper, 2014.04.27].

We have Bollen trading on the authority of South Dakota's elected officials to cling to his profit-making scheme. And we have our Governor, our Congresswoman, and both of our Senators playing along.

Senator Johnson is already stepping down. Senator Thune doesn't face the voters until 2016. But we have the opportunity to fire Rep. Noem and Governor Daugaard for their complicity in the EB-5 abuse of power right now.

*   *   *

Your investment is safe, your achieving the green card is within reach, and the joint efforts of SDRC, Hanul Professional Law, the state of South Dakota, and its political delegation in Washington, D.C. are being marshaled to achieve victory and success on your behalf [Joop Bollen, memo to Iberdrola investors, quoted in Ellis, 2014.04.27].

14 comments

I had a long drive yesterday, with plenty of time to think about Joop Bollen, Richard Benda, and their scheme to get rich funneling EB-5 money to TransCanada's Keystone XL pipeline. But it only took me about ten minutes out of the driveway to realize that the EB-5/KXL overreach was an outright violation of Bollen's contract with the state and the whole purpose of the state economic development office.

Recall the terms of Bollen's contract with the Governor's Office of Economic Development (the contract inked while Benda was GOED/DTSD chief, the contract that took Bollen's EB-5 operations private as SDRC, Inc., and out from under more strict state scrutiny):

A. DTSD is an agency and instrumentality of the State of South Dakota empowered and directed to promote economic development in South Dakota and to enter into public-private partnerships for the purpose of promoting economic development in South Dakota.

...D. DTSD desires to contract with SDRC for the pirpose of having SDRC administer the Regional Center and the EB5 Program and to market the EB5 Program for the benefit of South Dakota, all in conformity with applicable statutes and regulations [Department of Tourism and State Development, contract with SDRC, Inc., 2009.12.22].

Bollen and Benda sought to expand SDRC beyond South Dakota's borders in order to solicit EB-5 funds for stretches of the Keystone XL pipeline and pumping stations in Montana and Nebraska. The state contract allowed Bollen to work on EB-5 "within the Regional Center's territory," but the above text, GOED's mission statement, state law, and common sense make clear that South Dakota's state economic development authority is supposed to promote economic development in South Dakota. Let's look at the statute establishing GOED's purpose:

The Governor's Office of Economic Development shall forge a private-public partnership among state government, local communities, higher education, and the private sector to create jobs that create goods and services for use within the state and for export outside the state, which results in the creation of new wealth [SDCL 1-53-3].

Funding Bollen and Benda's EB-5 promotion to lay pipe in Montana and Nebraska would not "create jobs that create goods and services for use within" South Dakota.

Remember also the basic tenet of government promotion of economic development: we spend tax dollars to make things happen that wouldn't happen without government help. TransCanada has said it needs no government assistance to build Keystone XL. TransCanada is an oil company. They are stinking rich. They've planned to fund the pipeline out of cash flow. And they've planned to build Keystone XL through South Dakota all along.

TransCanada didn't need any government incentive or crutch to choose a pipeline route through South Dakota. Bollen and Benda's desire to divert EB-5 money to TransCanada would not have created a single job or cranked out a single dollar of tax revenue that TransCanada didn't already plan to plow into South Dakota. The only unique benefit of connecting EB-5 investment with Keystone XL would have been more money in the pockets of Joop Bollen, Richard Benda, and their friends in the EB-5 money machine.

48 comments

The GOED/EB-5/Benda scandal has connections to Northern Beef Packers, mega-dairies, Hutterites, Hyperion, the Philippines, and Mike Rounds. Now we add Keystone XL.

Jonathan Ellis fills our Easter baskets with the revelation that Rounds pals Joop Bollen and Richard Benda were scheming to connect their money-making EB-5 visa program to TransCanada's tar sands oil pipeline:

Joop Bollen, SDRC’s founder, applied to the United States Citizenship and Immigration Services — which administers the federal EB-5 program — for permission to add TransCanada as a qualifying business under the program, which enables wealthy foreigners to get green cards for investing as little as $500,000 in qualifying projects.

Besides trying to help Trans-Canada, the same application asked to dramatically expand SDRC’s geographic area of coverage. Bollen sought federal permission to expand SDRC to Montana and Nebraska in a bid to provide financing to the Keystone XL pipeline from the Canadian border to Nebraska’s southern border. SDRC’s contract with South Dakota to run the EB-5 program was supposed to be “for the benefit of South Dakota,” according to the contract’s language [Jonathan Ellis, "Documents Link State-Sponsored Company, Keystone XL," that Sioux Falls paper, 2014.04.19].

Bollen applied to include Keystone XL in May 2011. Governor Dennis Daugaard knew nothing about it... which is what we would expect when Mike Rounds let his pals take the EB-5 program private and hide their work from public oversight.

The EB-5–Keystone XL connection makes perfect sense. Recruit Chinese investors to pour money into a pipeline that will bring North American oil to their homeland. Send a 10% commission to Bollen, Benda, and other friends of Rounds and Daugaard, who cheerlead the pipeline and do nothing to block TransCanada's eminent-domain predations on South Dakota landowners.

Ellis reports the cost of Keystone XL in South Dakota alone may be $920 million. That would have allowed Bollen and Benda to recruit up to 1,840 EB-5 investors at $500,000 a pop. Recruiting investors for a huge industrial project that's received oodles of global press and is guaranteed to make money would have been much easier than selling the merits of some local beef plant or a Deadwood casino that no one outside South Dakota has ever heard of. And those investors would have paid Bollen, Benda, and SDRC's lawyers $45,000 each, for a possible take of $82.8 million.

TransCanada, to their credit, said no thanks. As with Hyperion, Bollen and Benda just couldn't strike oil with their visa investment scheme. But the EB-5 story keeps on growing. Stay tuned.

5 comments

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