David Montgomery is also poring over the interactions catalogued in the intriguing set of Regental invoices made public by Rep. Kathy Tyler (D-4/Big Stone City) this week. In addition to demonstrating the state's February 2009 cognizance of Joop Bollen's misdeeds and revealing that Bollen resigned briefly from his own SDRC Inc. in spring 2009, Montgomery now adds the revelation that Bollen was pressing the Regents to turn his contract on its head and grant him immunity from legal consequences for the trouble he caused the state with his EB-5 machinations.

I'll have more on that when I have time to excerpt the noteworthy invoice passages. Suffice it to say that the Regents say they've cut no deal with Bollen.

Just as eyebrow-raising is the below-the-fold statement by Attorney General Marty Jackley along the same line:

Other authorities investigating EB-5 said they haven't given Bollen any immunity from prosecution or lawsuits.

"The attorney general has not granted any (criminal) prosecutorial immunity in relation to the EB-5 matter," Attorney General Marty Jackley said Thursday [David Montgomery, "Bollen Sought Indemnity in EB-5 Lawsuit," that Sioux Falls paper, 2014.09.25].

Wait a minute: that's a pretty forward statement about a criminal investigation, isn't it, AG Jackley?

Jackley said he ordinarily doesn't disclose immunity deals but would confirm Bollen's lack of a deal "because the thing is of such public nature" [Montgomery, 2014.09.25].

Oh my goodness! Isn't "public nature of the story" exactly the argument Bob Mercer has been making about why you ought to make an out-of-the-ordinary release of your records in the investigation of Richard Benda's suspicious death?

Jackley is showing a pattern: when an unusual release of records forwards his party's narrative or need for cover, he's an open-records champion. But when we want answers to real questions that might not reflect well on his office or his fellow candidates, we get bupkis.

Gubernatorial spokesman Tony Venhuizen joins AG Jackley in spilling select beans, telling Montgomery that Governor Daugaard hasn't given Bollen any deal, either, and that the Governor nuked the state's contract with Bollen and SDRC Inc. last year against Bollen's wishes.

I don't know, Joop: the Regents, Jackley, and Venhuizen don't sound like they want to cut you any slack. Maybe it's time for one more charm campaign: why not call the blog, publicize your side of the story, and tell us what orders you were following, and which of your superiors gave those orders?

9 comments

An invoice from the California law firm hired by the Regents to untangle the legal mess created by state employee and EB-5 investment director Joop Bollen hints at an effort by Bollen to hide his involvement in an illegal conflict of interest during that litigation.

In an invoice submitted April 13, 2009, James Lynch of San Diego law firm Garcia Calderón Ruíz bills the Board of Regents for $7,718.60 of legal services performed in March, 2009, on Darley International v. SDIBI. During March, 2009, the state paid Bollen to direct the SDIBI. Bollen also owned and operated SDRC Inc., the private company he formed and contracted with (illegally, without authorization, now say the Regents) in January 2008 to carry out SDIBI duties. But in the midst of the Regents' inquiry into his activities to build its defense from Darley, Bollen apparently distanced himself from SDRC Inc.:

James Lynch, Garcia Calderón Ruíz invoice #2381, 2009.04.13, excerpt. (Click to enlarge.)

James Lynch, Garcia Calderón Ruíz invoice #2381, 2009.04.13, excerpt. (Click to enlarge.)

On March 11, 2009, Lynch reviewed correspondence discussing Joop Bollen's resignation from SDRC Inc. On April 7, the state received a statement of change replacing Bollen with his crony James Park as SDRC Inc. president and registered agent. That appears to fit with the March suggestion that Bollen was resigning.

But then on June 1, 2009, with Darley's voluntary withdrawal of its federal lawsuit on the horizon, Bollen's lawyer Jeffrey Sveen sent the state articles of amendment restoring Bollen as the sole director of SDIBI's strange private doppelganger.

Read that sequence of events again: state employee Bollen violates conflict of interest laws by signing a contract between his state agency and his own private company. When his bosses find out, he takes his name off the private corporation's papers. When his bosses are close to cleaning up the courtroom mess he created, he puts his name back on.

Bollen then held both his state job and his private job until December 21, 2009, when he quit SDIBI and, the next day, signed a no-bid contract to keep SDRC Inc. doing SDIBI's job.

You cannot read this and tell me nothing fishy was going on. And you can't look at the players involved—lawyers from Northern State University, the Board of Regents, the Attorney General's office, and, as of July 2009, the Governor's Office of Economic Development—and tell me no one in Pierre knew that fishy things were going on.

22 comments

We have probable cause, based on documentary evidence, that Joop Bollen committed a variety of crimes when he contracted the duties of his state job out to his own private company. Why hasn't the South Dakota Attorney General taken any action on these crimes?

The AG's office certainly can't claim ignorance; they've known about Bollen's questionable dealings since at least February 2009.

In January 2009, Northern State University and the Board of Regents learned that Bollen had gotten the state's International Business Institute sued by Darley International of California. The Regents immediately hired James Lynch of Garcia Calderón Ruíz from San Diego to get the Regents out of the arbitration that Bollen's concealment and bad lawyering had gotten the state into.

In an invoice dated March 30, 2009, Lynch charged the state $10,921.11 for work done on Darley International v. SDIBI. Lynch kindly itemized his 36.3 hours of labor that month. This excerpt (with my annotations) shows his first actions on behalf of the state:

James Lynch, Garcia Calderón Ruíz law firm, invoice 2335, 2009.03.30, excerpt. (Click to enlarge.)

James Lynch, Garcia Calderón Ruíz law firm, invoice 2335, 2009.03.30, excerpt. (Click to enlarge.)

On February 4, 2009, Lynch included "J. Hallem" on correspondence about rules and arguments he was researching for the state's defense. On February 5, he contacted J. Hallem to discuss an oath (probably the oath required to make him a special assistant attorney to represent the state in court) and other documents.

J. Hallem is Jeffrey Hallem, assistant attorney general, a "top member" of the attorney general's office in 2009 under Larry Long and now under Marty Jackley.

Lynch mentions Hallem's name 101 times in 16 GCR invoices from February 2009 to June 2010. The Attorney General's office was thus closely involved in reviewing the actions of Joop Bollen in running SDIBI and in forming his own private company to take over the duties (not to mention the profit-making opportunities) on which Darley thought it had dibs.

Hallem and the Attorney General's office thus would have known from February 2009, while Bollen was still an employee of the state, that Bollen was breaking laws. That knowledge would have passed to the new Attorney General, Mike Rounds's appointee Marty Jackley, on September 9, 2009, when AG Jackley had to renew Lynch's appointment as special assistant attorney general:

James Lynch, Garcia Calderon Ruiz law firm, invoice #2885, 2009.10.15, clip. (Click to enlarge.)

James Lynch, Garcia Calderon Ruiz law firm, invoice #2885, 2009.10.15, clip. (Click to enlarge.)

The South Dakota Attorney General's office has known for five and a half years that state employee Joop Bollen abused his position, broke rules, and exposed South Dakota to legal liability in his quest to enrich himself. Yet the Attorney General's office has not arrested or prosecuted Joop Bollen.

Why not?

*     *     *

Related Reading: During yesterday's readers theater at the Government Operations and Audit Committee meeting in Pierre, Rep. Mark Mickelson (R-13/Sioux Falls) showed similar signs of struggling to come to grips with reality:

"There are two things I think bother us," said Rep. Mark Mickelson, R-Sioux Falls. "The first is the appearance that (former Cabinet secretary Richard) Benda would have used his state position to procure employment. ... The other thing that happened is this contract ... that Joop Bollen may have signed with himself" [David Montgomery, "Stymied, Lawmakers Could Subpoena EB-5 Chief Bollen," that Sioux Falls paper, 2014.09.25].

May have signed? Rep. Mickelson, please review the January 2008 SDIBI-SDRC contract, which Joop Bollen really did sign. Really.

18 comments

As the press turns up the heat on the EB-5 scandal, Mike Rounds is looking for a new fall guy. His choice: the South Dakota Board of Regents.

David Montgomery reviews the Republican Senate candidate's public comments and his defensive responses to the Government Operations and Audit Committee's questions about his role in South Dakota's EB-5 visa investment dealings and finds the former governor pairing his claimed ignorance of the program with blame for the Regents' sloppy management:

"Based on (media) reports ... I was not aware the Regents were not totally involved with and aware of what was going on," Rounds told the Argus Leader last week. "If I had known about it (at the time), I probably would have asked, 'Where are you at, Regents?'"

...Rounds said he was "not surprised" that [former state employee and private EB-5 management contractor Joop] Bollen's contract wasn't brought to him. "Very few ever were," Rounds said.

"But ... it would surprise me if the Board of Regents was not aware of the fact that one of their employees had signed a contract and it did not have their due process of having an attorney review it and help to write it," Rounds said [David Montgomery, "Rounds: Regents Oversaw EB-5," that Sioux Falls paper, 2014.09.24].

Yes, Bollen technically worked for the Board of Regents on the Northern State University campus. But NSU business dean Clyde Arnold says that's not how Bollen really worked:

"He made good contacts with the Governor's Office of Economic Development, and we began to do things," Arnold said. "The next thing I know, he had branched out. ... By the time I moved on as dean (around 2005), he was almost working for GOED" [Montgomery, 2014.09.24].

Perhaps most importantly, where Rounds has dodged the real questions about the propriety of Bollen's EB-5 activities, Regents exec Jack Warner is saying straight up that Bollen's 2008 contract with himself was illegal:

"He did not have the authority to engage in those contracts," Warner said. "(That) means any contract he would have engaged in would then have to receive approval by either Northern or the Board. No such approval was sought and no such approval was granted" [Montgomery, 2014.09.24].

Whether or not Rounds or the Regents knew about Bollen's 2008 contract with his SDRC Inc., the Regents are saying Bollen had no authority to execute that contract. Doing business as SDRC Inc., Bollen thus profited from state authority that he had no legal right to use. That would suggest that the moment any executive found out about that illegal contract, that executive should have hauled Bollen to court and demanded that SDRC Inc. surrender any and all documents and emoluments received under that bogus contract.

The Regents and the state now know about that bogus contract. Why has the state not taken action to retrieve what never belonged to Bollen in the first place?

p.s.: If the Regents are responsible for South Dakota's EB-5 program and any misdeeds conducted thereunder, do the Regents also get to claim credit for the $600 million in capital investment and more than 5,000 jobs that Rounds attributes to EB-5?

22 comments

In an astute comment under John Tsitrian's vigorous critique of Mike Rounds's buck-passing, Wayne Gilbert says that the GOP Senate candidate appears to view the GOAC investigation of the EB-5 scandal as a campaign opportunity rather a serious legislative matter with legal implications.

Gilbert is right: Rounds's formal response to the Legislature's inquiry reads as if it were written by his campaign manager, not by his lawyer. Rounds makes campaign promises. He recites his own campaign propaganda as fact. He bullies lawmakers, threatening them with defamation charges for having the temerity to ask him questions (and it's debatable whether such charges can even be brought). He accuses Democrats of concocting conspiracy theories. And in snark that exceeds sloppiness, Rounds consistently writes "democrats" with a small d.

Enter Jeff Barth to focus Rounds's legal attention. Yesterday the Minnehaha County Commissioner filed a petition asking the United States District Court of South Dakota to order Mike Rounds, Aberdeen lawyer Jeff Sveen, and former Board of Regents exec Tad Perry to "preserve evidence" related to South Dakota's EB-5 program.

For the first time in the EB-5 scandal, Rounds is being called to account in court. Rounds may think he can politicize the GOAC hearings, but he doesn't dare try politicizing a federal courtroom. Facing a federal judge, Rounds needs to get serious about the facts and law surrounding the abuses of power that occurred under his administration. (He can start by reading legal eagle Todd Epp, who brilliantly explains the legal details of Barth's petition.)

51 comments

On September 16, 2014, Senator Larry Tidemann sent former governor Mike Rounds a batch of supplemental questions concerning his awareness of and involvement in activities related to his Office of Economic Development's use of the EB-5 visa investment program. The last question was this complicated query:

When you were served legal matters of the Darley petition in July of 2009 to force South Dakota into arbitration because of Joop Bollen's actions, why didn't you fire Joop Bollen and why didn't you initiate legal action against SDRC, Inc. which had pledged to hold harmless and indemnify the state of South Dakota? [Senator Larry Lucas, included by Chairman Larry Tidemann, Government Operations and Audit Committee, letter to Michael Rounds, 2014.09.16]

On September 22, 2014, Rounds responded to that question thus:

The governor's office "was not served". The BOR was [M. Michael Rounds, letter to GOAC Chairman Larry Tidemann, 2014.09.22].

"BOR" stands for Board of Regents, which was in charge of the South Dakota International Business Institute, which was directed by Joop Bollen, who got South Dakota in trouble by pretending he was a lawyer and losing the case Darley brought against the state in federal court in July 2008 (not the one Senator Lucas asked about). The Board of Regents was able to argue its way out of that trouble by arguing, in part, that Darley failed to deliver service on the right officers of the state—i.e., the Governor and the Attorney General:

In order to commence an action against the SDIBI or the Board of Regents, Petitioner Darley International, LLC ("Darley") was required by South Dakota law to serve both South Dakota's Governor and Attorney General. There is no evidence on record that either has ever been served with process in this action; in fact, the South Dakota Attorney General has no record of such service [James Lynch for Board of Regents, Memorandum of Support, Darley v. SDIBI, 2009.03.20].

The Regents' March 2009 memorandum footnotes SDCL 15-6-4(d) and adds:

There is no State statute designating another person to accept service of process for the Board of Regents [Lynch/BOR, 2009].

The Regents' argument persuaded Darley to dismiss its own petition in June 2009. But one month later, in July 2009 (this is the one Senator Lucas is talking about), Darley filed a similar complaint against SDIBI in Los Angeles County Superior Court.

Pause. Put yourself in Darley's lawyers' shoes. The company has paid you beaucoup bucks to spend a year suing this weird little South Dakota Ponzi scheme, and you find out your suit is invalid because, among other things, you didn't serve the Governor and the Attorney General of South Dakota. Darley says, "We want to try again. File another suit, and don't screw this one up." What do you do?

You turn the Regents memorandum into a checklist of things not to screw up, and Item #1 is, "Serve Governor Mike Rounds and Attorney General Larry Long."

Mike Rounds says his office was not served in Darley's July 2009 suit. But the Board of Regents said in March 2009 that it could not be served. State law said the Governor had to be served. And Darley's retread lawsuit moved forward, suggesting Darley served the proper entities the second time around... and suggesting that either I've missed some simple and obvious detail or Mike Rounds has erred in his recollection of s significant fact.

15 comments

Last weekend I posted on attorney Brandon Taliaferro's upcoming appearance before the South Dakota Supreme Court to ask that bogus criminal charges be expunged from his record. John Hult does good work this weekend explaining the many ways in which the state's petty refusal to expunge those charges acts as unjust punishment of an innocent man:

In an era of easy, online access to criminal records, past arrests and charges can haunt a person's housing, employment and education prospects for years, even when they don't lead to convictions.

"In a courtroom, everyone knows you're innocent until proven guilty, but the members of the public don't always differentiate between charges and convictions," said Tim Rensch, a Rapid City defense lawyer. "People draw conclusions just based on the existence of a charge."

Companies considering new hires will run a check of public records. If the potential employer sees an arrest record, he said, that's enough to take someone out of the running before they're ever able to say that a charge was dismissed [John Hult, "In South Dakota, Clearing Criminal Record No Easy Task," that Sioux Falls paper, 2014.09.20].

Leaving a false arrest on the record becomes an endless tax on the innocent citizen's ability to make a living, delaying and denying opportunities for no good reason. I note with dismay that Minnehaha County State's Attorney Aaron McGowan is willing to impose such extrajudicial pain:

"If I believe there's an arrest that should not have occurred, we'll agree to expungement," said Minnehaha County State's Attorney Aaron McGowan. "If I believe someone did it, but I can't prove it, I will resist" [Hult, 2014.09.20].

Suppose a friend or a neighbor does you wrong. You don't have the time or lawyer-money or court-actionable evidence to bring that person to court. But you take that wrong as reason not to trust or work with that person again. That's fine.

But as long as that person remains innocent in the eyes of the law, you should not get to sue the power of the state to impose any further burden on that person.

Related Goose and Gander Reading: If you review Taliaferro's brief to the court, you learn that prosecutor Michael Moore asked for and the court granted expungement of Wendy Mette's eleven felony charges of abuse or cruelty to a minor. The prosecutor had testimony from her foster children that she had known about the sexual abuse her husband Richard had committed against them. In his brief to the Supreme Court, Taliaferro notes that the state had stronger evidence against Wendy Mette and perhaps did not even have the technical statutory grounds on which to allow expungement of her record.

When Taliaferro requested expungement, the state submitted an affidavit from Mette as justification for rejecting Taliaferro's request. Judge Gene Paul Kean viewed Mette's affidavit dimly:

In her conclusion, Wendy writes: "Mr. Taliaferro altered our lives forever, and he has not even begun to show any type of understanding of what exactly happened, nor has he made any offer or attempt to take any responsibility for his direct part in it." The reaction this court has is: Really? Taliaferro altered her life forever? Has Wendy forgotten about Richard who is in prison for sexual assaults on the children? Richard, who Katrina indicated was continuously assaulting her and at one time indicated that Wendy saw the episode and did nothing which was reported to DSS? While Wendy disagrees with this report, it was the information that the Brown County States Attorney's Office had at hand when the cases were commenced. Obviously Wendy is highly selective in recalling the history of events. This court should and does give little weight to this affidavit which is self-serving and inconsistent with the facts from the various cases involving her, Richard and the children [Judge Gene Paul Kean, expungement ruling, quoted in appellant brief, Taliaferro v. South Dakota, 2014.06.02, p. 17].

Mette's expungement was filed August 22, 2012, the same day as the pre-trial hearing at which, according to Taliaferro's brief, DCI agent Mark Black said the state had no evidence that Taliaferro had committed the crimes with which he was charged. According to a footnote in Taliaferro's brief (p. 4), "After State dismissed Wendy's eleven felony child abuse charges, consented to expungement of her record and placed the child abuse victims back in her legal and physical custody, State called Wendy as a witness at the grand jury that indicted Taliaferro."

The state of South Dakota seemed motivated to free Wendy Mette of the burden of punishment for crimes that the State never proved in court that she committed. It is odd they do not feel the same motivation to provide Brandon Taliaferro the same justice.

11 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

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