I think we need to talk out in the hall—New Angus CEO Doug Cooper (far left) and executive chairman Keith DeHaan (far right) consider what they'll say on the record to Brown County Commission on their effort to resurrect the former Northern Beef Packers processing plant in Aberdeen, SD, 2015.02.17.

I think we need to talk out in the hall.... New Angus CEO Doug Cooper (far left) and executive chairman Keith DeHaan (far right) consider what they'll say on the record to Brown County Commission on their effort to resurrect the former Northern Beef Packers processing plant in Aberdeen, SD, 2015.02.17.

Walk into a room with a press tag and a tripod, and the first thing New Angus officials will say to you is, "We're not giving interviews at this time." Ask to record their comments to the Brown County Commission about their plan to reopen the former Northern Beef Packers processing plant, and the first thing they'll ask for is an executive session.

Brown County Commission, prior to meeting, Aberdeen, SD, 2015.02.17

Brown County Commissioners prepare for the excitement of the New Angus briefing and local blog coverage, Aberdeen, SD, 2015.02.17

New Angus CEO Doug Cooper and executive chairman Keith DeHaan came to this morning's Brown County Commission meeting at the courthouse in Aberdeen to update commissioners on their progress toward processing beef on the south side of town. Cooper and DeHaan seemed to think that their update, listed on the agenda as a public item item and recorded like every Brown County Commission meeting for posting on YouTube, would be a confidential matter. Alerted to the presence of a local blogger and the commission's own camera, Cooper and DeHaan indicated they'd prefer to speak in executive session. Commission chairman Duane Sutton said the commission could consider that. I asked Commissioner Sutton if the New Angus update would fall under any of the exceptions for legal or contractual matters that allow public boards to close their meetings. Commissioner Sutton said he'd check with the state's attorney.

Ten minutes later, the meeting began, and it remained open.

Among the highlights of these public comments:

  • CEO Cooper sticks with previous projections to reopen the plant this year. He says if the plant doesn't open in 2015, he and DeHaan "probably be sitting here, because it means we didn't get it done. It's not anybody's fault but ours. We accept that." Cooper declines to give an exact date, because he says that disclosing an exact date could "send a wrong signal" that would cause producers to make decisions and investments that could cost them thousands of dollars. "We're trying to fill a bucket with credibility and not drain it in one shot." To that last comment, one commissioner replied, "That would be something new for out there."
  • CEO Cooper says the plant was set up properly and was USDA-inspected. He says New Angus is only making minor changes to accommodate the production plans dictated by their current market analysis.
  • Commissioner Doug Fjeldheim asked if New Angus is primarily targeting the export market. CEO Cooper said yes, primarily Asia, although the Canadian and Mexican beef markets are also open and cheaper to export to. Cooper says Brown County has "the finest cattle in the world" and that the Asian market is particularly hungry for marbled beef younger than 30 months.
  • Commissioner Sutton asked if New Angus plans to operate at the 1500-head-per-day capacity. Cooper said yes: "That's what the engineer plate says."
  • Commissioner Rachel Kippley said a lot of folks come into her tax office who worked for Northern Beef Packers, have stuck around Aberdeen doing other jobs, and are ready to go back to work at the plant when New Angus opens. DeHaan said the handful of staff they've brought in say they know others around the community who are ready to come back to work when the plant reopens.
  • Chairman DeHaan notes that he looks forward to discussing cattle deals with Commissioner Kippley and her husband Jeff. No conflict of interest there when time comes to check on the beef plant's compliance with zoning and environmental regulations or to spend county dollars on road upgrades around the plant....
  • CEO Cooper said he doesn't know what happened in Northern Beef Packers' operations, but he says New Angus's operations are "going to be transparent." Looking forward to that transparency, I presented my card to Mr. Cooper and said that I'll be happy to come for a tour of the plant when he and DeHaan are ready to give interviews.
43 comments

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 were 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 & Schutz law 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 in print, 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.

47 comments

As the Government Operations and Audit Committee sifts through the doublespeak and shifting narratives they have received from Joop Bollen, Mike Rounds, and everyone else in state government about the EB-5 program, they should consider the commentary of Aberdeen city councilman Mark Remily. Responding to the fantastical claims of Rory King, attorney for bankrupted EB-5 beneficiary Northern Beef Packers, Remily says that EB-5 and NBP may have brought money for the lawyers, but not for regular folks around Brown County:

Unlike the local family-owned and operated equipment rental business that lost $4,165.27. Or the local dry cleaner with five employees that didn’t receive raises the past year because NBP stuck their small business for $9,443.98. Or, how about the local roofing contractor still waiting for his final $15,636.82 for work performed over a year ago? The list goes on totaling $1,844,228.68. More than 300 plant workers went unpaid. These losses total $104,608.18. Nine states and one territory went without child support payments held out of wages, that total was $5,429.95 [Mark Remily, "Truth Is Missing in Beef Plant Defense," Aberdeen American News, 2014.11.07].

Remily also questions the excuse that NBP was delayed by the 2008 recession.

“Then came the 2008 banking crisis.” What project developer ever develops, and commences building, any project and then lines up financing for said project? And, a $115 million project at that! [Remily, 2014.11.07]

Remily also finds it deceptive that NBP boosters, right up to NBP godfather Senator-Elect Mike Rounds, have tried to poo-poo the failure of NBP by promising future gains:

“Ninety million was raised and spent in Aberdeen.” It is hard to believe that $90 million in total was spent building this plant. There is no possibility that $90 million was injected into the economy of Aberdeen. Quite the opposite. A $115 million “state of the art” failure was injected into the Aberdeen economy. Just ask the various business and the many former unpaid employees how much money was injected into their economies.

“Aberdeen will have a thriving beef processing facility in the near future.” How many more weeks, months, or years will we hear this? Mr. King, face the facts, the plant pretty much closed before it ever even opened. If the facility ever does re-open it will be nothing more than a “kill plant.” The product produced will be nothing more than tubes of hamburger. Not the promised “South Dakota Certified” fine beef we were all told to expect [Remily, 2014.11.07].

The facts on the ground in Aberdeen right now are that a beef-packing plant opened, failed, and now sits empty. Aberdonians and South Dakotans lost money and jobs. And a few insiders—state employees and lawyers—lined up hefty profits for themselves.

GOAC won't follow that money or the trail of lies the moneymakers have laid. Reporters will.

23 comments

KELO misreads its own poll on the effect of Northern Beef Packers and EB-5 on the U.S. Senate race. "EB-5 Has Little Effect on Voters," says the headline, introducing Ben Dunsmoor's dismissal of the potency of the issue. But we can easily read the actual responses to say the opposite, that the Northern Beef Packers/EB-5 scandal EB-5 has had a significant effect on how South Dakotans will vote.

"How much of an effect have the issues raised about the funding that the Northern Beef Packers Plant in Aberdeen received through the EB-5 immigration program had on your voting decision on the South Dakota Senate race? Have they had a major effect, some effect or no effect at all?"
Major Minor No Effect Not Familiar
State 21% 31% 45% 3%
SENATE VOTE
Rounds Voters 9% 16% 73% 2%
Weiland Voters 41% 34% 23% 2%
Pressler Voters 19% 56% 22% 3%
Howie Voters 13% 44% 37% 6%
Undecided Voters 9% 55% 31% 5%
SEX
Men 19% 32% 48% 1%
Women 23% 30% 43% 4%
PARTY
Democrats 28% 41% 28% 3%
Republicans 15% 25% 57% 3%
Independents 23% 26% 47% 4%

First, consider the question. KELO (via Mason-Dixon) asks voters whether NBP/EB-5 is affecting their voting decision. That question doesn't just measure the impact of the issue; it also measures the dedication of voters to their candidates. NBP went bankrupt and EB-5 went scandal after Rounds and Weiland started campaigning. Many voters committed to those candidates before NBP/EB-5 could have an effect on their decision. Democrats and Republicans have partisans who will stick by their party no matter what. I've written more about Northern Beef Packers and EB-5 than most reporters, but my honest response to this survey question would have been "No Effect." Even in the alternative universe where Joop Bollen didn't run NBP into the ground and Richard Benda retired quietly to a beach in the Philippines, I'd still be voting for Weiland.

Second, consider the numbers. A majority say NBP/EB-5 has some effect on their vote. In every subgroup except for Rounds voters and Republicans, more people say the issue is has some effect than say it has no effect. NBP/EB-5 matters to 75% of Weiland voters and Pressler voters. Nobody should expect one issue to resonate with every voter, but having a "major" effect on one in five voters, the vast majority of whom swing away from the favored Republican frontrunner in South Dakota, tells me that NBP and EB-5 are worth every bit of attention the Weiland and Pressler and Howie campaigns are willing to give it.

I would argue that Rounds's challengers themselves have not hit Northern Beef Packers and EB-5 as hard as they could. It's already swaying a sizable chunk of the electorate, against all the advantages Republicans have, to Weiland and Pressler. There is still time to pull some of 31% "minors" over to the 21% "majors" and use the endemic corruption exposed in the NBP/EB-5 scandal to pull Rounds's 9% lead back to the side of good, honest government.

27 comments

Some of my readers think David Montgomery has sold out to the good-old-boys' network on whom he and his employer depend for access and advertising dollars.

If that were the case, I don't think that Sioux Falls paper would slap this headline on Montgomery's latest EB-5 report:

Rounds knew of Benda conflict in final days of term

This headline comes not from diligent investigative reporting but from Mike Rounds's own mouth. The Republican Senate candidate said in yesterday's live interview with 100 Eyes that he knew Richard Benda, his economic development chief, was going to work for an "investor" in Northern Beef Packers, the stalled economic development project toward which he directed $2.36 million in state grants during the last few weeks of his governorship.

Benda didn't identify which investor he would be working for, and Rounds said he didn't press. Benda went to work for SDRC Inc., a company managing EB-5 foreign investments for projects, including Northern Beef. On Tuesday, Rounds said he now feels Benda "misled" him by not disclosing where he was going.

At the time, though, Rounds didn't ask Benda for more details.

"I said 'Good, I'm glad to hear that he's going to be actively involved in the beef plant,'" Rounds said in a live interview on the Argus Leader's "100 Eyes" online show.

Rounds' focus at the time, he said, was on which of his Cabinet secretaries "should I meet with to find out if they need assistance in finding other opportunities" — not whether they were "leaving government with a conflict of interest," as Argus Leader managing editor Patrick Lalley asked Rounds. Benda already had lined up a job, so Rounds said he focused attention elsewhere [David Montgomery, "Rounds Knew of Benda Conflict in Final Days of Term," that Sioux Falls paper, 2014.10.22].

Permit me to paint a managerial scenario, and you tell me whether I'm viewing the situation with hindsight or South Dakota common sense:

  1. I'm an outgoing governor, tying up loose ends in the Capitol.
  2. Among the loose ends are various fiscal and policy decisions to keep one of my marquee legacy projects alive. It's running over two years late and way over budget.
  3. I'm taking a risk writing some pretty big checks to keep the legacy project alive.
  4. I can't afford any bad press dragging this precarious project down.
  5. I find out one of my cabinet members who's been key in saving that project is now going to work for that project.
  6. I say, "Wait a minute, Richard. What exactly are you going to be doing for the project?" I listen closely. If I sense any hedging, I say "Cut the crap" and get the full story.
  7. Whatever answers I get, I think ahead to appearances, if not legal questions, and I say to my cabinet member, "I think it's best that, for these last couple weeks, we put a big brick wall between you and any policy decisions affecting the folks you're going to work for."
  8. I review all of the checks and other papers I've signed over the past few weeks for the project and make sure everything looks kosher.
  9. And above all, I make sure my guy going to work for the project is not the guy who carries the million-dollar state check to that project.

Rounds gets to my step 5, then veers off the road of good management, saying, Rich has a job? Great! Now I can focus on helping all my other pals get golden parachutes.

Rounds said at Dakotafest in August that if he'd known what Benda had been up to with respect to Northern Beef Packers and EB-5, he'd have fired Benda. In yesterday's interview, Rounds said, "Richard Benda did some things in the last couple of weeks (of Rounds' term) that I did not know about, and that I'd like to ask him questions about." But when Benda was right in front of him, and the issues all hot on his plate, Governor Rounds chose not to ask.

And the day Mike Rounds didn't ask Richard Benda those questions at the end of 2010 may have been the day that Mike Rounds lost the election of 2014.

27 comments

One more detail sneaks out of Denise Ross's report on Joop Bollen's inept management of Northern Beef Packers. The South Dakota Banking Commission may have exempted an honest-to-goodness bank from our bank franchise tax:

Kang said once it became clear that Chinese Development Industrial Bank out of Taiwan was willing to loan Northern Beef $30 million through its subsidiary, Anvil Asia Partners, Hanul and Bollen began working directly with bank officials [Denise Ross, "Source: Bollen, Lawyer in Control of Northern Beef Operations, Finances," Mitchell Daily Republic, 2014.10.17].

Remember: Northern Beef Packers got a $30 million loan from Epoch Star Limited, which was a subsidiary of Pine Street Special Opportunity Fund, which was a subsidiary of Anvil Asia Partners, which Kang says was a subsidiary of the Chinese Development Industrial Bank.

Under pressure from the Governor's Office of Economic Development, the South Dakota Banking Commission said Epoch Star didn't have to pay bank franchise tax on that loan.

Cut out the middle words, and we see the South Dakota Banking Commission saying a bank making a loan wasn't really a bank making a loan.

Gee, Republicans, I think calling that a "special tax break to a shady offshore corporation" is putting it mildly.

6 comments

The hook in Denise Ross's blockbuster EB-5 story today is that Governor Mike Rounds attended a meeting in the Capitol with economic development chief Richard Benda, EB-5 czar Joop Bollen, Northern Beef Packers CEO David Palmer, Hanul Law Firm and Bollen pal James Park, and Maverick Spade financier David Kang where his South Dakota Certified Beef Program, a key to the Northern Beef Packers plan, was discussed. Kang says Governor Rounds was there simply to meet and greet, not blatantly inconsistent with his statement of ignorance of EB-5's "transactional details." Nonetheless, the Rounds campaign is claiming no recollection of this meeting.

The hammer in Denise Ross's report is financier Kang's damning assessment of Bollen's business savvy and ethics. Kang says that Bollen and Park controlled Northern Beef Packers, shut Palmer and experts out, and ran the packing plant into the ground:

Kang describes finding Northern Beef Packers in financial disarray in 2009, with Joop Bollen and Hanul's James Park running operations and having control of the plant's accounts and money.

"They were in complete control of any and all finances," Kang said of Bollen and Park. "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" [Denise Ross, "Source: Bollen, Lawyer in Control of Northern Beef Operations, Finances," Mitchell Daily Republic, 2014.10.17].

Kang's statement confirms what we've seen in subsequent contracts with NBP in which Bollen asserted control over the project and forced them to spend money to suit his wishes.

And while Bollen likes to puff out his chest over his urgent entrepreneurial wizardry, Kang says Bollen and Park didn't know what they were doing:

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].

Kang also calls them chiselers. The $2.5-million "success fee" originally apportioned to Maverick Spade for securing the $30-million Epoch Star loan may sound like robbery, but Kang says his firm did real work to clean up the financial mess in which Bollen and Park had drowned Northern Beef Packers. In return, Bollen and Park gave Maverick Spade the brush-off:

"They had us flying here, there, South Dakota, Korea, Asia, everywhere trying to get financing. We were working in three time zones," Kang said.

Kang said once it became clear that Chinese Development Industrial Bank out of Taiwan was willing to loan Northern Beef $30 million through its subsidiary, Anvil Asia Partners, Hanul and Bollen began working directly with bank officials.

"They pretty much got what they wanted and from there said, 'Bye-bye,' " Kang said, adding that his firm had not been paid much beyond an initial retainer fee. "That is one of the many reasons why Maverick exited the project" [Ross, 2014.10.17].

A July 23, 2010, amendment to the NBP–Epoch Star loan agreement changed Maverick Spade's "success fee" to $750,000. Kang tells Ross his company ultimately received $950,000.

But even screwing vendors like Maverick Spade who brought millions into the packing plant, Bollen and Park weren't able to turn Northern Beef Packers into a sustainable business.

So maybe we have our answer to how Mike Rounds's biggest legacy project made $167 million go poof. The guys running it were bumblers... much like the Rounds campaign staff that hasn't found a working defense to the hailstorm of EB-5 news.

44 comments

SDRC Inc., the private company state employee Joop Bollen created to make big money on EB-5 investments in South Dakota, created an offering memorandum on January 10, 2010, that pitched Northern Beef Packers to EB-5 visa investors. That offering memorandum was appended as Schedule 10 to the Northern Beef Packers–Epoch Star loan agreement of March 18, 2010.

That offering memorandum explains why NBP needs the new loan fund into which SDRC Inc. would place the EB-5 funds it was soliciting:

The Funded Business, Northern Beef Packers Limited Partnership ("NBP LP"), is a South Dakota Limited Partnership formed in April, 2007. It was established in order to build a state-of-the-art beef processing facility in South Dakota through investment of local managing partners and seventy (70) EB-5 investors seeing immigration to the U.S. This facility is designed to process over 7,500 head a week on a single shift and up to 20,000 head a week on a double or triple shifts, and other associated facilities are to be managed and operated by NBP LP. According to original plan, the construction was planned for completion in 2009. However, in the course of development, the completion date was postponed due to expansion of the business which additionally included construction of rendering plant and waste facilities. In order to facilitate new construction and operating cost, the Funded Business plans to receive additional financing from the Limited Partnership [SDRC Inc., offering memorandum, 2010.01.10, included as Schedule 10 to NBP–Epoch Star loan agreement, 2010.03.18].

There are two key lines of bunk in this pitch. First, 2009 was not the originally planned completion date. A pitch apparently prepared by SDRC Inc. partner Hanul Professional Law Corp. in 2007 says "The construction will start from May 2007 and plans to be completed by April 2008 in Aberdeen, South Dakota."

Second, rarely have I heard the delays at NBP attributed to an expanding business plan. Delays in the construction of Northern Beef Packers came from a host of factors: "financial issues, local opposition, the recession, and flooding."

As with so many of the affairs of SDRC Inc. and Northern Beef Packers, this 2010 investor pitch appears to be another load of bull.

p.s.: This detail may be entirely trivial, but that Hanul 2007 pitch represents to investors that Northern Beef Packers would have an April 2008 completion date, a total estimated business cost of $52 million to $55 million, and an estimated workforce of 600 to 700. Section 3.2 of the Northern Beef Packers–Epoch Star March 2010 lending agreement avers that "...Borrower has made no representation, warranty, or covenant to any 2008 EB-5 investor or other third party concerning the completion date, cost of construction of the Improvements, the date of commencement of Borrower's business as a packer at the Property, or the number of jobs to be created following commencement of the business."

But hey, since Northern Beef Packers bought Epoch Star eight months after making that agreement, I guess there's no one left to complain about that contradiction, is there?

Notice also that while the Hanul 2007 pitch claims 600 to 700 jobs, the 2010 offering memorandum claims NBP will create 563 jobs. It also pegs the total cost at $95,583,691. Hmm... expand operations, but create fewer jobs....

9 comments

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