It took Mike Rounds five months to come up with answers to the questions Bob Mercer submitted to him in May concerning Joop Bollen's EB-5 visa investment scam. Amidst repeating eight times that he was not involved in the "transactional details" of a program that was crucial to his legacy-building Northern Beef Packers project, Rounds throws this grenade into his own foxhole:

[Bob Mercer]: In March 2013, Gov. Daugaard's office received a federal grand jury subpoena. Were you the target of any part of that subpoena? If so, for what purpose?

[Mike Rounds]: No. And, I believe the federal subpoena should be made public. So Attorney General Marty Jackley has repeatedly stated that I was [not] a target of the investigation. Eight separate law enforcement and investigatory agencies have reviewed various aspects of this case. Local, state and federal authorities have worked cooperatively. And yet, the U.S. Attorney Brendan Johnson maintains his silence. The federal subpoena was delivered to the state in March or April of 2013, Governor Daugaard notified SD Attorney General Marty Jackley a short time later, the SD attorney general concluded his investigation in October 2013 — almost a year ago. The U.S. Attorney, Brendan Johnson, has had this file longer than anyone — despite the SD Attorney General concluding his investigation almost a year ago. The U.S. Attorney should release the federal subpoena [emphasis mine; Bob Mercer, "Rounds Answers Reporter's Questions on EB-5 Scandal," Black Hills Pioneer, 2014.10.02].

Notice that if Rounds were just answering the question, he could have stopped at "No." But Rounds then returns to this strange SDGOP obsession with a U.S. Attorney who is not on the ballot. Rounds and the GOP are like the bullies shooting spitwads at the smart kid in study hall who's just sitting quietly at his desk doing his homework, trying to goad the smart kid into doing something stupid that gets him in trouble and keeps the teacher from noticing what the smirking bullies are up to.

Round also misses one key fact. A subpoena involves at least two parties. Brendan Johnson is the subpoena-er. The state is the subpeona-ee. Governor Daugaard or Nila Novotny or somebody in the Capitol received that subpoena on our behalf last March. Now I know Mike says folks in the Governor's office are kind of bad at keeping the boss up to speed on such legal matters, but I'm sure someone in the Capitol has the subpoena says should be made public.

I agree wholeheartedly with Mike Rounds that the federal subpoena that Governor Daugaard announced last year should be made public. I think all eight of the subpoenas relating to the federal investigation of Rounds and Daugaard's EB-5 program and who knows what else should be made public. And Rounds's buddy and ticketmate Governor Daugaard could make that happen right now.

("Thanks, Mike," Governor Daugaard is muttering under his breath.)

24 comments

While Representative Bernie Hunhoff (D-18/Yankton) has asked the Board of Regents to release all of its files pertaining to the Darley v. SDIBI litigation (and while I'd be happy for now just to get Darley's 17.5-hour deposition of Joop Bollen), Mr. Montgomery and that Sioux Falls paper are taking another tack, asking the Board of Regents for the Conflicts of Interest Disclosure forms that Bollen would have signed during his Regental employment from 1994 (or whenever the Regents implemented this paperwork) through 2009.

The Regents have said nope:

...the Board of Regents rejected the Argus Leader's open records request, saying an exemption in South Dakota's open records law protects them from disclosing those documents.

Bollen's forms, Regents general counsel Jim Shekleton wrote in a letter, are "personnel information" and thus not subject to required public disclosure.

South Dakota law makes all government documents public records but includes a long list of exceptions. Among those documents not required to be disclosed are "personnel information other than salaries and routine directory information."

"The documents that you request are not public records," Shekleton wrote [David Montgomery, "Regents Deny Bollen Conflict-of-Interest Forms Request," that Sioux Falls paper, 2014.10.01].

We don't necessarily need Bollen's conflict-of-interest forms to recognize that he did indeed have a conflict of interest when he signed a no-bid contract assigning the duties the state was paying him to do at NSU to SDRC Inc., his own newly formed private company, in January 2008. Seeing the form Bollen handed the Regents would simply reveal whether Bollen compounded his sins by concealing them, or whether the Regents knew full well what Bollen was doing.

I appreciate the Regents' respect for the privacy of their employees. Certain personnel information should remain private, between employer and employee. But the Regents could satisfy the public interest without revealing any new information. Bollen's ownership of SDRC Inc. and any other corporation is a matter of public record. The Regents could release the conflict-of-interest forms with any private information (like Social Security number or employer ID numbers) redacted but leave the names of the corporations Bollen mentioned, if any. Care to reconsider, Regents?

27 comments

Governor Dennis Daugaard has declared October "Archives Month" in South Dakota:

“Archival institutions have a responsibility to collect, organize, preserve and make available records that document the history of the state of South Dakota and the plains region for the education and appreciation of present and future generations,” Gov. Daugaard noted in the proclamation.

“October is a chance for South Dakotans to recognize the importance of archives and historical records,” noted Chelle Somsen, state archivist for the South Dakota State Historical Society at the Cultural Heritage Center in Pierre. “There are county, municipal, university and private archives as well as the State Archives and each of these organizations contain historical records that document the rich history of our state” [State of South Dakota, press release, 2014.10.01].

However, the state will delete all record of Archives Month 30 days after its conclusion.

8 comments

Sorry, Jeff Barth: your lawsuit is already too late to stop the state from destroying some EB-5 evidence. Seth Tupper finds the state deleted Richard Benda's e-mails just weeks after he jumped the ship of state with his half-million-dollar life preserver from Mike Rounds... in accordance with state policy:

The policy says that when employees delete an individual email, that deleted email is retained by the system no longer than 37 days; when an employee leaves state government, the employee’s entire email account is deleted as soon as 30 days later.

So last spring, when investigators were examining records from Benda’s final days in office for evidence of criminal activity, there was no state email account of his to comb through. Investigators obtained and re-created some emails through other investigative means, according to state Attorney General Marty Jackley, who acknowledged the task was made more difficult because of the deletion of Benda’s email account [Seth Tupper, "SD Email Policy: Don't Ask, Don't Keep," Rapid City Journal, 2014.09.28].

Governor Dennis Daugaard sends his poor spokesman Tony Venhuizen out to say silly things about how hard it is to store e-mail:

Venhuizen said the state’s current email system comprises 11 terabytes of storage.

“That’s large, and for that reason, backing up the older messages is kept to a minimum to keep down the expense of storing multiple copies,” he said [Tupper, 2014.09.28].

Tupper snorts milk onto his notepad and points out that one can buy a 12-terabyte external storage unit for $2,200. But always buy for the storage you'll need later, not the storage you need now. For $2,200 we can get order one Western Digital 12-TB unit for the current e-mail system for $650 and a Buffalo 16-TB unit for the next five years of e-mail for $1,317, have someone swing by Best Buy and grab three 1-TB portable drives for $62 a pop, and still have $47 left to take our tech guy out to Red Rossa.

The technological and financial difficulty of storing state e-mails for investigative and historical purposes is trivial. Using those portable drives, we can get a terabyte of storage for $62. Try storing that much information on paper, at two kilobytes per typed page (remember, kilo- means thousands; tera- means trillion), and you'll need one million reams of paper, which at a dollar a ream would cost one million dollars. Multiply that by the 31 terabytes of storage I just priced for the state at Amazon and Best Buy, and we're going to need 64 more EB-5 investors to turn Northern Beef Packers into Northern Leaf Papers.

Archiving the state's e-mails is no big deal. Appropriations, move a decimal point somewhere and buy the governor some hard drives.

p.s.: Seth Tupper appears to be back in his element. After a few months as publisher at the Mitchell Daily Republic, he's back in the game writing political stories for the Rapid City Journal. Maybe I'm just optimistically imagining things, but I sense a certain pent-up enthusiasm unleashed in his hefty report on the state's memory-hole correspondence policy. Perhaps Tupper realized about himself and journalism what I know about myself and teaching: offer me a promotion to principal or superintendent, and I will say no thank you. Some of us are born for the front line.

37 comments

The South Dakota Board of Regents has been gathering evidence on the EB-5 scandal for over five years, ever since it discovered that the EB-5 coordinator who worked on the Northern State campus, Joop Bollen, concealed a lawsuit against the state connected to his January 2008 no-bid contract with himself. As shown by the collection of invoices from a California law firm handling the Darley v. SDIBI lawsuit and the resulting arbitration for the Regents, the Regents have a large collection of correspondence, legal pleadings, and depositions that illuminate what Bollen and his associates were doing, who in state government knew about it, and when they knew it.

Perhaps the single most illuminating document in the Regents' possession is the April 2014 deposition of Joop Bollen. According to an invoice submitted to the Regents by Garcia Hernández Sawhney & Bermudez on May 22, 2014, attorney Chaka Okadigbo spent 35 hours preparing for this deposition, then attended the interrogation of Bollen for 17.5 hours spread over three days, from April 16 to April 18 (two hours of homework for every hour in class—just like college!).

6546-Apr14-excerptp2-BollenDeposition

Garcia Hernández Sawhney & Bermudez, invoice #6546, submitted to South Dakota Board of Regents, 2014.05.22, excerpt, p. 2

6546-Apr14-excerptp3-BollenDeposition

Garcia Hernández Sawhney & Bermudez, invoice #6546, 2014.05.22, excerpt, p. 3

Garcia Hernández Sawhney & Bermudez, invoice submitted to South Dakota Board of Regents, 2014.05.22, excerpt, p. 5, showing travel expenses for Chaka Okadigbo

Garcia Hernández Sawhney & Bermudez, invoice #6546, 2014.05.22, excerpt, p. 5, showing travel expenses for Chaka Okadigbo

An invoice submitted March 27, 2014, shows that Okadigbo spent one full work day and part of another in February preparing for the Bollen deposition. At $300 per hour, plus $2,200 in travel expenses, the Regents spent over $20,000 preparing for this deposition.

It's not the price tag that makes the Bollen deposition transcript the most valuable legal document in South Dakota today. It's the fact that, as far as we know, the Regents are the only entity in South Dakota in possession of statements from Joop Bollen under oath about his management of South Dakota's EB-5 program.

It's possible Bollen didn't say much; just as he didn't want to tell the Regents about the Darley lawsuit in 2008, he expended great effort after he quit his state job to shield himself from Darley's ongoing litigation behind the façade of his private corporation. According to a May 21, 2012 invoice, the Regents were working on a legal strategy to secure Bollen's testimony.

Garcia Calderón Ruíz invoice #5446, 2012.05.21, excerpt. (Click to enlarge.)

Garcia Calderón Ruíz invoice #5446, 2012.05.21, excerpt. (Click to enlarge.)

Interestingly, in August 2013, the Regents appear to have worked to avoid a Bollen deposition. According to an invoice submitted by its California lawyers on September 26, 2013, Bollen was demanding indemnity and release from the Regents in August 2013. Attorney Okadigbo discussed this issue by correspondence with Bollen, Bollen's lawyer Jeff Sveen, and Regents' counsel James Shekleton.

6170-Aug13-excerpt1

Garcia Hernández Sawhney & Bermudez, invoice #6170, 2013.09.26, excerpt, p. 2

After further correspondence with Sveen about "antecedent conditions" to an interview, Okadigbo came to South Dakota and interviewed Bollen for four hours on August 9, 2013.

Garcia Hernández Sawhney & Bermudez, invoice #6170, 2013.09.26, excerpt, p. 2

Garcia Hernández Sawhney & Bermudez, invoice #6170, 2013.09.26, excerpt, p. 2

The Regents insist that they have made no deal with Bollen, but at the end of August 2013, Okadigbo prepared and filed opposition to Darley's application to depose Bollen.

Garcia Hernández Sawhney & Bermudez, invoice #6170, 2013.09.26, excerpt, p. 3

Garcia Hernández Sawhney & Bermudez, invoice #6170, 2013.09.26, excerpt, p. 3

The invoices do not make clear exactly what happened next, but it would appear the April 2014 deposition was part of Darley's discovery process. While the Regents may have had questions of their own about Bollen's activities, Okadigbo's attendance at Bollen's deposition may have been intended to keep as much information off the record as possible in anticipation of the Darley v. SDIBI arbitration that took place in California from April 28 through April 30, 2014.

Bollen and Okadigbo may have spent much of the April 16–18 Bollen deposition muttering "Fifth!" or "Objection!" or whatever other hurdles one can raise during a deposition. But 17.5 hours of questions from Darley, follow-up questions from the Regents, and responses and non-responses from Bollen would likely tell us much more than Wednesday's legislative readers theater did about who knew and did what when in South Dakota's EB-5 program.

Regents, even if you didn't want Bollen deposed, you have that deposition. Bollen's statements are of great public interest. Do us a great public service: help us understand the state's EB-5 program by releasing the April 16–18, 2014, deposition of Joop Bollen.

18 comments

Hey, Burt Elliott! Pat Hale! You're paying attention to this letter to the editor in the Aberdeen paper, right?

Ed Fischbach of Mellette notes that Senator Al Novstrup (R-3/Aberdeen) was all about open records when the James River Water Development District stonewalled him. Fischbach thus finds it puzzling that Novstrup, who is now running for District 3 House, isn't fighting to open records in the EB-5 scandal:

Now there is an EB-5 scandal that is bigger than life in his own legislative district, and we don't hear a peep out of him. The EB-5 scandal has no-bid contracts, no open records, no accountability, pending lawsuits against the state involving upwards of $147 million, and he says nothing. The handling of EB-5 money in this state has everything that Sen. Novstrup complained about when he went after James River Water District and more, but this open government and open records legislator is now silent.

You won an award, Sen. Novstrup, so start demanding records and accountability from Mike Rounds, Dennis Daugaard and other state officials just like you did from James River Water District. Or, return your award [Ed Fischbach, letter to the editor, Abderdeen American News, 2014.09.21

Senator Novstrup hasn't been entirely silent on the EB-5 scandal. Last December, he agreed with the need to look into affairs in the Governor's Office of Economic Development, but he didn't sound terribly eager to do so, or to expand the scope of any investigation to look into local EB-5 failure Northern Beef Packers:

...[T]o Sen. Al Novstrup, R-Aberdeen, seeking a special session less than three weeks before the start of the regular session seems like a waste of money. If it’s needed, extra digging can be called for once the session begins in January.

One thing the state doesn’t have the authority to do is scour the finances of Northern Beef. It’s a private company, and even if there were fraud, the Legislature wouldn’t have that power, he said.

With EB-5 being a federal program, it seems appropriate that Johnson, a federal prosecutor, is looking into what happened, Al Novstrup said. But, he said, the Legislature can take a look at whether the state’s contract with the SDRC to do EB-5 work was properly followed. If it wasn’t, there might be penalties the state can impose, he said [Scott Waltman, "More Answers Wanted: Area Lawmakers Call for More Investigation of State Economic Development Efforts," Aberdeen American News, 2013.12.15].

Open-records crusader Novstrup certainly isn't among those calling now for Novstrup's neighbor Joop Bollen to testify under oath about his questionable profiteering as the state employee in charge of EB-5 from 2004 to 2009.

Elliott, Hale, Tornberg, Nelson, Page, Nordstrom, this is how you tune the EB-5 scandal to your local legislative races. Ask your Republican incumbents why they aren't fighting for more answers about a scandal that may have cost this state more than Mike Rounds's structural deficit. Ask your Republican incumbents why they aren't asking who knew what was happening in the Governor's Office of Economic Development and when they knew it. Don't let them hide behind their reheated stammerings of "But EB-5 is federal!" Legislators' willingness to investigate or ignore the apparent corruption in our state's economic development program raises a fundamental question of character that every candidate should answer this fall.

5 comments

On Monday, the South Dakota Democratic Party launched a local ad campaign encouraging citizens to call Senator Larry Tidemann and urge him to subpoena Governor Dennis Daugaard, former Governor Mike Rounds, and other state officials who could explain just what happened in the GOED/Northern Beef Packers/EB-5 scandal. Remarkably, the discussion on this blog turned to the propriety of publishing Senator Tidemann's phone number (a number which is published on Senator Tidemann's official Legislative webpage, as are phone numbers for every other South Dakota legislator).

One eager reader took up the ad's challenge and called Senator Tidemann. The reader got voicemail and left a message. Senator Tidemann called the reader back. Here's the reader's account of their very civil conversation:

When he called me back he was very nice and tried to be helpful explaining what he was doing and what they hoped to accomplish.... We talked about [Richard] Benda, Joop [Bollen], records missing and he basically held to the party stance on this whole thing. He said it was a federal program and I agreed but I pointed out my concern was how it was administered here in SD. It was almost as if there were things with standard responses he made that are used to throw me off and diminish this but I held on and was pointed yet very tactful and respectful.

He said the reason he did not want Joop to be present was that it would have been a circus atmosphere and that the written responses were the same as a subpoena. He mentioned the U.S. Department of Justice ongoing investigation and covered the basis of they are legislators and some of this is better left to police, FBI and DCI agents [blog reader, e-mail, 2014.09.17].

Senator Tidemann's willingness to call a questioner back and discuss serious issues seems to deflate the critique of the propriety of encouraging citizens to call legislators. Senator Tidemann gets extra points for affirming that a federal investigation continues and acknowledging that there appears to be criminal activity in this scandal that warrants investigation.

But Senator Tidemann loses points for talking points. Bob Mercer has rejected the "EB-5 is federal " dodge; so should everyone else.

Senator Tidemann loses more points for his circus-phobia. Is Senator Tidemann saying he is incapable of maintaining order at any committee meeting where a prominent or controversial figure may testify? When is the last time any Legislative committee meeting turned into a circus? How circusy can things get in Pierre? Is Tidemann afraid Bob Mercer will bring peanuts and thundersticks?

The worst that happens if Joop Bollen appears in person in front of the Government Operations and Audit Committee on September 24 is that two bloggers, five reporters, and ten lawyers come to the meeting. Chairman Tidemann raps the desk, points his gavel, and says menacingly, "No circus, or you're out!" And then everyone sits in rapt silence, punctuated only by the raindrop tap of laptop keys, as Senator Larry Lucas and Rep. Susan Wismer grill Joop Bollen.

Senator Tidemann is serving the public trust by talking with voters directly on the phone. Now let's serve the public trust by having former public employee Joop Bollen talk directly with the public at GOAC, in person, under oath, on September 24.

p.s. [09:52 CDT]: The caller notes that Senator Tidemann deserves extra credit for taking a call from a South Dakotan outside his district. The caller made clear in the voicemail that the caller lived in another legislative district, yet Senator Tidemann still took the time to call back. Well done, Senator Tidemann!

8 comments

Rep. Kristi Noem has chickened out of debating Corinna Robinson this weekend, but she will still be lurking around the State Fair. At 2 p.m. today, she will accept a "Friend of the Prairie" award on the Freedom Stage from the South Dakota Grassland Coalition.

If you want to talk to Congresswoman Noem about what she's done to deserve such an award (cutting subsidies to farmers plowing virgin prairie, but reducing the CRP maximum CRP acreage from 32 million acres to 24 million acres and CRP funding from $400 million to $250 million?) or to ask her questions that she might have faced in a debate with Robinson, the Princess directs you to contact her staff.

Worth nothing is the fact that Team Noem sends out notice of her appearance at the State Fair one day before it happens. Sometimes it seems as if Rep. Noem just doesn't want attention. Rep. Noem visited Madison Tuesday, but it was another of those surprise, invitation-only, elites-only visits that doesn't make the paper until after it's done. Her staff appear to have posted notice of that event the day it happened, minimizing the opportunity for the press and other interested citizens to come see their Congresswoman.

11 comments

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