The EB-5 scandal is so dangerous to Republicans that the state party is lying to its own voters. An eager reader says the SDGOP is sending out the following letter to registered Republicans:
SDGOP mailer, October 2014 (click to embiggen!)
Wow—talk about missing the point! Let's go to the line-by-line (I preserve the SDGOP's underlining and add letters for easier reference):
A. State leaders have vigorously investigated this matter—the Division of Criminal Investigation, the Government Operations and Audit Committee, the Department of Legislative Audit, and two different private accounting firms.
- The DCI never interviewed key witness Richard Benda.
- GOAC has refused to subpoena key witness Joop Bollen.
- GOAC has refused to require Bollen, Mike Rounds, Governor Dennis Daugaard to testify in person under oath where legislators could immediately follow up on responses.
- The Department of Legislative Audit did not investigate any of the questionable practices of Bollen and his collaborators in the operation of SDRC Inc., the company he formed to privatize his state job.
B. The only allegations were against Richard Benda—of double dipping on travel reimbursement, and of redirecting a state grant after he had left the state and was working for a private company.
- The new revelations that have come out this year about EB-5 have moved well beyond Richard Benda's activities as Governor's Office of Economic Development chief and SDRC Inc. loan monitor.
- The primary unanswered allegations are that as Governor, Mike Rounds know about a raft of malfeasance by Joop Bollen and rewarded Bollen with a lucrative no-bid contract.
C. AG Marty Jackley was ready to pursue criminal charges against Benda at the time of his death.
- The SDGOP is defaming a dead man.
- AG Jackley's release of a draft arrest warrant that was never executed causes pain a family whose pain and desire for privacy AG Jackley has cited as justification for keeping other EB-5-related matters secret.
- AG Jackley and Gov. Daugaard both initially denied that Benda had committed any wrongdoing with respect to the $550K Future Fund grant diversion. AG Jackley changed that story in July 2014.
D. The audits of GOED were comprehensive and recommendations for improvement have been adopted.
- The GEOD audits did not address the entirety of business practices of SDRC Inc.
- The GOED audits did not address Joop Bollen's violation of state conflict-of-interest law.
- The GOED audits did not address Joop Bollen's concealment, in violation of state risk management policy, of a lawsuit against the state incurred by his public agency's activities in 2008.
- The GOED audits did not address Joop Bollen's illegal and inept representation of the state in a legal pleading in 2008.
- The GOED audits did not address Joop Bollen's mismanagement of Northern Beef Packers, which ultimately led to the loss of $167 million dollars of private and state investment in bankruptcy.
E. Democrats are playing politics. They are manufacturing a scandal about EB-5 through innuendo. They have never explained what wrongdoing they suspect.
- Rep. Kathy Tyler, attorney Patrick Duffy, this blog, and others have laid out thorough and detailed arguments about lost taxpayer dollars, ethical breaches, and legal violations.
F. Republican leadership been [sic] open and forthright.
- Republican leadership on GOAC forthrightly refused to even discuss subpoenaing Joop Bollen.
G. AG Jackley vigorously investigated the matter, at the governor's request. His investigators interviewed dozens of witnesses, including Joop Bollen, and reviewed thousands of documents. As a result of what was found, AG Jackley was prepared to pursue criminal charges against Benda. That didn't happen because of Benda's death.
- Again, the SDGOP is shamelessly using a dead man as its fall guy.
- The SDGOP is making unsubstantiated claims about "dozens" of witnesses and "thousands" of documents. If the Republican leadership is committed to being "open and forthright," it will list those dozens of witnesses and thousands of documents.
- AG Jackley's "vigorous" investigation did not include questioning Richard Benda.
- AG Jackley's "vigorous" investigation did not begin until spring 2013, four years after the attorney general's office learned of illegal activity by Joop Bollen.
H. Gov. Daugaard promptly released the AG's investigation report to the public last fall.
- Gov. Daugaard did not release this information until after Richard Benda's unusual death provoked a firestorm of public curiosity and scrutiny.
I. Gov. Rounds has been completely open and forthright as well—with the public and with investigators. Rounds has said that, if he had known about Benda's wrongdoing, he would have fired Benda on the spot.
- Documents have shown that several of Rounds's "open and forthright" statements are false.
- Rounds took four months to respond to questions about EB-5 from reporter Bob Mercer.
J. Gov. Daugaard ordered three separate reviews, of GOED, by two different accounting firms and by the Department of Legislative Audit, the state legislature's independent auditing office. The audits found no further wrongdoing, and the state implemented ideas to improve processes.
The reports of all three reviews were shared with legislators and the public and are available at http://sdreadytowork.com/Financing-and-Incentives--Public-Records.aspx
- New evidence of wrongdoing has surfaced since the February 2014 audits.
K. The State Legislature has held two hearings to discuss the reports and the investigation and to ask questions of state officials.
- The committee charged by the Legislature to discuss the reports and investigate EB-5 has left EB-5 off its agenda in two meetings.
- The hearings that have addressed EB-5 have been used by Republican leadership to stonewall hard questions about EB-5.
L. Everyone involved—Gov. Rounds, Gov. Daugaard, AG Jackley, and other state officials—have answered every question asked, and provided every document that the law allows.
- Answering every question does not mean answering every question fully and truthfully.
- State officials have not answered questions about the focus of seven of eight federal subpoenas issued relating to South Dakota's EB-5 program.
- State officials have not answered questions about why Joop Bollen was not fired for numerous violations of state policy and law.
- State officials have not answered questions about the evidence that led to the conclusion that Richard Benda committed suicide.
M. A federal investigation is also ongoing, and everything that has been found by state officials has been shared with federal investigators.
- The SDGOP makes another unsubstantiable and uncreditable assertion. We cannot know if state officials have shared "everything" with federal investigators.
N. EB-5 is a federal immigration program—not a state-run program.
- The SDGOP repeats its biggest red herring: while Joop Bollen may have violated USCIS regulations on the EB-5 program, he also appears to have violated numerous state policies and laws that fall entirely within the jurisdiction of state officials.
- Mike Rounds has said Bollen was a Board of Regents employee, subject to state oversight.
- Bollen testified in Darley v. SDIBI that he answered to the Regents and the Governor's Office of Economic Development.
O. The state's ability to investigate a federal program is very limited—whether it is the Attorney General or a legislative committee. That is why the AG provided everything he found to federal investigators.
EB-5 is a federal program that allows private companies to raise private investment for economic development projects, under federal guidelines.
- Medicaid is a federal program, yet the Attorney General's office regularly investigates and prosecutes Medicaid fraud.
P. Like nearly every other state, SD had designated a private company to operate EB-5 in the state—SDRC, Inc. Gov. Daugaard terminated the state contract with SDRC in Fall 2013.
- The state operated EB-5 through a state agency, the South Dakota International Business Institute, from 2004 through 2009.
- The state obtained and has continuously retained the official USCIS EB-5 "regional center" designation since 2004.
- South Dakota's contract with private SDRC Inc. in December 2009 was a no-bid sweetheart deal rewarding malfeasant state employee Joop Bollen, who quit his state job the day before he signed the SDRC Inc. contract.
Q. Today, the state does not actively promote EB-5. The state receives and files reports about existing EB-5 projects, and provides information about the program to those who enquire.
There are numerous successful projects in SD that were funded through EB-5, including Dakota Turkey Growers in Huron, the Deadwood Mountain Grand, and development of wind power.
- More red herrings: these facts have nothing to do with wrongdoing by Richard Benda, Joop Bollen, Mike Rounds, or anyone else involved with running the state's EB-5 program
R. South Dakota did not lose millions of dollars of taxpayer money on Northern Beef Packers (NBP).
The total state contribution to the $150 million project was $4.3 million. That entire amount has already been recovered through taxes paid by NBP.
- The actual amount of public and private money poured into Northern Beef Packers was $167 million.
- $4.3 million does not include the bank franchise taxes lost in the tax break for NBP offshore funder Epoch Star.
- $4.3 million does not include the $2.4 million in bank franchise taxes evaded by SDRC Inc.
- $4.3 million does not include the uncounted local and county revenues lost when NBP went bankrupt due to state employee/contractor Bollen's mismanagement and put hundreds of Aberdonians out of work.
S. Although the owners of NBP went bankrupt, the plant still exists, and new owners, New Angus, intend to reopen and operate the plant within a year. That means the goal of a beef plant in Aberdeen will be achieved.
- Aberdeen heard claims that NBP would open within a year throughout its five-year construction period.
- Claims of future solvency bear no weight on present failure.
- Claims of future solvency under new management bear no weight on the failure of Bollen, Benda, and Rounds to make NBP work now.
If Republican voters are looking for an excuse to ignore EB-5, this letter from the SDGOP may provide the palliative they need. I mean, hey, it's on paper, so it must be true, right?
But if I were a Democratic leader, I'd feel awful about having to blow smoke like this at my own people to keep them marking the right bubbles on their ballots.
Forward this list of responses to your Republican friends, and encourage them to ask their party leaders for the full and accurate story about EB-5.