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

I can hear the conversation in Pierre: We're short on teachers, and folks going to expect better pay... quick! Blow smoke!

South Dakota’s superintendents say schools are struggling to fill open positions mainly because of low teacher pay, while policymakers suggest a solution to the teacher shortage isn’t simple and the problem won’t be fixed with funding alone [Kevin Burbach, "Lawmakers Say Education Needs More Than Just Money," AP via that Sioux Falls paper, 2014.09.21].

Actually... yeah, it will. Raising teacher pay would do more to solve South Dakota's worsening teacher shortage than any other single policy action. $10,000 more in every teacher's paycheck would change more teachers' minds about moving or retiring or taking up welding than improving teacher training and "support," the ideas Rep. Jacqueline Sly (R-33/Rapid City) mentions in Burbach's report. (At least Burbach gets Rep. Sly's name right; he calls Democratic Rep. Paula Hawks "Tessa".)

At the bottom of the article, spokesman Tony Venhuizen reminds us what the Daugaard Administration really thinks of the teacher shortage—they'd like to make it permanent:

“Particularly in some small districts we see they’re making decisions to keep larger staffs, to keep their staffing levels higher rather than to use the money to pay fewer teachers more [Tony Venhuizen, quoted in Burbach, 2014.09.21].

That's right, far from a shortage of teachers, Governor Daugaard still thinks we have too many teachers. Getting rid of a third of our teachers would deprive our kids of even more resources and support in school, but hey! those darn teachers lean union and Democrat anyway! Who needs 'em?

There are plenty of other, more positive legislative actions we can take to improve our K-12 schools. So let's not dilly-dally: let's raise teacher pay so we can get on to those other improvements.

61 comments

In the brush-off to the Legislature's Government Operations and Audit Committee that he pens for former state employee and EB-5 profiteer Joop Bollen, lawyer Jeffrey T. Sveen makes this claim about Bollen's EB-5 management company:

SDRC, Inc. has previously provided information to government authorities when requested to do so. As the Committee is aware, an audit by the State of South Dakota has shown that all funds administered by SDRC, Inc., were properly applied [Jeffrey T. Sveen, letter to Senator Larry Tidemann, 2014.09.08].

Really? Let's review what that state audit from February 12, 2014, said about SDRC Inc.:

Finding No. 2003-001:

The former Department of Tourism and State Development (DTSD) and the current Governor’s Office of Economic Development’s (GOED) policies and procedures were inadequate for the monitoring of the contract with the SDRC Inc.

  • ...Although the SDRC was providing to the DTSD a monthly e-mail containing a report and the balances in the two funds, the report was not sufficient to ascertain that the correct amounts were being collected and deposited and copies of bank statements did not accompany the e-mail to corroborate the balances being reported.
  • Documentation was not adequate to determine whether the DTSD or the GOED was receiving the books, records and reports that were required to be provided to the CIS by the SDRC.
  • Inadequate internal controls existed over the payment of expenses from the Expense Fund. Five disbursements were made from the Expense Fund totaling $67,259.97. The invoices were signed by the former Secretary of the DTSD and the DSTD’s Administration Director. The invoices identified the expenses as being for meals, lodging and transportation. Other than the information contained in the invoices, there was no supporting documentation retained to evidence that the expenses were incurred, who incurred the expenses, or the purpose of the expenses.
  • The DTSD and GOED did not report Indemnification Fund One and the Expense Fund in the State’s Comprehensive Annual Financial Reports for FY2010 through FY2012.

As a result, there existed a potential for the loss of assets and two funds were not properly reported in the State’s Comprehensive Annual Financial Report [Department of Legislative Audit, "Governmental Funds of the South Dakota Governor's Office of Economic Development: Audit Report," 2014.02.12].

As I noted in my February analysis of the audit, "loss of assets" is a brilliant euphemism for theft.

Auditor General Martin L. Guindon also emphasized in his report the audit transmittal letter that his office only reviewed only the expense and indemnification funds SDRC Inc. managed for the state, not the entirety of money managed by SDRC Inc.

Sveen and Bollen's claim is thus false. The state audit did not show that "all funds administered by SDRC, Inc., were properly applied." The audit showed that Bollen told the state that its portion of SDRC Inc's business was being handled properly, but he did not provide sufficient evidence to prove that claim.

And in arrogantly rejecting Senator Larry Tidemann's invitation-not-subpoena to testify before the Government Operations and Audit Committee, Bollen is again refusing to provide that evidence and doing so by telling us... something less than the truth.

Chairman Tidemann, are you ready to issue that subpoena yet?

14 comments

The arrogance continues. Joop Bollen wants to hide his activities as a state employee behind the façade of his private corporation, yet he demands the same deference as the highest state employee in South Dakota.

On August 21, 2014, Senator Larry Tidemann (R-7/Brookings), chairman of the Government Operations and Audit Committee, sent a letter inviting Bollen to attend GOAC's September 24 meeting. "This is not a subpoena," Senator Tidemann emphasized.

Since you were instrumental in the development of the EB-5 program in South Dakota, I believe a presentation by you of the chronology and details of the operation of the program would be beneficial to the Committee [Senator Larry Tidemann, letter to Joop Bollen, 2014.08.21].

For 18 days, Bollen remained silent. Then he had his lawyer and EB-5 confederate Jeffrey T. Sveen pen this response:

As you know, Mr. Bollen operates a private business, SDRC, Inc, which until recently administered the EB-5 Program in South Dakota. Due to the nature of the EB-5 Program, SDRC, Inc. is obligated to maintain appropriate confidentiality. SDRC, Inc. has previously provided information to government authorities when requested to do so. As the Committee is aware, an audit by the State of South Dakota has shown that all funds administered by SDRC, Inc., were properly applied.

The press has published many inaccurate and misleading articles about the EB-5 Program. Mr. Bollen does not desire to participate in the political and media frenzy which has surrounded the actions of NBP and GOED personnel. Therefore, Mr. Bollen respectfully declines your invitation to appear in front of GOAC. I understand the Committee has requested that former Governor Rounds and Governor Daugaard respond to written questions from the Committee. Please be advised that Mr. Bollen is open to the same approach to provide appropriate information to the Committee [Jeffrey T. Sveen, letter to Senator Larry Tidemann, 2014.09.08].

We need to break this down.

1. "Mr. Bollen operates a private business, SDRC, Inc,...." Bollen developed and administered the EB-5 program as a state employee from 2004 through 2009. Bollen was a state employee when he signed the January 2008 contract that shifted EB-5 to SDRC Inc.'s bailiwick and set the stage for exactly this kind of dodge of public scrutiny.

2. "Due to the nature of the EB-5 Program, SDRC, Inc. is obligated to maintain appropriate confidentiality." Who said GOAC would ask anything about confidential business matters? SDRC Inc. didn't exist until January 2008; why cannot Bollen answer the Legislature's questions about the development of EB-5 prior to SDRC Inc. and the state's side of interactions with SDRC Inc. after its formation?

3. "SDRC, Inc. has previously provided information to government authorities when requested to do so. As the Committee is aware, an audit by the State of South Dakota has shown that all funds administered by SDRC, Inc., were properly applied." It sounds like Sveen and Bollen are keenly sensitive to money questions that Senator Tidemann never asked in his invitation.

4. "The press has published many inaccurate and misleading articles about the EB-5 Program." Wait? Really? Like what? Joop, Jeff, call me. Help me clear up those inaccuracies. Or just come to committee and put those misleading articles to bed once and for all.

5. "Mr. Bollen does not desire to participate in the political and media frenzy...." Senator Tidemann is not inviting you to a political frenzy. He is inviting you to a hearing of a committee of the South Dakota State Legislature, to take questions from the elected representatives of the people who wrote your checks.

6. "...which has surrounded the actions of NBP and GOED personnel." Oh! Catch the blame shift! The "media frenzy" isn't about Joop Bollen and SDRC Inc. It's about people who worked for Northern Beef Packers and the Governor's Office of Economic Development! (I'm telling you, press Bollen, and he will turn on his former patrons with a vengeance to save his own skin.)

7. "Therefore, Mr. Bollen respectfully declines your invitation to appear in front of GOAC." Note that Bollen is not offering a legal reason for refusing a Legislative request to provide information about his activities as a state employee. The reason is purely personal. If I were a Legislative committee chairman, I would assert the superiority of the state's interest to Bollen's personal pettiness with a vengeance.

8. "I understand the Committee has requested that former Governor Rounds and Governor Daugaard respond to written questions from the Committee. Please be advised that Mr. Bollen is open to the same approach to provide appropriate information to the Committee." And finally, the ego trip. That deference you're showing the elected head of this state? I expect the same treatment. Kiss my ring, too, and I'll be "open" to answering your questions. 

Bollen has dismissed other investigators with the same arrogance. Now, Senator Tidemann, Joop Bollen is flipping that bird at you and at all the people of South Dakota. Senator Tidemann, on behalf of the people of South Dakota, I say it's time to stop taking that bird. He has given you no good reason not to accept your invitation to explain his activities as a state employee and contractor whose checks your appropriations bills wrote. Senator Tidemann, issue that subpoena.

28 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

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

South Dakotans Fighting Animal Cruelty Together has released its "PAWSative" scorecard for the South Dakota Legislature. SD FACT scores legislators on critter-comity based on votes on four bills:

  1. Support for Senate Bill 46, the bill SD FACT championed to make animal cruelty a felony in South Dakota as it is in every other state in the Union.
  2. Support for Senate Bill 75, the ban on pit bull bans.
  3. Opposition to Senate Bill 76, which would have expanded current law to allow people to kill mountain lions when their safety is threatened, not just their lives.
  4. Opposition to House Bill 1068, which would have allowed Rep. Betty Olson to hunt mountain lions across the state with more than one dog.

Seven Senators and twelve Representatives score 100% PAWSative:

  • Sen. Angie Buhl O'Donnell (D-15/Sioux Falls)
  • Sen. R. Blake Curd (R-12/Sioux Falls)
  • Sen. Jean Hunhoff (R-18/Yankton)
  • Sen. Mark Kirkeby (R-35/Rapid City)
  • Sen. Deb Peters (R-9/Hartford)
  • Sen. Deb Soholt (R-14/Sioux Falls)
  • Sen. Alan Solano (R-32/Rapid City)
  • Rep. Dan Dryden (R-34/Rapid City)
  • Rep. Christine Erickson (R-11/Sioux Falls)
  • Rep. Marc Feinstein (D-14/Sioux Falls)
  • Rep. Peggy Gibson (R-22/Huron)
  • Rep. Timothy Johns (R-31/Spearfish)
  • Rep. David Lust (R-34/Rapid City)
  • Rep. Scott Parsley (D-9/Madison)
  • Rep. Dean Schrempp (D-28A/Lantry)
  • Rep. Karen Soli (D-15/Sioux Falls)
  • Rep. Roger Solum (R-5/Watertown)
  • Rep. Kathy Tyler (D-4/Big Stone City)
  • Rep. Susan Wismer (D-1/Britton)

Only two departing Representatives, Republicans Manny Steele (12/Sioux Falls) and Don Kopp (35/Rapid City), are in doghouse with zeroes. Five Senators and twenty Representatives scored just 25%:

  • Sen. Jason Frerichs (D-1/Wilmot)
  • Sen. Tom Jones (D-17/Viborg)
  • Sen. Al Novstrup (R-3/Aberdeen)
  • Sen. Larry Rhoden (R-29/Union Center)
  • Sen. Mike Vehle (R-20/Mitchell)
  • Rep. David Anderson (R-16/Hudson)
  • Rep. Jim Bolin (R-16/Canton)
  • Rep. Gary Cammack (R-29/Union Center)
  • Rep. Scott Craig (R-33/Rapid City)
  • Rep. Brian Gosch (R/32-Rapid City)
  • Rep. Brock Greenfield (R-2/Clark)
  • Rep. Jenna Haggar (R-10/Sioux Falls)
  • Rep. Steve Hickey (R-9/Sioux Falls)
  • Rep. Kris Langer (R-25/Dell Rapids)
  • Rep. Isaac Latterell (R-6/Tea)
  • Rep. Elizabeth May (R-27/Kyle)
  • Rep. Scott Munsterman (R-7/Brookings)
  • Rep. Stace Nelson (R-19/Fulton)
  • Rep. Betty Olson (R-28B/Prairie City)
  • Rep. Herman Otten (R-6/Tea)
  • Rep. Lee Qualm (R-21/Platte)
  • Rep. Nancy Rasmussen (R-17/Hurley)
  • Rep. Lance Russell (R-30/Hot Springs)
  • Rep. Jim Stalzer (R-11/Sioux Falls)
  • Rep. Dick Werner (R-22/Huron)

There's certainly more Democratic flavor in the higher rankings and more arch-conservative flavor down low. But Senate Minority Leader Frerichs is among the low scorers. Among the top dogs, we have House Majority Leader Lust and other prominent Republicans.

I mention this partisan mix because Republican squawkers, Big Ag, and some of the press have misportrayed SD FACT as "out-of-state greenies" working for the vilified HSUS. But SD FACT's legislative agenda apparently is not so foreign or radical that it can't find support from South Dakotans of both parties in Pierre.

4 comments

Bob Mercer follows up on his Wednesday list of legislator out-of-state travel reimbursements with a big Sunday feature on the Legislature's far-too-loose travel policy. Evidently the Legislature continues to slide away from rule of law and down into the arbitrary discretion of one man.

Mercer reports that the Legislature has a list of approved events for which legislators can foot the bill. But faced with requests from lawmakers who went to events off that list, the Legislature's Executive Board lost its nerve and handed decisions over to their chair:

But at least one trip fell outside those approved events.

Rep. Isaac Latterell, R-Tea, and Rep. Jim Stalzer, R-Sioux Falls, attended the meeting of the group called the Mount Vernon Assembly held in Indianapolis in June.

Maher said he gave that trip the go-ahead because last year he approved a trip by Rep. Ray Ring, D-Vermillion, to a special economic conference.

Rather than fight over the Mount Vernon matter, or tighten the policy, the board instead loosened the approval policy by adding a sentence to the policy effective Oct. 1 to give the chairman more latitude. It says, “Any out of state travel to a non-mentioned organization shall be at the discretion of the Executive Board chair” [Bob Mercer, "Secrecy Surounds Increased Travel by South Dakota Lawmakers," Rapid City Journal, 2014.09.14].

Combine this increased latitude with the Legislature's decision to end election of the Executive Board chair and hand that position to the House Speaker and the Senate President Pro-tem (in alternating years), and we see one less chance for accountability to policy and open vote and one more chance to concentrate power in the hands and the whim of one legislator.

Related Arithmetic: Eight Democratic legislators and seventeen Republican legislators have submitted vouchers for out-of-state travel since the end of the 2014 session. The average travel expense request among the Democrats is $741. The average travel expense expense request among the Republicans is $1,633. The thriftiest traveler is Democratic gubernatorial candidate Rep. Susan Wismer, who vouchered $252.51 for one trip. The most profligate globetrotter is Republican Speaker of the House Brian Gosch, who is claiming $4,339.09 for two trips.

13 comments

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