As we wait for the South Dakota Division of Banking to determine whether Joop Bollen should have been paying bank franchise tax on the money he made fleecing foreign investors, an eager reader finds a hint that Bollen's boon companion James Park may also have been evading bank franchise tax.

Before Northern Beef Packers, the Veblen dairies were the biggest project in South Dakota's EB-5 program. The Veblen dairies received $13.5 million in EB-5 investment from 27 Korean investors before violating South Dakota environmental rules and going bankrupt in 2010.

Among the creditors listed on the Veblen East Dairy list of unsecured claims was Park's firm Hanul Professional Law Corporation, which claimed to have loaned Veblen East $2 million. Mikkel Pates reported that Hanul had $2.45 million in claims against the associated Dairy Dozen Veblen LLP but received only $248 in the bankruptcy settlement.

Hmm... so Hanul was a law firm, but they were lending at least $2 million to the Veblen dairies. As with Bollen's EB-5 shop SDRC Inc., Hanul appears neither to have obtained a lending license nor paid bank franchise tax on any proceeds from loans nor even an official exemption like the one the Banking Commission granted to shady offshore lender Epoch Star to save Northern Beef Packers.

The more we investigate South Dakota's EB-5 program, the more we find EB-5 players Joop Bollen and James Park trying to avoid the rules by which honest South Dakotans play.

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Joop Bollen, you have the right to remain silent. For your sake, you might want to exercise it. If you keep saying absurd things like the following, no one will believe anything you say:

The director of the South Dakota Regional Center said he does not know why the Governor's Office of Economic Development canceled a consulting contract with him to attract EB-5 investment dollars to the state.

Joop Bollen, the SDRC director who helped raise $80 million for Northern Beef Packers, said that the letter states the contract is terminated "for cause," but no cause is listed.

"I do not know what the cause is," he said. "It would only be speculation. The only one who knows is the GOED" [Jeff Natalie-Lees, "Bollen, Others Continue Support for EB-5 Program," Aberdeen American News, 2013.11.06].

Come on, Joop, don't play dumb. You know the state already had you on a short financial leash. You know why Pierre no longer trusts you with EB-5 money.

Bollen keeps going, saying his EB-5 work has been a net plus for the state:

Bollen went on to defend the EB-5 program, which grants permanent residency status to those who make a minimum $500,000 investment to businesses in the United States.

"It has been an incredible boon to the state," he said. "Look at its total benefits versus its bumps in the road."

Bollen said it is disappointing that Northern Beef Packers failed, but there are many other successful EB-5 funded projects in South Dakota, including the Dakota Provisions turkey plant in Huron, the Deadwood Mountain Grand Hotel, Casino and Events Center and a Basin Electric power plant near Elkton [Natalie-Lees, 2013.11.06].

Northern Beef Packers fails to pay hundreds of workers, kills their jobs, makes $152 million in EB-5 visa money, crazy secret loans, and public investment disappear, and you call that disappointing? 

The Veblen dairies that you so eagerly suckered more Korean investors into subsidizing screws local producers, pollutes the watershed, and goes bankrupt, and you call that a bump in the road?

Sometimes Bollen's crazy-talk works. In September 2011, Darley International, a business services firm in California, tried to force Bollen's SDRC Inc. to enter arbitration to settle a dispute over a South Dakota fish farm project. Bollen's previous organization, the state-run South Dakota International Business Institute, had contracted with Hanul Law in California for EB-5 work. Hanul in turn contracted with Darley to recruit Chinese investors. Darley promoted the fish farm, but SDIBI cancelled the fish farm in December 2007. SDIBI then mostly ceased to function, as Bollen incorporated the private SDRC Inc. to do South Dakota's EB-5 work in January 2008. When Darley tried to bring SDRC to arbitration, Bollen, master of disguise and corporate personhood, argued that SDIBI and SDRC are different entities, that SDRC never signed anything with Darley, and that SDRC doesn't have to answer for anything SDIBI did.

And the court bought it. Now that's disappointing.

Baloney or not, Bollen makes one more comment to the press that could signal more fun to come:

He said he did not want to comment on the GOED because he "doesn't want to get in a fight with them in the media" [Natalie-Lees, 2013.11.06].

...but is he ready for a fight in the court, where he's had such luck with legal legerdemain? If more shoes are to drop, maybe Bollen is signalling he's not ready to be the fall guy. (If that's the case, Joop, call me!)

*   *   *

Bollen said the EB-5 program by definition involves risk. Some projects will succeed and some will fail, he said.

"Look at the cost benefit analysis," he said. "How many millions of dollars did we bring into the state and how many jobs have we created? Even the beef plant. It is too bad it didn't make it, but that will someday become a state-of-the-art beef plant" [Natalie-Lees, 2013.11.06].

3 comments

Open the speculation floodgates....

Governor Dennis Daugaard announced today that Attorney General Marty Jackley and federal law enforcement have been investigating the Governor's Office of Economic Development for financial misconduct. Not his Office of Economic Development, Daugaard emphasizes, but someone else's:

Earlier this year, I became aware of alleged misconduct, prior to my administration, at the economic development office.... I asked the state Attorney General to investigate and provided all relevant materials to him. There has also been a federal investigation. I refer any further questions regarding the investigations to the Attorney General and the U.S. Attorney.

I take very seriously my responsibility as Governor to protect taxpayer dollars and to ensure the integrity of state economic development programs. I am confident in the integrity of those in my administration who work at GOED, and at my direction, GOED has initiated an independent review to verify that any alleged misconduct was an isolated incident [Governor Dennis Daugaard, quoted in "Governor: 'Misconduct in State Office under Investigation," Mitchell Daily Republic, 2013.10.30].

Governor Daugaard says he learned of the issue under investigation last spring. Attorney General Jackley confirms the state investigation continues. U.S. Attorney Brendan Johnson declines to confirm or deny the existence of the investigation that South Dakota's governor and attorney general say exists.

Daugaard and Jackley offer no dates or names, but they do say the misconduct took place prior to January 2011. Unless the alleged misconduct was really well hidden for over a decade, we are thus talking about possible misconduct under Governor Marion Michael Rounds.

You know, the guy running for U.S. Senate... and under whom Daugaard was Lieutenant.

And if we're talking misconduct under Rounds's GOED, there's a fair chance it could be connected to the cabinet sceretary who oversaw that GOED from 2006 to 2010, Richard L. Benda.

You know, the guy who was found shot dead in a grove of trees last week, whose cause of death remains under investigation, and whose funeral was yesterday, nine days after he died... and one day before Governor Daugaard chose to announce a problem he's known about for months.

And if the state and feds are investigating, we're not talking about someone walking home with a stapler. We're talking about someone in state government doing something wrong with money (probably a lot of money) connected to the federal government. What GOED program could that be?

How about the EB-5 visa program, the program where wealthy foreigners essentially buy their green cards by investing $500,000 in new American business ventures? The feds have looked into abuse of the EB-5 visa program in Texas. South Dakota, operating through the privately incorporated South Dakota Regional Center, has used EB-5 money to fund numerous projects: the Dakota Provisions turkey plant in Huron, the Deadwood Mountain Grand Casino, the Veblen megadairies, and Northern Beef Packers.

The last two were the biggest projects the SDRC funded during the Rounds Administration. And without the advocacy of Mike Rounds and the financial wizardry of Richard Benda, Northern Beef Packers in particular never would have happened. The Veblen megadairies and Northern Beef Packers both made millions of dollars of EB-5 money disappear in apparent mismanagement and bankruptcy.

If there was any place for anything to go wrong with big money, the EB-5 visa program and the bankrupt projects it funded seem like the first place to look.

That said, here are two quotes from David Montgomery's report that may echo in the coming weeks. First from the campaign trail:

Daugaard’s precessor as governor, Mike Rounds, acknowledged he “recently became aware” of the investigation but declined further comment via a spokesman for his U.S. Senate campaign.

“I believe it is appropriate that any further questions be directed to Attorney General Marty Jackley,” Rounds said in a statement.

Rounds’ spokesman, Mitch Krebs, declined to say whether Rounds had been interviewed by law enforcement [David Montgomery, "SD under Investigation Week after Official's Death," Political Smokeout, 2013.10.30].

Stace Nelson, Larry Rhoden, Annette Bosworth, turn on your radars.

And over at U.S. Attorney Johnson's office, Montgomery has one heck of a hypothetical conversation:

If Benda was related to the investigation, his death wouldn’t necessarily halt it. Speaking in general terms, Johnson said in some cases investigations continue even if the central figure dies during the process [Montgomery, 2013.10.30].

Remember how Brendan Johnson decided last spring not to run for Senate against Mike Rounds? Remember how he wanted to focus on his work at the U.S. Attorney's office? Perhaps we're about to see another big chunk of what that work has been.

There are a lot of dots here. Watch for connections.

37 comments

The South Dakota Supreme Court has closed another chapter in Richard Millner's dairy shenanigans in Veblen. In a unanimous decision issued Wednesday, the justices upheld Fifth Circuit Judge Jack Von Wald's issuance of summary judgment in favor of defendants Richard Millner and Veblen's Multi-Community Cooperative Dairy, which became the environmental-regulation-breaking, tax-dodging, and ultimately failed Veblen West Dairy. The court agreed with Von Wald that the minority shareholders suing Millner and MCC failed to offer prima facie evidence of commercial wrong-doing. The plaintiffs also abused the discovery process by skipping depositions and had to pay Millner and MCC some attorney fees as penalty.

This is one unusual stroke of good fortune for Millner's beleaguered dairy enterprises. His Shortfoot Calf Ranch headquarters burned down last November; the state fire marshall says the cause remains "undecided." And one of his employees just got busted for selling methamphetamines to undercover agents three times in one week, including one sting-sale that took place on Millner's Five Star Dairy near Milnor, North Dakota. Mmmm... might want to check what's in that milk.

1 comment

In Tom Lawrence's readworthy series on big dairies in South Dakota, an Immigrations and Customs Enforcement officer claims he finds no evidence of illegal immigration arrests at South Dakota dairies.

This kind of incompetence and falsehood from a government official could get me to rejoin Stace Nelson's party. To wit:

Fourteen people arrested in the Veblen area Wednesday will appear before a federal immigration judge who will determine whether they're supposed to be in the country, an immigration official said Thursday. Thirteen others arrested face state charges of identity theft or using false identification. Tim Counts, a U.S. Immigration and Customs Enforcement spokesman in Minneapolis, said court dates have not been set for the 14 people suspected of immigration violations. The hearings will likely be in the next two or three weeks in Minneapolis, Counts said. There is also a federal immigration judge in Omaha, Neb., so the hearings could be there. The immigration accusations are administrative, not criminal charges, Counts said. So the people in those cases could be deported, but not sentenced to jail or prison. Counts said all 14 people are adults. They are being held in Sioux Falls-area jails. He was not sure on their nationalities. The 27 arrests are incorrectly being described as an immigration raid on dairy facilities in the Veblen area, Counts said. Most of the arrests were made at dairy buildings in Veblen because that's where many of the people worked, but not because the dairy was being raided, he said [Scott Waltman, "14 Arrested in Veblen Area Face Immigration Hearings," Aberdeen American News, 2008.10.30].

I'm not sure why Immigration would have a stake in twisting language to keep hide illegal immigration violations at South Dakota dairies. I would think Immigration would be keenly interested in demonstrating its commitment to and effectiveness in rooting out the crime it is charged with stopping.

comment!

I won't spend a lot of time blogging about a reporter reporting on my blogging. But my blogging about the Veblen dairies has become part of the story, as Mikkel Pates includes me in his in-depth coverage of the ongoing saga of Rick Millner.

Of more importance is Pates's account of the developing operations at the Ramona dairy to which Millner is bringing his environmentally, economically, and socially dangerous management. Evidently the major jobs at Millner's new Lake County operation have all been filled by immigrants brought down from the Veblen East dairy. Hmmm... that doesn't inspire confidence.

And evidently Millner has already gotten to the locals:

Neighbors contacted by Agweek say little about the new dairy, wanting to stay open-minded and positive about a new neighbor [Mikkel Pates, "Up from the Ashes," AgWeek, 2011.09.19].

Sorry, Rick. You deserve neither open-mindedness nor positivity. Your track record of violating environmental and zoning rules is clear.

Letting Rick Millner operate a dairy (and apply to expand it) at the head of the watershed that drains directly into Madison and Lake Madison threatens the environmental and economic health of Lake County.

9 comments

The courts are wrapping up another messy parcel of the dairy empire that serial polluter Rick Millner of Veblen mismanaged into bankruptcy. The United States Bankruptcy Court of the District of South Dakota has received the final trustee's report concerning The Dairy Dozen-Veblen LLP. Chapter 7 and Chapter 13 trustee John S. Lovald proposes dividing up the remaining $2,908.31 of the estate as follows:

Proposed Bankruptcy Disbursements Dairy Dozen-VeblenLLP

(click to enlarge -- from Trustee's Final Report, U.S. Bankruptcy Court, District of South Dakota, Case 10-10147, Document 71, filed 2011.08.03)

If I understand this document correctly, those 32 limited partners would include the Korean investors who bought their way into the country by sinking hundreds of thousands of dollars into Rick Millner's now-failed dairies. In for ten million, they now get back a thousand.

Hand Millner $100, get back one penny... that's about the return any community can expect investing in malodorous, polluting confined animal feeding operations.

5 comments

The Gary, South Dakota, office of Wayne Viessman of Viessman Trucking is listed as the business address of Lake County Dairy LLC, which organized this spring and bought the Swier Dairy near Ramona, eight miles north of my house.

Another of Viessman's LLC ventures, Veblen (SD)-based Dairy Dozen, is in dutch again with the Minnesota Pollution Control Agency. The Dairy Dozen's Thief River Falls (MN) facility, the notoriously foul Excel Dairy, is in bankruptcy, like pretty much everything else touched by the Veblen dairy "entrepreneurs." The bankruptcy trustee moved to sell Excel Dairy this month.

The Minnesota Pollution Control Agency, which firmly denied Excel its operating permit in April 2010, objected to the sale, saying Dairy Dozen/Thief River Falls has failed to lower manure levels in one of the dairy's basins to proper levels. A Minnesota court issued that manure reduction order on January 20, 2010. Dairy Dozen did not comply. On August 18, 2010, a judge found Dairy Dozen in contempt of court and ordered the manure levels be lowered to specs within ten days. Dairy Dozen did not comply.

Last week, MPCA's Michael Sharp inspected the Thief River Falls manure basin and found (as of June 27) that Dairy Dozen still had not complied with the court order. MPCA thus argues that selling the dairy would violate state law and frustrate environmental enforcement.

If Mr. Viessman or any other Dairy Dozen partners are involved in managing the Ramona dairy, I hope they will show more respect for the laws and courts of Lake County and South Dakota than they have shown for the laws and courts of Minnesota... not to mention the land and people around Thief River Falls.

Read here the MPCA's objection and supporting documents, including the two court orders the Dairy Dozen has flagrantly violated.

4 comments

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