Bob Mercer is trying to wrap his brain around the state and federal investigations of the EB-5 visa program overseen (perhaps not overseen enough) by the South Dakota Governor's Office of Economic Development. As background, Mercer directs us to required reading on the EB-5 program in South Dakota, a 2007 article by Emily Arthur-Richardt of the Aberdeen American News.
I've cited Arthur-Richardt's excellent story in my past coverage of the EB-5 program and the Veblen dairies debacle. I've also had her article on my desktop since Benda's shooting. As I read and re-read that seminal text, I keep coming back to this central quote about the motivation of EB-5 visa buyers from the man who ran Governor Marion Michael Rounds's second-term economic development efforts, Secretary of Tourism and State Development Richard Benda:
Richard Benda, secretary for the Department of Tourism and State Development, defended the program.
“I haven't found (getting a green card) has been the overwhelming factor of people investing here,” he said. “... These are very prudent investors. They are looking for a return regardless of whether they can obtain a green card. The overwhelming principle all of them look at is the return on the project. They've got to answer the question: Is there a possibility down the road that I get my money back? It's got to be an investment; it's not a loan” [Emily Arthur-Richardt, "Green Cards for Sale: $500,000," Aberdeen American News, 2007.10.07].
You don't need my blogging to tell you Richard Benda was putting mayo on the whopper. Let's hear from EB-5 program coordinator Joop Bollen... in that same 2007 article:
And then there are the allegations that foreign investors are basically just buying their green cards.
Bollen said he understands them, and he doesn't deny that's happening.
“These people will drop the money here, but they won't live here,” he said, meaning South Dakota. “It's their ticket over here. Most of them don't care where the money is going. The average wealth of these people is quite high. I'd say, on average, it's about $10 million. They have substantial wealth” [Arthur-Richardt, 2007.10.07].
Think about those statements in the context of the Northern Beef Packers plant, which Benda and Bollen were helping Dennis Hellwig start with EB-5 money when Arthur-Richardt wrote this article. Recall that there were local cattlemen who were interested in starting a beef plant in northeastern South Dakota. Instead of anchoring the project in that local interest and wealth, Secretary Benda and Governor Rounds steered Hellwig toward foreign EB-5 money, which almost exclusively funded the initial construction of the plant and which saved the project when local investors (strangely?) dried up.
Who benefits from basing NBP on EB-5 investment?
Well, perhaps the EB-5 coordinator, Joop Bollen. According to the 2009 contract that I'm reading between the Rounds-Benda Department of Tourism and State Development and Bollen's newly incorporated South Dakota Regional Center, Inc., the SDRC (which, as far as I can tell, has never consisted of anyone other than Bollen and sometime partners Maurice Berez and Pyush Patel) would receive a $45,000 fee.
And, perhaps, the Department of Tourism and State Development, now the Governor's Office of Economic Development. That 2009 contract says the SDRC will charge EB-5 project beneficiaries a fee of not less than 1% of the capital raised. That money was supposed to go into and "Expense Fund" and two "Indemnification Funds" under the control of DTSD/GOED.
Whatever the benefits and whoever the beneficiaries, Governor Mike Rounds's administration pushed an economic development program that preferred investors with more disposable cash and less interest in how that money would be spent than local South Dakota investors.