Press "Enter" to skip to content

Vermont’s State-Run EB-5 Program More Efficient than SoDak’s Privatized Version

It's hard to predict who might be indicted for what in the state and federal investigations of financial misconduct in the Governor's Office of Economic Development, SDRC Inc., Northern Beef Packers, and the EB-5 visa investor program. But the GOED/EB-5 scandal is already indicting one core Republican idea: that privatizing proper government functions makes them more efficient.

South Dakota used to operate its EB-5 visa investor program under the Governor's Office of Economic Development. In 2009, the state let its EB-5 coordinator, Joop Bollen, leave the state payroll and operate the EB-5 program as his own private corporation. Most states have followed suit.

Vermont is the only state keeping direct control of its EB-5 program. David Montgomery reports that Vermont's program runs more efficiently than South Dakota's:

For one thing, Vermont’s regional center takes a cut of only $1,500 per investor, which it uses to pay most of its expenses. Raymond said his office has a small taxpayer-funded budget but mostly relies on fees.

Investors in South Dakota projects run by SDRC, on the other hand, paid $10,000 per year per person — a potential revenue of millions of dollars for the private company. It set aside a small portion of that to pay state expenses related to the EB-5 program [David Montgomery, "Northern Beef: EB-5 Can Work in State Hands," that Sioux Falls paper, 2013.11.09].

Vermont's state officials skim much less off the EB-5 visa applicants than South Dakota's private middleman does. That means more dollars per investor going toward the intended economic development projects.

That also means the folks running the program are less worried about drawing more investors to boost their commission (remember: if the project goes belly up, the investors lose their money, but SDRC's Joop Bollen keeps his commissions) and more worried about making sure projects are up to snuff:

“Once we approve a project, we meet with them on a quarterly basis, we actively look and we view the projects, we look for any evidence of improper marketing, any evidence of anything even becoming potentially questionable, and we quickly seek out solutions to immediately take care of any concerns that we have,” [Vermont EB-5 director Brent] Raymond said.

That happened earlier this year, when Vermont canceled EB-5 funding for a retirement home after becoming concerned about the project’s principal partner [Montgomery, 2013.11.09].

That state responsibility and accountability spared EB-5 investors disappointment in Vermont this summer when the state declined to approve a window factory for EB-5 funding. German window maker Menck wanted to include EB-5 money in its portfolio to convert a vacant building to a factory in Newport, Vermont. Menck modified its factory plans to automate production, which would have improved its bottom line but which also reduced the total job count. EB-5 visa rules require specific levels of job creation. Vermont's EB-5 officials saw Menck's factory would fall short and said, no Korean dice.

The state of Vermont runs its EB-5 visa program more efficiently and effectively than its privatized, profiteering South Dakota counterpart. That indictment of privatization is one more reason South Dakota Republicans are struggling to explain why we let a private firm run a government program with no accountability.


  1. owen reitzel 2013.11.10

    Try telling this to a Tea Partier Cory. Imagine what would happen if you privatize Social Security, Medicare and other government programs.
    Everybody wants as small as government as possible but there are some things the government does better then a private organization does,

  2. Douglas Wiken 2013.11.10

    There are many things government can do better than ripoff businesses and many are being done right now. A little thought can make them all better however. Ideological mythology and defective memories are the problem in SD.

  3. Porter Lansing 2013.11.10

    Typical "Red State" (Conservative) corruption. SoDak may only be third in most corrupt states but they've got high hopes for advancement.

  4. Jerry 2013.11.10

    Republicans cannot govern, simple as that. I say this over and over and I am proven right, over and over. It is not in their DNA to do the sort of thing it takes to run government or for that matter an honest business. They believe that in order to do business, you must not have competition.

  5. Jerry 2013.11.10

    I wonder how much Joop gave to Rounds in campaign contributions and other forms of thank you's. The guy must have felt somewhat beholding to Rounds for the millions pouring through his hands that were all commissioned.

  6. Roger Cornelius 2013.11.10

    It has been said that Rounds has a $9,000,000 war chest for his campaign. Have any ideas where he might have gotten it?

  7. Jerry 2013.11.11

    Mr. C, maybe he got it by cashing in his 401. No, guys like him do not get that big time moolah from the grassroots here in South Dakota, they get it from out of state interests who just want the little man's vote. His vote has nothing to do with South Dakota or its good people. His vote has to do with lining the pockets of himself and the rest of the fat cats by lifting tax payer money. It does not take a genius to figure out that the South Dakota EB-5 was a con, that is run privately for the state, was designed to make certain people very rich and in my view, able to steer and direct funds without oversight. When you have that kind of control over millions, doing nothing really for employment, one wonders what was it designed to do, other than to promote political agenda. A mutual back scratch that manipulates South Dakota tax payer moolah and disperses it among wealthy investors overseas, all with a substantial cut going to political supporters of the powers to be.

    Each one of these "projects" seem to be functioning on more "loans through investments by foreigners" to keep the doors open. It doesn't appear that for the most part, there are any opportunities for South Dakota workers in these ag related business ventures. Without the legislature and more importantly, the governor, overseeing these projects and making sure they live up to their potential, it is a slush fund. Why can Vermont make this program work and South Dakota cannot? As reported, Vermont uses oversight and takes responsibility, South Dakota cannot seem to govern.

  8. caheidelberger Post author | 2013.11.13

    Oh, Jerry, I think Joop is smarter than to transfer cash to Rounds on the books like that. I haven't seen Bollen's name on any campaign finance reports yet, though I haven't read them all. I'm not even sure Joop is a citizen and registered to vote.

Comments are closed.