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Benda Pocketed $450K Diverted from Future Fund-NBP Grant

Last updated on 2013.12.23

A day after declaring Richard Benda's death suicide, Attorney General Marty Jackley fingered the former economic development chief for double-dipping on $5,559.80 in travel reimbursements.

Now someone (Bob Mercer doesn't name the sources, plural) ties Benda to the much larger misappropriation of $550,000 from Governor M. Michael Rounds's last-minute Future Fund grant to Northern Beef Packers:

Richard Benda conspired to pay himself $225,000 annually from state funds for the next two years when he left state government in January 2011, it was learned Thursday.

Sources said Benda routed $550,000 from a $1 million state grant that was paid in January 2011 from the Governor’s Office of Economic Development to Northern Beef Packers in Aberdeen.

...Benda personally delivered the $1 million check to Northern Beef, according to sources.

In turn Northern Beef paid $550,000 to SDRC Inc., the Aberdeen-based company that oversaw all EB-5 immigrant investments in South Dakota.

...SDRC then hired Benda in January 2011 to become its EB-5 loan monitor for Northern Beef.

Northern Beef was the recipient of two large loans totaling some $59 million from the EB-5 program. SDRC handled recruitment of the foreign investors and managed the loans [Bob Mercer, "Missing $550,000 Used to Pay Benda," Aberdeen American News, 2013.12.13].

We all see the shell game here, right? The Future Fund disbursement Benda hand-delivered from Pierre to Aberdeen, Grant #1434, specified the million dollars was to be used for construction costs and equipment. Benda shows up smiling at NBP's door and hands over that check. Then, according to Mercer, SDRC, through the loan fund Benda is now in charge of, demands that NBP pay loan monitor Benda's salary, $225K per year, for two years in advance. (Someone, please tell me how I can swing a deal like that!)

Now remember, the money misused here is state money. The Republican spin machine will flip into overdrive telling you that there's nothing to see here (yup, already at it). But Governor Rounds signed the agreement sending that money out the door and, ultimately, into Richard Benda's pocket. Whether Richard Benda tricked Mike Rounds into making this deal possible, or whether Rounds willingly did this favor for a friend who failed to win continued employment with the incoming Daugaard administration, Rounds's oversight of state funds is in serious question.


  1. Rick 2013.12.13

    Mike Rounds has no business running for the U.S. Senate. But as long as he's willing to keep his reputation in the political hotbox, he'll be a human pinata for anyone wanting to rip down the GOP power clic in Pierre. Get 'im, Stace.

  2. owen reitzel 2013.12.13

    Rick Knobe ripped bloggers yesterday when you were on Cory but where would this story be without yourself or Bob Mercer?
    It's the bloggers that haven't let this story be swept under the rug and Knobe should issue an apology.

  3. caheidelberger Post author | 2013.12.13

    Knobe was hard on bloggers, Owen, but note that he excepted this blog from his criticism. He said the quality of the journalism you've read here was why I was the first blogger he's interviewed on Viewpoint University. Perhaps Knobe has just been reading too much Dakota War College?

  4. owen reitzel 2013.12.13

    lol. that could be Cory. I did hear that he said Madville Times seemed to be a good blog and that you've done the research.
    Something PP does not do Especially if Rounds is invloved

  5. Rick 2013.12.13

    Bill Clay relies upon the generosity of others. Research is too much work.

  6. Rorschach 2013.12.13

    We're learning more about what happened here, but we're not quite there yet.

    What a racket SDRC had going. If memory serves, wasn't it charging the EB-5 investors a large sum every year to manage their money? And then charging the loan recipient an extortionate sum for a person to monitor the loan disbursements. Wasn't the fees charged to the EB-5 investors supposed to be used to pay the loan monitor who essentially worked on behalf of the EB-5 investors?

    The dollar amount NBP paid doesn't jive with 2 years of Richard Benda's salary by the way. Why, if SDRC demanded 2 years of Richard Benda's salary ($450,000) did NBP pay SDRC $550,000?

    What Benda did might not be illegal. It may just be another example of the golden parachute for government executives from the private sector that they funnel state money to. If I recall, after Bill Janklow sold the cement plant and sold the revenue stream in exchange for a lump sum, he left office and went to work for the company that did that transaction.

    I think the federal investigation will shed some light on the Wall Street type of financial shenanigans SDRC and Northern Beef were engaged in, and the state's dismal failure of oversight. I don't know how much this will hurt Rounds, but it surely doesn't help him.

  7. DB 2013.12.13

    Just as was expected by those of us who came to logical conclusions. It only made sense when we knew where both the money and Benda ended up. Now, on to Rounds since the crazy Tea Party Stace supporters will try to make something of it......What's Round's motive to be involved? I highly doubt he is going to risk everything for pennies. Even if he wasn't involved, blaming him for the oversight is going to be tough. It is very common where embezzling happens, rogue accountants and directors act alone and are only found out about when it is too late. It will be tough for the clowns that support Stace to get that to stick to the wall.

  8. Disgusted Dakotan 2013.12.13

    Mercer's article cuts to the bone. He points out that Rounds' fingers are all over the diverted monies:

    Hypocrites like Powers rail against Democrats for corrupt crony-capitalism, but claim this type of corruption is good Republicanism in being pro-business. True Republicans are against this type of corruption and are for the free market (which is not free if the government is picking winners and losers).

  9. interested party 2013.12.13

    Rounds is toast.

  10. interested party 2013.12.13

    Rounds comes off as looking like not only an egomaniac short guy, a sleazeball and incompetent, he makes the Catholic Church look innocent of crimes against children.

  11. Joe 2013.12.13

    How does Rounds approve this loan guarantee without a conflict of interest? Hey yeah, I'm going to give you a bunch of money to give to a company who in return is going to give you a bunch of money.

    Its not illegal, I don't even think its that bad for what Benda did. He got paid to do a job, and found a creative way to make sure it happened. What I don't get is how a Governor and his staff approves of this

  12. Rorschach 2013.12.13

    It seems to me that for Joop Bollen the EB-5 program was nothing more than a vehicle to scam rich foreigners out of their money. Maybe they felt like the foreigners were more interested in a visa than an investment, so in their minds it was o.k. that they sold these people a bill of goods. But when the state of South Dakota lends its name, and staff, and credibility to the EB-5 program and to the investments being pitched to the foreigners, the state of South Dakota has a responsibility to oversee the program and make sure it's being run for the benefit of the investors and not for the benefit of the middleman.

    That complete dereliction of duty by the state of South Dakota is what the federal investigation will probably show. Of course the state will blame the dead guy - again. But didn't Rounds go on these trips too? He's the one getting his picture taken in the Governor's office with Chinese investors. Mike Rounds can have his surrogates point fingers at the dead guy, but the cloud over Rounds's candidacy isn't going away. He can't control the timing or the content of what the federal government releases concerning its investigation.

  13. Rorschach 2013.12.13

    Here's what any candidate running against Mike Rounds should do. Locate some of those Chinese and Korean investors who were scammed out of their money, but who met with Mike Rounds and got a pitch about investing in SD. Get them on a tv commercial telling their story about how they met the governor of SD and what he said to them. Then saying what really happened. "He was a slick salesman, and I believed him." At the end the distressed/disgusted political ad voice woman delivers the punchline: "Aren't there enough slick salesmen in Congress?"

  14. Earl Hanson 2013.12.13

    Could you get the list of names of those legislators who would not sign Kathy Tyler's petition for a legislative audit? I believe all the legislators were only too happy to look the other way when this was all going on. Isn't there supposed to be checks and balances in government?

  15. Robert Klein 2013.12.13

    Earl, if I wanted a list, I believe I'd ask for a list of those who DID sign her petition. Heck, she'd probably make that one available. Since they all were asked, you'd have the information you needed.

  16. Bree S. 2013.12.13

    I'm about to speculate, grudznick.

    What I want to know is what happened to the extra $100,000. Was it rediverted back to NBP? Was it actually used to pay fees? It is rather convenient that $450,000 + $550,000 adds up to a million. It could be someone at NBP made a deal with Benda to get the money from Rounds' future fund. Course it would have been simpler to just send $450,000 to SDRC. But that $100,000 difference is puzzling and these people do seem to like complicated paper trails.

  17. Rick 2013.12.13

    Maybe Rounds' $9 million campaign money is already in a bank -- somewhere.

  18. Bree S. 2013.12.13

    So I'm curious about this: Jackley said $550,000 was improperly diverted. On the DWC "commenters" are saying the $450,000 paid to Benda was all perfectly fine, normal and adhering to contract. If that is the case then what $550,000 was "improperly" diverted?

  19. rollin potter 2013.12.13

    hey people,you forgot to " wonder" who received the legal fees during this fiasco!! You better believe they don't work for zippo!!!!!!!!

  20. testor15 2013.12.13

    The east Asia investors met an American insurance salesman and lost.

  21. Douglas Wiken 2013.12.13

    Rounds probably wanted only the equivalent of an agent's fee for an insurance policy.

  22. Charlie Johnson 2013.12.13

    It certainly appears Mike Rounds will not be our next U.S. Senator.

  23. Jerry 2013.12.13

    Maybe all of the missing loot was deposited in Europe in a rainy day fund. 9 million is a lot of rain man. Would not take much to bring that with you, why else did those two crazy kids go off to the old country?

  24. Kurt Evans 2013.12.13

    Here are some other key excerpts from the Mercer story (
    "Benda was secretary of tourism and state development from 2006 through the first week of 2011 in Gov. Mike Rounds’ administration. Benda oversaw GOED and a variety of other agencies...

    "In December 2010, when Benda knew he wouldn’t be retained by Governor-elect Dennis Daugaard in the new administration, Benda received approval from Rounds for a $1 million Future Fund grant to Northern Beef.

    "The Future Fund is under the exclusive control of the governor. It is funded through money paid by all businesses that participate in South Dakota’s unemployment insurance program...

    "Because the reimbursement for the salary of a loan monitor was a contractual obligation of Northern Beef, and because Northern Beef had to comply with its contractual obligations to obtain further loan disbursements from SDIF, the company paid SDIF the sum of $550,000, according to King...

    "Benda died from a gunshot wound on Oct. 20 at a farm near Lake Andes. The attorney general ruled the death was a suicide."

    "Benda was secretary of tourism and state development from 2006 through the first week of 2011 in Gov. Mike Rounds’ administration. Benda oversaw GOED and a variety of other agencies."

    Maybe Rounds is corrupt. Maybe he's just incompetent. Either way, he's obviously made a long series of very bad choices.

  25. Winston 2013.12.14

    What I find interesting is that in July of 2011, six months after leaving State government, Benda was still promoting himself as the current Secretary of Tourism and State Development:

  26. Earl Hanson 2013.12.14

    In the November 26th issue of the Watertown Public Opinion, Bob Mercer reported and I quote "The $550,000 was diverted to PREPAY fees charged by recruiters, promoters and agents to immigrant investors." This makes sense when you know that the Ag Week publications reported that the Hanul law firm got $250 for a Two and one-half million dollar judgment in the Veblen Dairy bankruptcy. No wonder they wanted to be prepaid. They may have forseen the bankruptcy of Northern Beef. It appears they recouped part of their Veblen losses. It would be interesting to investigate the connections of Benda, Bolin, and Hanul Law Firm.
    The Hanul Law Firm of California and South Korea was an EB5 recruiter.

  27. Bree S. 2013.12.14

    The Offering Memo created by Defendants painted a glowing picture of the NBP Project. The Offering Memo, however, failed to disclose material problems at the Project, including litigation, millions of dollars in liens that had been filed before the November 2009 Offering Memo was circulated, and numerous other problems and conflicts of interest.
    On February 22, 2010, NBP amended its Certificate of Limited Partnership with respect to an earlier, September 2009 filing by which the general partner of NBP had been changed to an individual named Oshik Song, who was one of the original EB-5 investors - correcting that prior filing slightly to state:.. "There was no intent, with the initial Certificate of Amendment, dated September 23,2009, to change the general partner. The general partner of Northern Beef Packers Limited Partnership has always been, and will continue to be, Northern Beef Packers Management, LLC. The membership of that Limited Liability Company has changed. Oshik Song is the new member/owner of the LLC."
    The Offering Memo and related materials included a template escrow agreement providing for Hanul to be the escrow agent... Defendants failed to disclose that Hanul was associated with or in control of the prior EB-5 group, which previously invested in, and now controls, the Project... Defendants also failed to disclose the connections between Defendants, Hanul, and Song who were also in business together regarding yet another undisclosed EB-5 investment project in South Dakota: the failed Veblen Dairy Project...

  28. Jerry 2013.12.14

    Thanks Bree S. Whenever I read about this and think about it, it was smelly to begin with. An uncle loaning money to a nephew, what a crock. What uncle has 30 million in cash laying around the kitchen table? Rounds has a lot of splaining to do, but hopes that this will just vaporize like all the rest of his shady dealings.

  29. Disgusted Dakotan 2013.12.15

    Well, now we know why Rounds is really avoiding debating! Why though are reporters like Mercer, Montgomery, and others, letting him get away with it? Where are the Op Eds? Since when does a candidate get to waive off debates put on by the public like an arrogant entitlement mentality rich career politician? A lot of fussing on here, is it toothless?

  30. Rick 2013.12.15

    Welcome to South Dakota, DDakotan. Move along while they remove your money and fill their pockets. Nothing here to see.

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