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Legislature Again Stifles EB-5 Discussion; Some GOP Share Dems’ Concerns

Last updated on 2014.03.07

I come home to learn that the South Dakota Legislature's Executive Board has again stifled discussion, not to mention legislative investigation, of the state's EB-5 visa investment program. Rep. Kathy Tyler (D-4/Big Stone City) again led the fight to seek answers about the complicated financial activities of the green-card-buying program that is now tied to two high-profile bankruptcies, diversion of over a half-million dollars from a state grant, and a swirl of public suspicion. She was told by a majority of the E-Board to be quiet... and perhaps by no one more offensively than Senator Corey Brown (R-23/Gettysburg), whom Rep. Susan Wismer (D-1/Britton) quotes as saying that he didn't "want to listen to EB5 lecture... from a retired schoolteacher."

Senator Brown, if that quote is accurate, please tell me you are writing your apology now.*

SDPB reports that Sen. Phyllis Heineman (R-13/Sioux Falls) recycled the standard GOP dodge that it is somehow inappropriate for the Legislature to ask question about something that state and federal officials are investigating.

For the record, Senator Heineman, I feel no compunction about researching and discussing something that the feds are investigating. Why should I?

In an encouraging sign, Senator Craig Tieszen (R-34/Rapid City) is thinking like an honest lawman and legislator:

I think we ought to give deference to our criminal investigations, both the state and the federal ones. I think we need to keep our powder dry, so to speak, for the time being and see what the results of those are.... On the other hand, this is an issue for the legislature, and we will be reviewing this at some point. It’s our responsibility to review this, either to review what’s happened and what needs to be done about the past but, maybe more importantly, how we need to protect ourselves from future incidents that may come to light as a result of the investigation [Sen. Craig Tieszen, quoted in Kealey Bultena, "Lawmakers Decide Against EB-5 Talks," SDPB Radio, 2013.12.16].

The Executive Board held a voice vote to remove EB-5 from today's agenda, so we won't get a roll call of those who chose to keep the Legislature's head in the sand. Remember: the Republicans on the board to day didn't vote against an investigation or other action; they voted against even talking about it.

For the record, we do have the names of the legislators who joined Rep. Tyler in formally calling for a special session to discuss the EB-5 program:

  1. Rep. Julie Bartling (D-21/Gregory)
  2. Sen. Tim Begalka (R-4/Clear Lake)
  3. Sen. Jim Bradford (D-27/Pine Ridge)
  4. Rep. Dennis Feickert (D-1/Aberdeen)
  5. Sen. Jason Frerichs (D-1/Wilmot)
  6. Rep. Peggy Gibson (D-22/Huron)
  7. Rep. Spence Hawley (D-7/Brookings)
  8. Rep. Bernie Hunhoff (D-19/Yankton)
  9. Sen. Tom Jones (D-17/Viborg)
  10. Rep. Dan Kaiser (R-3/Aberdeen)
  11. Rep. Patrick Kirschman (D-15/Sioux Falls)
  12. Sen. Larry Lucas (D-26/Mission)
  13. Rep. Stace Nelson (R-19/Fulton)
  14. Sen. Angie Buhl O'Donnell (D-15/Sioux Falls)
  15. Rep. Scott Parsley (D-8/Madison)
  16. Rep. Ray Ring (D-17/Vermillion)
  17. Rep. Dean Schrempp (D-28A/Lantry)
  18. Rep. Karen Soli (D-15/Sioux Falls)
  19. Sen. Billie Sutton (D-21/Burke)
  20. Rep. Kathy Tyler (D-4/Big Stone City
  21. Sen. Chuck Welke (D-2/Warner)
  22. Rep. Susan Wismer (D-1/Britton)

That's 19 Dems, 3 Republicans. Contrary to my earlier report, Rep. Elizabeth May (R-27/Kyle) appears to have changed her mind about supporting Rep. Tyler's call for a special session... either that, or the mail from Kyle is slow.

Rep. Wismer's signature might puzzle those who get their news from Dakota War College. Pat Powers misread the Aberdeen Sunday paper and rewrote Rep. Susan Wismer's comments there to give the false impression that she rejects the need for any further audits of South Dakota's suspicious EB-5 visa investment program. Her signature on Tyler's petition indicates otherwise.

The thrust of Scott Waltman's excellent Sunday report is that state lawmakers on both sides of the aisle want more investigation of the EB-5 program and the Governor's Office of Economic Development. Waltman quotes Rep. Wismer as saying, "It makes sense to see what the ongoing audits and investigations reveal before ordering something like the EB-5 forensic audit." Wismer expresses caution, but she does not reject the need for any further audits.

More importantly, Pat's own Republicans reject the claim that the GOED/EB-5 scandal is no big deal or just some half-baked Democratic ploy. Republicans like Rep. Charlie Hoffman, Sen. Al Novstrup, and Rep. Dan Kaiser want answers, too. Let's summarize what all of the other legislators, Republican and Democrat, say about the GOED/EB-5 story:

  • Rep. Feickert supports a forensic audit of EB-5.
  • Sen. Frerichs wants more details about the GOED's business favors. He says Governor Dennis Daugaard's cancellation of the state's contract with SDRC Inc. for EB-5 work was a good idea and affirms that there is a serious problem. And heck, Sen. Frerichs throws in that he's uneasy with EB-5 investors buying up South Dakota property.
  • Rep. Charlie Hoffman (R-23/Eureka) deserves a full blockquote:

Rep. Charlie Hoffman, R-Eureka, said he believes the ongoing work will yield many of the answers people want concerning the EB-5 program and how state money is used for economic development. If there are problems, he said, the Legislature will pass any needed changes 105-0.

What Hoffman doesn’t want, though, is a partisan-driven investigation where there is assumed wrongdoing. If there were improprieties, Jackley and Johnson will find them and recommend changes, he said. Doing anything until they reveal their findings and the newly ordered audits are finished would be circumnavigating the process, he said.

Hoffman said he knew Benda. Benda was likely involved in some improprieties, Hoffman said, but it doesn’t look like there have been problems with state government on the whole. The $550,000 was misappropriated, but it isn’t missing, he said [Scott Waltman, "More Answers Wanted: Area Lawmakers Call for More Investigation of State Economic Development Efforts," Aberdeen American News, 2013.12.15].

Catch that part where our man Charlie expresses confidence in both AG Jackley and US Attorney Johnson? So much for heeling to the GOP line that the GOED/EB-5 scandal is all partisan muckraking. Thanks, Charlie!

More legislator statements from Waltman:

  • Rep. David Novstrup (R-3/Aberdeen) says the Legislature wait and see what the feds find.
  • His dad Sen. Al Novstrup (R-3/Aberdeen) says the Legislature can most certainly look into how SDRC Inc. carried out its state contract to conduct EB-5 activities.
  • Sen. Welke isn't sure we need an independent investigation (again, like Wismer, cautious, but not rejecting), but he says the public expects answers so we can avoid future errors (standard effective management thinking!).
  • Rep. Dan Kaiser (R-3/Aberdeen) turns on his policeman's sense and says that with all the unanswered questions, he favors a forensic audit.
  • Wismer, Feickert, and Hoffman all say that we may be able to still get some good out of EB-5, but we should be careful with it.

Certain Republicans need you to believe that the EB-5 story isn't worth discussing. Unfortunately, a majority of the Legislature's Executive Board feel the same way. But that opinion is far from uniform among our legislators. As Waltman's report shows, while legislators may not agree on the exact mechanism, a number of Democrats and Republicans are saying we must review and reform our EB-5 visa program and perhaps our larger approach to economic development.

*Update 2013.12.21 18:59 CST: Rep. Tyler reports no apology, but she offers her own account of the insult she and the quest for truth suffered at the E-Board Monday:

The meeting started; the chair asked for additions or deletions to the agenda. A motion was made, seconded, and carried to remove my discussion from the agenda. Three reasons were given: current investigations (If they would have listened, those were covered in my spiel); not the right time (So when will the right time be?); and my favorite—to paraphrase: “If I wanted to learn more about the EB-5 program, I’d want to hear it from someone who knows something about it, instead of a retired school teacher” [Rep. Kathy Tyler, "I Still Don't Like Politics," Kathy's Corner, 2013.12.20].


  1. interested party 2013.12.16

    One and a half West River legislators: where is Larry, grud?

  2. Jerry 2013.12.16

    You would think that they would have a lot more curiosity into how the money they appropriated was actually divided up. They voted for the disbursement of the funds for this and now they act like it is no big deal that it took a flying flop. Why aren't all of the legislatures demanding to see how the Chinese and Korean investments took place and how was that going to have an effect on the state they represent? By not having curiosity about the outcome means they know that the deal has been done and soon it can be announced that there is nothing to see here and we should all move along.

  3. grudznick 2013.12.16

    Mr. Rhoden is likely carefully studying the issues and probably doesn't want to sign random and poorly written documents handed out by crazy ladies. Words we should all live by.

  4. interested party 2013.12.16

    Even the Howieites are mum: where is the outrage, Lance?

  5. interested party 2013.12.16

    Betty: is Stace not your stallion?

  6. Jim 2013.12.16

    Speaking of crazy, Grudz did you send Dr. Annette 11 bucks so she could enjoy coffee with her breakfast?

  7. Bree S. 2013.12.16

    A retired schoolteacher who kicked everyone else's butt by a wide margin getting votes in her district.

  8. grudznick 2013.12.16

    Mr. Jim, I have said I would like to have breakfast with Dr. Bos but I will not give her money for her to enjoy coffee on her own and $11 will buy a full on gravy tater, eggs, sausages and several kinds of toast, plus a bottomless cup of good old black joe at any respectable breakfast joint west river. I wouldn't give a starving homeless woman $11 for coffee and neither should you, sir.

  9. Jana 2013.12.16

    The legislators might be afraid that their failure of oversight and willingness to hand out blank checks will come back to haunt them as well. They control the purse strings and are ultimately responsible for the oversight of the people of South Dakota's best interests.

    They've lost sight of that over the years of one party control and out of control crony deals that are in their own cliquish interests.

    We all know that when the Gov says jump they say how high. All the kool-aid they've drank over the years around wild spending on sketchy economic development is coming back to rot their teeth.

  10. Roger Cornelius 2013.12.16

    To be clear, Larry Rhoden doesn't want a legislative investigation of GOED/EB-5 funds. If he did, he would have signed on.

  11. caheidelberger Post author | 2013.12.16

    Jana, could we assuage their fears by telling them that people are going to pin any shenanigans on the Governor and not the Legislature? After all, it's the Governor's Office of Economic Development, not the Legislature's. And these are the same voters who rejected Referred Law 16 (HB 1234, Daugaard's education bill) last year but re-elected most of the legislators who voted for it. Couldn't legislators legitimately claim to be out of the loop, due to their part-time status? (Not excusing them, just wondering if they really do face threats of political blowback.)

  12. barry freed 2013.12.17

    All of the Foxes who favor investigating the missing hens, raise your paws.

  13. caheidelberger Post author | 2013.12.17

    Rep. Paula Hawks (D-9/Hartford) weighs in on Facebook:

    "I am an elected member of a citizen legislature elected of the people by the people to serve the people of South Dakota. It is not just Kathy Tyler's right to do this investigative work, it is her absolute responsibility as a member of this body that represents the citizens of this state. The citizens of this state whom, the legislative executive board should be reminded, pay the taxes that fund this government program. Kathy, who is also a small-business owner, spent 20+ years serving the state of SD as a teacher, a mentor, a classroom leader, a counselor, and a guide for countless students, parents and other teachers. As a fellow former schoolteacher, my hackles have been raised. Who is anybody to imply that a retired schoolteacher is due any less respect than any other elected member of this body? This is another unfortunate, egregious example of the levels of disrespect that occur in the discourse among politicians at the state and federal level" [Rep. Paula Hawks, Facebook post, 2013.12.16].

  14. Les 2013.12.18

    As someone who contends we need to drill the stink out of this, I do not agree supporting or not supporting Kathy's effort is more sincere or disingenuous to repairing our problem. There is a problem, but it is not our current legislature, yet!
    We have at least two investigations ongoing and a third won't guarantee anything, yet.
    As to Sen Brown's comment, if truly exists in the context published, Corey would do well to apologize before he is forced to recognize the organized power of school teachers in his business.

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