There are eager readers, and there are really eager readers. A friend of the blog cogitates on the GOED/EB-5/NBP scandal and decides to place the affair in recent historical context. In this essay, our friend reminds us that South Dakota has trouble holding its political favorites accountable and must rely on the diligence of outsiders to bring friends of the powerful to justice.
The Republican Senate darling in South Dakota is stuck in a scam. People close to him and whom he trusted are found to have scammed millions right under his nose.
Months drag on, details leak out, and the South Dakota Attorney General still won’t act.
He stonewalls. He minimizes the allegations. He sees no reason to act. Meanwhile, the paid-for GOP blogs bang the drum to knock down the scam, attack the news media, attack the whistleblowers and deflect attention and blame.
Concerned citizens look outside South Dakota for justice … for a prosecutor who wouldn’t shirk his or her duties to investigate. Sound very familiar?
It should. We lived through it, starting in late 2004 when complaints could no longer be contained in South Dakota and Iowa about Sioux Falls car dealer and Sen. John Thune’s best friend and former campaign organizer Dan Nelson and his company, Dan Nelson Automotive Centers.
The John Thune-Dan Nelson alliance goes back to Thune’s entry to South Dakota politics. They were very close friends. Dan told the New York Times during the summer of 2004 that he and John were “best friends.” John was running against Sen. Tom Daschle and Dan’s paying gig was his chain of used car dealerships in South Dakota and Iowa. And his credit business. They were an influential team.
- John hired Dan in 1995 to be his campaign manager for the 1996 elections. They won the primary against Lt. Gov. Carole Hillard and went on to win the general election for the U.S. House of Representatives.
- John and Dan’s friendship and comradeship continued through John’s re-elections to the House for two more terms, and again when John ran and lost by just 524 votes to incumbent Sen. Tim Johnson in 2002. Dan, John and a circle of close male friends hung out together frequently, shot hoops and had some great laughs over the years, according to GOP insiders at the time. Dan reportedly gave John’s 2004 campaign $9,000.
- Dan leased part of his corporation’s building as John Thune’s Senate campaign headquarters in Sioux Falls. He leased cars to the campaign. He provided advice to the candidate and his campaign team. He gave and raised money for John. John paid Dan $84,189.87 for office rent in the 2004 campaign against Senate Leader Tom Daschle.
- John’s business dealings before the Daschle challenge included lobbying and sitting on the Audit Committee and Board of Directors of what would soon become known as MetaBank. He reportedly was paid about $35,750 to sit on the board, starting soon after the 2002 campaign ended. He remained on the Board of Directors until Nov. 18, 2004, after he won the Senate election. This was great news for Dan Nelson, who claimed to be close pals with MetaBank’s top officer.
- While John served on the bank board and on its Audit Committee, Dan obtained millions in loans for his corporation, “formerly known as South Dakota Auto Group, Inc., d/b/a Dan Nelson Finance Super Center, J.D. Byrider Sales, and Dan Nelson Auto Network. The corporation headquarters was at 2900 W. 12th St., Sioux Falls, SD,” according to legal documents. When Dan declared bankruptcy in mid 2005, he owed more than $28 million, about $10 million of it to MetaBank.
During 2004, while John shared Dan’s office space and ran for the U.S. Senate, complaints stacked up in South Dakota and Iowa against Dan Nelson Finance Super Center and his auto network. An investigation started in mid-2004 in Iowa, but not in South Dakota.
By September 2004, Dan became aware of the Iowa investigation. Questions arose about what Dan and his business partner Chris Tapken did with all the money they owed. On Jan. 7, 2005, Iowa Attorney General Tom Miller announced he filed a lawsuit alleging consumer fraud violations by Dan Nelson and the Dan Nelson Automotive Group, Inc. During the same week, John Thune had taken the oath of office to become a U.S. Senator.
South Dakota’s blogosphere was afire. Republican paid-for blogs accused the Iowa Attorney General, a Democrat, of playing politics. Democratic bloggers countered with evidence gleaned from public records detailing the Thune-Nelson business relationship and friendship and pointing to Thune’s role on a bank board doling out so many millions to his best friend and former campaign manager. What, they asked, was John Thune doing on MetaBank’s Audit Committee while his best friend was bilking millions from the bank?
Finally, in the summer of 2005, South Dakota news reporters started to pay attention to the Iowa Attorney General’s lawsuit for fraud and the ocean of complaints in Iowa and South Dakota. Cornered by Keloland reporter Don Jorgenson on July 8, Thune denied being aware of Nelson’s activities, saying he only sat on a board and didn’t have access to those details. Thune’s press aide was outraged. (So, what does an audit committee do?)
Having seen the same information, South Dakota Attorney General Larry Long made it clear he had no intention to do anything other than the most cursory look-see. That’s not how others in South Dakota’s law community saw things. From Sioux Falls attorney Harry Enberg to Keloland: "With Dan Nelson, you would think that FDIC had been watching this file, and if they had seen a $30 million loan and only $10 million or $6 million in assets, they would have ordered the bank to do something, whether it's foreclose or force into bankruptcy.” Not even the news that Dan Nelson had sold the business to Chris Tapken for just 50 bucks could get Long to move.
- July 12, Keloland asks “why hasn’t South Dakota filed suit against Dan Nelson Automotive?” Long answered that South Dakota doesn’t have the same laws on its books as Iowa to protect against fraud. Other than that, he had nothing actionable: “I would say this: I would say his business conduct is no better or no worse than any other auto dealer we deal with.”
- July 13, another bombshell hits. Keloland asks why the “SD Acting US Attorney Wouldn't Investigate Nelson Case.” Turns out Thune’s preferred Acting U.S. Attorney is the mother of Dan Nelson’s business partner, Chris Tapken. “Now their family ties will affect how the justice system handles any investigations into the bankrupt car dealership. Michelle Tapken has been an assistant U.S. attorney in Sioux Falls since 1990. He had owned 25% of Dan Nelson Automotive. Then shortly after Nelson filed for bankruptcy, Tapken became the majority owner of the company when he bought it from Nelson for $50. Since then, Metabank has gained control of the business. The Tapken connection means that the U.S. Attorney's Office won't be involved in any legal proceedings.”
- July 20, Attorney General Larry Long still thinks this is just a lot of hoopla. The Iowa Attorney General had received 450 complaints while Long claimed he had only 22. Part of the reason is 75 percent of Nelson’s dealings were in Iowa and because Iowa actually has a credible consumer protection agency with a reputation of going after the bad guys.
- August 25, Iowa Attorney General Tom Miller wins relief for 1,400 victims of Dan Nelson’s swindles. He and MetaBank – now free of John Thune – agreed to improved terms for Nelson car buyers who got stuck with artificially inflated interest rates and inflated prices by Nelson’s South Dakota Acceptance Corporation.
- September 20, the Argus Leader profiles the rise and fall of John Thune’s best friend, Dan Nelson. “He's impressed governors, senators and Capitol Hill gofers, then soared to success as a car dealer whose work ethic and broad smile made him a poster child as one of Sioux Falls' young millionaires. At age 37, he spans generations of Republican leadership as a businessman whose story, under other circumstances, would be Exhibit A in the party's message about risks and rewards in a free society. But now the luster is gone. It vanished in the summer heat of a consumer-fraud lawsuit in Iowa and the subsequent bankruptcy of the Dan Nelson Automotive Group in South Dakota.” In the article, reporter Jon Walker identifies Dan Nelson’s exceptional GOP DNA: “In reality, Nelson is so well connected that his ties to Thune might be only a footnote in the network of South Dakota relationships. Nelson's wife, Jill, is the former wife of Kevin Schieffer, who worked with Nelson for Sen. Larry Pressler in Washington. His partner in the car business has been Chris Tapken, whose mother, Michelle Tapken, once was expected to be Thune's choice for U.S. attorney. His friends include Russell Janklow and Mark Mickelson, both Sioux Falls lawyers and sons of governors.”
- November 20, the Argus Leader reports “a lengthy indictment filed Wednesday in an Iowa federal court accuses the politically connected ex-car dealer Dan Nelson and business partner Chris Tapken of defrauding several banks, causing an estimated $21 million in losses. The 28-count indictment alleges Nelson and Tapken routinely created false reports, which gave MetaBank and other participating banks undue confidence in the health of their subprime car loan businesses.” And here’s the kicker: “The conspiracy began in 1997 when Nelson and Dan Paulson — who is not named as a defendant — submitted fraudulent reports to MetaBank, the complaint states; Tapken later joined the conspiracy.”
The veil was now lifted. South Dakota’s Attorney General played a valuable role as the chief law enforcement officer in John Thune’s home state. By failing to get involved, he controlled the bleeding in the Rushmore State. After all, all politics is local. He moved up the ladder when Gov. Mike Rounds appointed him to the Sioux Falls Circuit Court bench.
As for Dan Nelson and Chris Tapken, it wasn’t until November 2008 that Nelson was charged with 28 counts of bank fraud, wire fraud and mail fraud. Nelson claimed another close, personal friend of his at MetaBank was its president, whom he claimed had approved every report involving his transactions. He and Tapken opted for a plea bargain agreement.
And it wasn’t until after New Year’s Day in 2011 that Dan Nelson was sentenced to two and half years and Chris Tapken was sentenced to one and a half years in federal prison. They were ordered to pay back $7 million in restitution to nine banks, including $3.3 million to the MetaBank in Sioux Falls. A third participant, Daniel W. Paulson, “an accountant, served as the chief financial officer of the various Nelson corporations from the 1990s until the corporations became defunct after June of 2005,” pled guilty to a conspiracy to make false entries in bank reports and was sentenced in April 2011 to a year in prison. Unlike Nelson and Tapken, he didn’t personally profit from the swindle, other than keeping his job in Sioux Falls.
Larry Long resigned his post as Attorney General and accepted Gov. Mike Rounds’ appointment to the Circuit Court bench in Sioux Falls.
John Thune is the third most powerful Republican in the U.S. Senate. But what about his presidential aspirations? The press in Iowa is not too keen about his well documented role in the MetaBank swindle. He would get thrashed in the always white hotly contested Iowa Caucuses. John’s going to retire in the U.S. Senate. The Democrats in 2010 let him run uncontested, despite a mountain of ammunition. Maybe that ammo will still be dry in 2016, but whether the SDDP is up to the fight remains to be seen.
* * *
The GOED Scam in Pierre is still in its early stages. The MetaBank swindle teaches us that justice rolls slowly and deliberately, but when you see a trail of evidence of unethical and lawless behavior, be patient and diligent. Only this week, we finally see that Virginia’s ex-governor Bob McDonnell and his wife were charged in federal court with “14 felony counts, including wire fraud, conspiracy to commit wire fraud, obtaining property under color of their official office and conspiring to the do the same.” In New Jersey, where the heavy hand of Gov. Chris Christie’s influence was misused, the investigation is only starting and will probably take months to dig to the bottom of Christie's abuses of power.In Mike Rounds’ Governor’s Office of Economic Development case, we see a key official’s mysterious death by gunshot which opened the public’s eyes to years of very suspicious handling of millions — and lost records of what happened to that money and who did what. Dots are easy to connect. Records will eventually surface.
No matter how many people have been involved, all the roads lead to Gov. Mike Rounds. Rounds hand-picked the Attorney General who now appears to be bending over backward to shelter Rounds from the mess in the Rounds/Daugaard Governor’s Office of Economic Development. They’re running out the clock in this election, hoping the public will forget in November.
—Reader submission, 2014.01.22
(The author of this essay prefers to remain anonymous. I vouch here for the author's knowledge and integrity. I also note that, to the best of my knowledge, the author is not running for any office, against Rounds, Jackley, or anyone else. But anyone who is running against South Dakota's potentates should read this author's essay.)
You said the wheels of justice run slowly Cory. Hopefully not too slow and Rounds becomes Senator.
The people of this state have to wake up and get involved.
This is the kind of opposition research that the SDDP should be engaged in constantly--in contrast to Thune's attacks on the kind of house Tom Daschle lived in and the beauty=pageant history of his wife. Ironically, the writer makes mention of the failure to come up a candidate against Thune in 2010. One suspects that the author withheld his/her name for the same reason that some very qualified and promising potential candidates chose not to run in South Dakota.
This guest essay traces out the abject cronyism that forms South Dakota's justice system. It is one of the reasons why many people, including those potential candidates, came to the realization that South Dakota is not a great state, and if one wants to live where justice and equal opportunity can prevail, it is necessary to live elsewhere.
Report this morning was that former Va. Guv/crook McDonnell refused a plea agreement where he only faced one felony and his wife faced zero. Why not throw the SOB in jail where he belongs and maybe other crooked pols might think twice about flaunting the laws they are supposed to uphold. AG Miller works for the PEOPLE OF IOWA,not the governor of either party.
It is really sad that people have no clue what is going on in SD. We have nobody to blame but ourselves. We vote for so called nice guys. Cory, you need to run against Thune.
The topic of these races should be CORRUPTION! Every candidate should be focusing on investigating the corruption that has been taking place over the years. Dig everything up. To bad are media has failed us.
I have read and followed this Blog and others as well as the news media coverage of the various scandals over the past several years in South Dakota. Having had some run-ins with what is supposed to pass for a judicial system in South Dakota and also having been inside some of the back rooms where the powerful have been present, I would submit the following:
The people of South Dakota are thought of and sometimes even referred to as "stupid" and "lemmings". These folks are going to do nothing to clean up the system which they have total and absolute control over. In fact, they are already working actively to turn the current scandal into nothing more than a "bookkeeping error"
I would have every citizen in South Dakota google the phrase "Battle of Athens" and read the various accounts of what happened in Tennessee in 1946. Or, perhaps the people in power should read it even more. At some point, a government, by acting lawlessly, ceases to be legitimate.
I have read and followed this Blog and others as well as the news media coverage of the various scandals over the past several years in South Dakota. Having had some run-ins with what is supposed to pass for a judicial system in South Dakota and also having been inside some of the back rooms where the powerful have been present, I would submit the following:
The people of South Dakota are thought of and sometimes even referred to as "stupid" and "lemmings". These folks are going to do nothing to clean up the system which they have total and absolute control over. In fact, they are already working actively to turn the current scandal into nothing more than a "bookkeeping error"
I would have every citizen in South Dakota google the phrase "Battle of Athens" and read the various accounts of what happened in Tennessee in 1946. Or, perhaps the people in power should read it even more.
What a great review of Thune and Metabank! Thank you!
What the writer has actually identified are the political shenanigans of what we use to call the "Abdnor Wing" of the South Dakota Republican Party. But let us not forget that the other wing, the "Janklow Wing," are no saints either….
In fact, I would allege that the latter wing and its growing allegiance with the South Dakota Democratic establishment in the past 15 years is the reason the SDDP did not run any one against Thune in 2010 so as to starve the moderate voter for an opportunity to vote in a statewide race, like waning to vote for Scott over Dennis, hopefully…. and who do you think was more connected, in 2010, to the saint-less latter wing between Scott and Dennis?
The bottom-line is this. There is a galactic battle going-on between two wings of the South Dakota GOP because of the EB5 scandal. When you review these wings the thought of the "lesser of two evils" definitely comes to light. As progressives, liberals, and/or Democrats we must be careful to not aligned ourselves with one of these wings at the expense of the other, rather we must rid ourselves of any allegiance with any elements of the SD GOP if we truly want transparency and honest State government and a return to true two-party government in Pierre.
One way we can do this is right now is to have the SDDP hold weekly press conferences on the EB5 scandal with a new factoid and question each week for the state press to hear, so as to force to the forefront the issues in the EB5 scandal that are already there, but that the state media are obviously too timid to adequately report or ask…..
David Newquist calls the justice system cronyism, I call it and the Republican party as it exists in South Dakota, incestuous. We have a chance to take our State government back from the South Dakota Underground in the 2014 election. We better start praying that we elect honest folks in the Fall election.
That's a very insightful and interesting read and I have to agree with Owen's comment, people do need to wake up and get involved!
I wish the legislative committee would take some lessons from the NJ legislature and gather up cell phone messages, emails, files, etc. We need to get some people talking.
Mr. Newquist's comments, as well as the author, define South Dakota cronyism and corruption.
I'm getting tired of waiting for state Democratic Party to get proactive and start asking the necessary hard questions.
For Winston to believe the Democrat party, or any party will bring a new dimension to honesty, demonstrates the very problem that keeps our country hog tied.
.
Where is your SD Democratic leadership Winston. They are taking and giving exactly what the SD GOP demands and have for many years to keep those coveted positions.
.
My party will put an obedient Democrat in before a disobedient Republican and that is the few you have, at least wearing your party colors.
Could there be some Democrats that are involved in the EB-5. This should not be about parties, this should be about the people. Politicians need to set themselves apart from party politics and represent the people. Forget the damn labels and investigate.
Les, I am not what you would call an "obedient Democrat"…… keep hope alive!
Tara, the only reason NJ politicians are investigating Christie is because of labels. The Democrats in NJ finally have an angle to unhinge Republican Christie and his popularity and they are working it fast and hard. Your call for a non partisan movement and/or investigation is admirable as long as it does not erode the checks and balances that a true two-party system has to offer, because if you blur the distinction between political parties then you cultivate the "obedient" attitude which Les has elaborated upon…..
But Winston, that is exactly what has blurred the distinction between the two political parties at the national level-money. They are both in the pocket of the monied interests and that in turn is what has weakened the Democrat party in traditional Republican leaning states. The book "What Happened in Kansas" alludes to that very thing. The Republicans, use those moral issues such as abortion and gay marriage to enamor the "alleged" Christian population, which in turn seduces the Christian population to vote against their own fiscal and physical issues. Have they made abortions more difficult? Unquestionably. Have they stopped even one? Who knows, but they certainly cannot prove that they have. On the other hand, is there a Democrat that is in favor of abortion? Probably not, but just like not being in the bedroom, Democrats don't feel they have the need or the right to tell a woman what to do with her own body. Dems need to remind the voters constantly that they want the woman to have the child but they also want to pass bills that will help her to support that child after it is born, not leave it out in the cold by cutting education funding, cutting SNAP, refusing medicaid to working families who make too much to qualify for the program but not enough to buy insurance for their families. Remind her that the Dems are the ones who circulated the petition to put the raise of the minimum wage and tying it to inflation in the future, on the ballot in 2014. Talk about the issues that are bread and butter issues to the voters.
Lanny, if there is going to be a credible two party system in South Dakota, then Democrats in this state must begin to practice the protocol of such (like holding press conferences concerning the EB5 scandal) and not be, as Les referred to them, as "obedient Democrats."
I really cannot disagree with your analysis about the need for Democrats to talk about the issues which you mentioned, but if money has blurred the distinction, then where is this Party which you want to advocate particular issues? Well, let me answer that question for you. It is the Democratic Party and if even you believe the Democrats are bought and sold, like the Republicans, I give greater hope that the Democratic Party can find in itself the last vestige of hope for the common man and woman….. You must have hope and advocate it within our political system and the Democratic Party, else any advocacy you proclaim is purely academic in the wake of your claim that the Democrats are already bought and sold for like the Republican Party.
You make a very good point Winston and Les. You look at Washington DC, both parties are very dysfunctional and it seeps into the states. The parties look to their congressmen like they are some kind of rock stars. I look at them as someone employed by us working short term not as lifetime career politicians. We have enough Democrats and Tea Partiers, and honest republicans to do an investigation. They should be upfront and aggressive. Didn't Kathy Tyler try to put a committee together. Where did that end up? I believe it is the legislatures duty and responsibility to get to the truth and keep us informed.
The un- and ill-informed South Dakota electorate receives the politicians it deserves. The electorates apparent theme in electing Janklow, Thune, Rounds, Long, and Daugaard, perhaps others like the AG is likely 'our crook and bully is better than your crook and bully'.
Winston, I only said that money has blurred the national parties. They do what the puppet masters want. That has not trickled down to the local level until there is a national election that matters to the puppet masters, like the Daschle Thune election in 2004. They wanted the Majority/Minority leader defeated, so they pumped millions into our state on both sides to influence the election.
What I am saying, is what others on this thread have been saying. The Dems need to start speaking out on these local issues, including the moral issues that the Repubs have been winning on. Who wants to see an unborn baby killed? But at the same time, who wants to see a baby that has been born, go hungry, or go without proper healthcare for itself and for its parents, or not get the same education that others get in surrounding states? These are bread and butter issues that also happen to be moral issues at least as those on the left see it.
They also need to speak out on the corruption that is the insiders of the Republican party. Those folks are so ingrained in control of our State that they even denigrate those in their own party who would disagree with the same old, same old that those insiders have perpetrated on their party and by default on the rest of us.
Is there really such a thing as an "obedient" Democrat?
SHS was one.
Would you give Herseth some cred to say she crossed party lines and worked very hard to understand the issues, Lanny.? No doubt some political aspects, but it still was politics where she failed more so than performance in her loss to Noem.
.
Winston and Lanny - Don't you gentlemen ever sleep!?
I do occasionally Deb, the last time was in the summer of 2012, but actually I am sleeping now and really have been ever since my sophomore year in high school.
Oh, and thanks for the "gentelmen".
Expect to see John Thune spending some time in Iowa.
Hey, Madvillians: this post just lit up my twitter feed.