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California Company Subpoenas EB-5 Program, Seeks to Depose Joop Bollen

If South Dakota won't go after corruption in the EB-5 visa investment program, maybe the private sector will. Scott Waltman reports that California firm Darley Commercial is subpoenaing the crap out of South Dakota's EB-5 program. Two rounds of EB-5 funding for the bankrupt Northern Beef Packers in Aberdeen, three rounds of EB-5 funding for the Dakota Provisions turkey plant in Huron, EB-5 money for the Deadwood Mountain Grand Casino and a handful of other favored projects—Darley wants pretty much every scrap of paper that Joop Bollen and the Hanul Law Firm of California can come up with.

Plus, Darley wants to depose Bollen, who ran South Dakota's EB-5 program through NSU's SDIBI and then through his own private corporation SDRC Inc. and several shell partnerships until the state yanked his contract last September amidst a federal investigation of financial misconduct in the program. That's a deposition I'd love to witness... although I expect there will be a lot of brief answers using the word "Fifth".

Waltman can't tell what Darley is after. Darley has been on Bollen's case for a few years. As reported last November, the California company worked for SDIBI through Hanul to recruit Chinese investors for EB-5 projects in South Dakota. When SDIBI failed to follow through on a fish farm project that Darley promoted to potential EB-5 investors, Darley pressed for payment. Bollen cleverly shifted operations to the private corporate umbrella of SDRC Inc. and got a California judge to rule in 2011 that Bollen as SDRC Inc. chief did not have to submit to arbitration to answer for violations of contract he may have committed as SDIBI chief. One might speculate that Darley is still pressing its case, trying to establish the simple fact that someone must still be around to answer for whatever monkey business went on in South Dakota's EB-5 program.

Darley, I hope you get a full response to your subpoena. And I hope you'll share that response with the thousands of South Dakotans who would like to know who's been profiting on this questionable federal intrusion into the free market.


  1. Tim 2014.04.08

    Wonder how many paper shredders have been burned up over this?

  2. Susan 2014.04.08

    The only winners in the EB-5 program were Joop and the Hanul Law Firm. They deserve to spend the next decade in litigation - if not in jail for fraud.

  3. Lanny V Stricherz 2014.04.08

    Well, everything else has been blamed on Benda, so since he will not be able to defend himself, any question in this set of transactions can also be place on his shoulders, er grave.

    I don't know how much it hurt anyone else to read that headline that a California company is subpoenaing Bollen, but it sure rankled me. The way the South Dakota Legislature disrespected Kathy Tyler in her challenge last fall, still hurts today and should make every South Dakotan upset.

  4. rollin potter 2014.04.08

    Susan, There are more winners in the EB-5 program than Joop and Hanul law!!!!! that is why the law firms are such a close nit society!!!!

  5. Troy 2014.04.08

    There is no 5th Amendment protection in a civil proceeding. This is where this was always going to end up. I said this in the beginning.

  6. caheidelberger Post author | 2014.04.08

    No Fifth Amendment outside criminal proceedings? Really? If I'm in a civil case, and Joel Arends asks me which drawer of Chad's desk I stole the Philippines travel itinerary from, I can't just clam up under oath? ;-)

  7. Lanny V Stricherz 2014.04.08

    Wouldn't appearance before the legislature be considered a civil proceeding, Troy? If so why wouldn't/didn't the legislature subpoena him and have a full blown investigation as Kathy Tyler suggested last fall?

  8. Nick Nemec 2014.04.09

    I'm a non-lawyer so please bear with me, if there are no 5th Amendment protections in civil law cases and someone refuses to answer questions, what happens? Can they be compelled to answer? If they do answer can that information be used against them in a future criminal action?

  9. Roger Cornelius 2014.04.09

    mike from iowa,

    I think Troy is right on this one.

    Using the OJ Simpson case as a precedent, he was not compelled to testify in his criminal trial, but when sued for wrongful death in a civil trial he did have to take the stand.

  10. mike from iowa 2014.04.09

    I hate to disagree,but......OJ was acquitted of murder in a criminal trial(he did not have to testify) and because of double jeopardy,he cannot ever face those charges again. Because of that caveat,he was forced to testify in civil court because there was no danger of him going to jail,even if he confessed to murder. The judge in a civil trial gets to decide if the defendant testifies in his own behalf in a civil case. The article I posted clearly explains this. If OJ was an embezzler and the statute of limitations hadn't run out,he would be facing possible jail time and would not be made to testify against himself in a civil case. I believe the judge who wrote the article stated that jurors in civil cases are not told about the 5th amendment in civil cases,as they are in criminal trials.

  11. caheidelberger Post author | 2014.04.09

    "nor shall be compelled in any criminal case to be a witness against himself"

    Troy's right: Fifth Amendment is mum on civil cases! But Troy is also wrong: there is some Fifth Amendment protection in civil cases. What Mike says about O.J. finds support in McCarthy v. Arndstein (1924), in which the Supreme Court ruled that the Fifth does apply in civil cases if the disclosure could lead to criminal prosecution. And yes, as Judge Sudderth explains, invoking the Fifth in a civil trial may shield you from criminal prosecution, but it doesn't stop the jury and/or judge from concluding, "He claimed the Fifth! He must be guilty!" Tricky stuff!

  12. mike from iowa 2014.04.09

    I'll give Troy and Roger my okay,and I'll just say that nothing is absolute except me needing a haircut. Cory,is that your final word?

  13. Troy 2014.04.09


    I'm not a lawyer and slept in my own bed last night. However, I know that judges have compelled the testimony, sealed it from public purview, and any use of the information in a later trial can be exonerating similar to illegal searches and seizures. A judge who deems the civil testimony is critical to the civil case has ways to get the testimony without violating the 5th Amendment. This is especially true in civil fraud cases where the criminal charge is criminal fraud-like infractions.

    The case above references protections where the civil testimony could lead to criminal prosecution for matters such as murder, etc.

  14. Troy 2014.04.09

    "later criminal trial"

  15. Anne 2014.04.09

    As someone who has worked in court administration, I can say that the statement that there is no Fifth Amendment protection in civil cases is not correct. In fact, the relation of self-incrimination to civil actions is an area of law specialty, and it covers actions before legislative agencies, government regulatory boards, and other investigative agencies, as well as tort suits. It is a complex matter which has different precedents for different jursidictions, which is why legal firms choose the state from which they enter a lawsuit very carefully.

    On the federal level, a corporation is not considered a "natural individual" in matters of self-incrimination and cannot use that as a plea to avoid supplying records and information. However, in South Dakota, as illustrated by the NBP/EB-5 business, the laws covering corporations provide a veil of secrecy which provides a de facto protection against self-revelation. That is why South Dakota ranks at the bottom of the integrity indexes, as it protects corporations and, therefore, state involvement with corporations.

  16. Nick Nemec 2014.04.09

    What if a witness just refuses to testify? What tools does a judge have to compel testimony in a civil case? Presumably fines or imprisonment. Is their a limit to either?

  17. Lanny V Stricherz 2014.04.09

    That is an interesting point Anne, the protection of corporations in SD law that they don't have in Federal or many other State laws. Does that also include when they are involved with State Government? It would seem that such an arrangement would be counterproductive to State Law and the State itself, if that is the case.

  18. Troy 2014.04.09


    In a criminal trial, when a person in a criminal trial takes the 5th, the judge issues an admonition that jurors shall not form an opinion based on the exercise of this Constitutional right. In a civil case, the judge allows jurors to form an opinion based on the failure to answer.


    Anne is correct that South Dakota laws create some challenge but these laws effectively are designed to protect individuals and not corporations. The same concept is why creditors pursuing South Dakotans have a harder time piercing the corporate shield and attaching to personal assets.

    And, to some degree, in this case it does give some additional rationale to force Bollen to testify to the extent he as an individual acted non-nefariously even if the corporation conducted bad acts (this is a legal nuance I think worth protecting under the Constitution). That said, fraud is something which has a lower standard for piercing the shield than creditor protections.

    In this case, I am having a hard time seeing where the South Dakota difference puts up a unsurmountable barrier to getting the truth from Bollen or create a veil of secrecy. Just takes more time and possibly involve more process.

    Just remember I'm not a lawyer. There might be legal issues I'm not aware of. However, on more than one situation, I've been involved in pursuing fraud remedies with the intent of going to the individuals. I don't feel we were at a disadvantage except for time and expense we had to bear, which wasn't inordinate.

  19. mike from iowa 2014.04.09

    Civil Contempt
    Civil contempt is frequently referred to as “coercive” contempt. A judgment of civil contempt is an effort to persuade the contemnor to obey some order of the court where such obedience will benefit the movant in the action for contempt. The imprisoned contemnor in a civil contempt case can avoid punishment by simply obeying the court’s order, and thus has been said to carry the keys to the prison in his or her own pocket.12

    The penalty in a civil contempt is until the order of the court has been complied with. It is not for a finite period, and potentially could be a life sentence, depending on the obstinacy of the contemnor and the will of the court. Of course, “inability to comply” with the court order is a defense, and it becomes more credible the longer the contemnor remains in jail. A coercive civil contempt order is void if the contemnor is unable to perform the condition for purging the contempt.13
    This isn't about South Dakota law,but a lifetime in contempt is a compelling argument to say something in court.

  20. Lanny V Stricherz 2014.04.09

    But Troy, you still have not answered why the SD Legislature didn't subpoena Bollen and get some answers for us here in SD, and the other part of that would he have been able to plead the 5th before the legislature?

  21. Troy 2014.04.09


    First question: Process and background work. You don't subpoena a person until you are ready. Go on a fishing trip and you might not get a second chance. Personally, I'm doubtful there will be enough background information gathered and properly analyzed during this year to meet the year-end goal of the Legislature in this matter much less to interrogate Bollen under subpoena.

    Second question: I'm pretty sure the legislative investigation would more resemble a criminal investigation which would extend 5th amendment protection. I can't imagine the State Executive or Legislative branches (and in fact if they could, it would be scary to our constitutional rights) can initiate civil pursuit outside of the courts.

    I can't stress enough I'm not a lawyer.

    Here is the deal as I've seen this from the beginning. The only matter left related to the NBP matter is whether there was fraud. If it was criminal, my guess is it is more likely to be pursued federally (a lot of good legal reasons and not anything against the AG's office) but I doubt it will be pursued (again for a lot of good legal reasons and nothing against the US Attorney). The simple (but there are others) reason is proving civil fraud is easier. Often the government reviews the civil case and assesses if there is enough to prove criminal.

    What we see happening is someone who wants to pursue this civilly as I guessed it always would be. The pursuit will not only be against Bollen but also NBP and maybe the State if Benda was a party during his tenure.

    I know not only Rounds opponents but also just the general citizenry would like to know if there is fire under the smoke regarding fraud in the next few weeks. However, based on my experience with civil fraud cases, it will be years and a lot of money (hundreds of thousands of dollars) before we will know anything. Remember it is only in the last year we have finally been getting resolution to the financial meltdown matters from 2008.

  22. Lanny V Stricherz 2014.04.09

    Thanks Troy, for your lengthy first explanation and then the link to the article on Corzine.

    My first job after I turned 18 was working in the packing house at John Morrell. We were among the best paid people in the State, and I was earning between 5 and 6 k the first year. Our CEO in Chicago, Mr McCullum earned 25k.

    My last job before I retired was at Citibank as a fraud investigator on Credit Cards. I earned 32k and the CEO earned 155 million. I read an article a couple of weeks ago, that explained how that CEO, Sandi Weil, made so much. He had a deal with the board of directors that every time he cashed in his options, they reloaded. Well it turns out that his last year at Citigroup, he cashed his options and his total pay package was almost 1/2 billion dollars. The board made a deal that they would buy his shares at a set price and that way it did not affect the market. The share price was somewhere in the high 40s. Well it was not long after that the financial collapse hit and Citi sold for down around fifty cents a share.

    I no longer had money in Citi, but I did have my retirement money in a "safe fund" as promised by the broker with whom I dealt. I lost over half and found out afterwards that the funds were derivative type funds that never have recovered to what I paid for them.

    So that is the reason why the article in your second post is the reason that I want to see this EB-5 resolved in favor of the citizens of SD and to make sure that both Mike Rounds and Dennis Daugaard are finished in SD politics.

  23. mike from iowa 2014.04.09

    Here is a kick in the pants. Two key Fat and Furious bridge scandal ex-aides convinced a judge that their 5th amendment rights precluded them from handing over subpoenaed papers to investigators. This was neither a criminal or civil trial.

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