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Brown County Asks State to Investigate Bollen Bank Franchise Tax Evasion

...But Is Banking Commission Already on That Case?

The Brown County Commission today voted 4–1 in favor of a resolution brought by Commissioner Tom Fischbach to ask the State Banking Commission to determine whether GOED/NBP/EB-5 scandal figure Joop Bollen evaded bank franchise tax. Bollen managed loans and mortgages through his corporation SDRC Inc. but never got a lending license. If SDRC Inc.'s lending operations are subject to South Dakota's bank income tax, Bollen could owe the state $2.4 million in back taxes, $1.76 million of which, according to Fischbach's resolution, could go to Brown County. That would patch a lot of potholes between Hecla and Groton.

One commissioner, Mike Wiese, opposed the resolution. He doesn't oppose the idea of investigating Joop Bollen. But in the most important paragraph of Scott Waltman's report, Wiese says he thinks the state is already conducting that investigation:

Commissioner Mike Wiese voted against the resolution. After contacting the state Department of Revenue and state Department of Labor and Regulation, Wiese says he believes the issue is already being looked into and taken seriously. He said he wants Brown County to collect the bank franchise tax if the determination is it should have been paid. However, a resolution from the county commission will not carry much sway, according to Wiese [Scott Waltman, "County Commissioners Ask State to Look into EB-5 Taxes," Aberdeen American News, 2014.09.09].

A GOED/NBP/EB-5 issue "being looked into and taken seriously" by the state.* How rarely we hear such words, and how gratefully we hear them... "we" being all of us South Dakotans not being paid to make excuses for Mike Rounds.

*Update 18:03 CDT: Ben Dunsmoor confirms that the state is on the case:

The South Dakota Director of Banking, Brett Afdahl, confirmed Tuesday afternoon that he has already sent a letter to SDRC Inc. requesting information. Afdahl says it can take up to 30 days for a response from the company and then follow up questions will be asked before a final determination about the company’s status is made [Ben Dunsmoor, "Brown Co. Commissioners Ask If SDRC Inc. Is Bank,", 2014.09.09].

* * *

Rep. Kathy Tyler did not include that $2.4 million in the $140-plus million she calculates Bollen may have defrauded from the state by other means. The bank franchise tax hangs on an entirely separate statutory peg.

But that $2.4 million in tax evasion could have political implications equal to those we can derive from Rep. Tyler's argument. Recall that when it came to the EB-5 activities that the Governor's Office of Economic Development conducted to benefit Governor Mike Rounds's pet project, Northern Beef Packers, the Rounds Administration demonstrated a keen awareness of banking regulations. In 2010, when Northern Beef Packers arranged a $30 million bridge loan from the mysterious Asian bank Epoch Star Limited to tide it over until a new round of EB-5 investors wrote checks, the Rounds Administration sent GOED chief and EB-5 cognoscente Richard Benda to assure the Banking Commission that Epoch Star was not a bank, did not need a lending license, and did not have to pay bank franchise tax.

The Rounds Administration looked at a one-off offshore funding trick and said, "Jeepers, we'd better get a ruling from the Banking Commission!" The Rounds Administration then looked at its man Joop Bollen, who'd been constructing a fistful of loan funds from EB-5 dollars to supplant local commercial lending, and said... nothing.

Could the Rounds Administration not smell its own shtuff? Or were they so committed to shielding Joop Bollen and his profits that they couldn't risk the scrutiny of the Banking Commission... even if that meant stiffing Brown County $1.76 million?


  1. Tim 2014.09.09

    The gravy continues to thicken, there is no way this is going to be resolved before the election, what happens if Rounds and Daugaard are elected then sent to jail? Do we get to do a new election or do the corrupt just appoint more corrupt?

  2. owen reitzel 2014.09.09

    I call it "stink" not gravy. Seems like something new everyday.

  3. caheidelberger Post author | 2014.09.09

    Tim, at peril of getting ahead of ourselves, in the scenario you describe, Governor Matt Michels would appoint a replacement to the Senate, who would serve until the next general election. See SDCL 12-11-4 and 12-11-5 for Senate vacancy rules; for gubernatorial succession, see SD Const. Art. 4 Sec. 6 and (if Michels were nabbed, too) SDCL 1-7-4.1 (Total digression: Commissioner of School and Public Lands is actually a step above PUC members in the order of gubernatorial succession! I guess the job is good for something after all!)

  4. Tim 2014.09.09

    Owen, I didn't say it was good gravy. Cory, it appears we will be stuck with the republican corruption until the next round of elections. I don't hold out a lot of hope republican voters in this state will open their eyes and actually pay attention to who they are voting for.

  5. Roger Cornelius 2014.09.09

    Should Mike Rounds win the senate seat in November, all these investigation don't automatically stop, they will follow Rounds right into the Senate chamber.
    Unlike South Dakota, the senate has an ethics committee and a judiciary committee with broad powers.
    It will be sad if that happens, that maybe the only way to get the national media interested in Mike Rounds and his cronies.

  6. caheidelberger Post author | 2014.09.09

    Roger, you're thinking of Pressler's astute wounded-senator scenario from Dakotafest. Rounds wins the election (possibly with less than 40% of the vote, says the new KSFY poll, enhancing Pressler's thesis), then draws the attention of the national press corps, which tears him apart for his EB_5 malfeasance more thoroughly and mercilessly than his hip-pocket Lawrence & Schiller-sponsored local press ever will and leaves him a liability to the party, too weak to enjoy any influence in D.C.

  7. caheidelberger Post author | 2014.09.09

    But tell this story, share it with your friends, explain how Rounds let a state employee cheat us out of tax revenue, and we can preclude any weak-Senator or succession scenarios.

  8. Roger Cornelius 2014.09.09

    Dakotafest, that's where I heard that. I share everything on Facebook everything you have written about Rounds and will reach into your archives on EB-5 as the election draws nearer.
    The Brown County Commission may not legs and will probably get blocked by a corrupt Republican along the way, but it is a story none the less. We need these stories everyday.
    I'm intrigued how Powers and Wadhams are being forced to respond to every charge being made, they are clearly on the defensive, we need to keep them there.

  9. BOHICA 2014.09.09

    Amazing is all I can say. Good for Tyler bringing this extra information to light.
    It is easy to say I wasn't aware...but the real question is 'Why not?'. Truman had a desk plate 'The Buck Stops Here'...Forest Gump said 'Stupid is as stupid does'. Let your readers figure out which one is applicable here.
    Is S.D. really the 8th most corrupt State? Or are do we rank higher than that?

  10. 96 Tears 2014.09.09

    Those rankings are based on old data. Look for present conditions to be reflected in rankings in the next year or two.

  11. Dave 2014.09.09

    Shouldn't the state banking commission and other investigators be working a bit more quickly? ... I mean, Marty sort of dragged his feet and never got a "chance" to talk to Benda. As Joop's poop continues to hit the fan, he won't someday soon be found in a shelterbelt, too, will he??

  12. Roger Cornelius 2014.09.10

    Bob Mercer is reporting in the Rapid City Journal that Mike Rounds, Joop Bollen, and Jeff Sveen have not responded to Tidemann's "invitation" to the Sept. 24 GOAC hearing.

    He is also reporting the smack down of Kathy Tyler's requests to the Legislative Executive Committee to place additional items on the GOAC agenda.

    Actually I'm hoping none of them appear and that GOP limits all discussions on EB-5 and the BOR, it will show their cowardice and possible complicity in criminal acts.
    If they lawyer up, that raises another set of questions.

    Bring it on Wadhams, bring it on. Wadhams probably has the denial press releases already written.

  13. Roger Cornelius 2014.09.10

    96 Tears,
    There are a number of websites that cite South Dakota corruption from anywhere between #3 most corrupt to #8 most corrupt.

  14. Jenny 2014.09.10

    C-Span will have the SD Senate televised live tonight (Wed) at 7pm with Mike Rounds glaringly absent. All the candidates should actually acquaint the nation to Mike Rounds and his EB5 "common sense" EB5 business activities. Where's Mike? Mike are you out there?

  15. Roger Cornelius 2014.09.10

    Will C-Span allow cardboard Mike to make an appearance?

    With every debate or public forum Rounds flips the bird to, is a show of his cowardice.

    I'm certain the courageous candidates that do appear will remind the public of that fact.

  16. JeniW 2014.09.10

    Doncha know that Rounds does not need to participate in debates, he is able to take Republican voters for granted. The Republican voters who support him are willing to be taken for granted.

    Being taken for granted, IMO, is an insult, but oh, well, that is what some people must want and like.

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