Let me try to keep things simple and break Rep. Kathy Tyler's Monday exposé on Joop Bollen and Mike Rounds down into what we already know and what new information Rep. Tyler added.
Per my March report, we already knew that Joop Bollen had basically signed a contract with himself, between the South Dakota International Business Institute, which he ran for the state on the Northern State University campus, and SDRC Inc., which he owned and incorporated just days before signing the SDIBI-SDRC Inc. contract. I called this deal a creative legal fiction; Rep. Tyler calls it a deal "between a man and his mirror."
The new dot that Rep. Tyler connects is the South Dakota Board of Regents Fraud Policy (4:37). SDIBI director Bollen worked for the Board of Regents from 1994 through 2009. His job at SDIBI was to recruit EB-5 investors to promote economic development in South Dakota (I know, that job doesn't sound very Regental, but take that up with the state). Rep. Tyler contends that Bollen violated the BOR fraud policy by setting up a private corporation to receive a revenue stream (possibly worth more than $140 million) from EB-5 investors that rightly should have flowed to state coffers.
Bollen's revenue diversion appears to violate 4:37:1.A.1.a—"Intentional or deliberate act to deprive the State of South Dakota, the Board, any of the institutions governed by it or any affiliated organizations or students of something of value...."
Bollen's contract with himself (he had James Park of SDIBI collaborator Hanul Professional Law Corporation sign on behalf of SDRC Inc. to avoid the patent silliness of placing Bollen's names on both lines) appears to violate 4:37:1.A.1.b—"Deception, false representation of fact by either conduct or other communication, or concealing what should have been disclosed, or made when the actor knew or should have known that the other party relied upon his or her representations, leading to injury of the State of South Dakota, the Board, any of the institutions governed by it or any affiliated organizations or students."
Rep. Tyler did not go here, but I suggest this indictment of Bollen should include SDBOR Policy 4:35, the conflict-of-interest policy. Every Regental employee knows and signs off on this policy, which states that Regental employees cannot work full-time for anyone else and "should avoid entering into outside employments, occupations or endeavors for profit of any kind that may reasonably be thought to influence the decisions that they make in their capacity as Board employee."
We could even get intellectual and argue that system of loans and fees Bollen imposed on EB-5 investors was intellectual property rightly belonging to the Board of Regents. Depriving his employer of the profits from that fee structure could be a violation of BOR Policy 4:34, the Intellectual Property policy... but holy cow, how hard do we want to work here?
However many Board of Regents policies Bollen violated, he committed these violations for almost two years, from January 3, 2008, the date that he signed his articles of incorporation for SDRC Inc., to December 21, 2009, the day he quit his SDIBI job and violated other SDBOR policies by walking off with state files that did not belong to him.
Think of Bollen's violations this way: I was one of Bollen's fellow Regental employees in 2008 and 2009. Imagine that, as a teaching assistant, I had created a private company to recruit students to Dakota State University. Imagine I had charged them extra fees for worksheets and videos related to the courses the Regents paid me to teach. The Regents (not to mention the South Dakota blogosphere) would have gone ape over my obvious corruption, right?
So why didn't the Board of Regents ever do anything about Bollen's violations?
Consider that the president of the Board of Regents during this time was Harvey C. Jewett. Jewett was a partner in Siegel Barnett and Schutz, an Aberdeen law firm. Siegel Barnett and Schutz has represented Bollen and performed legal work for SDRC Inc. while Bollen was still a Regental employee under Jewett's authority.
Harvey C. Jewett is still a Regent. The Regents have yet to say boo about Bollen's exploitation of his Regental position to set himself up with what Rep. Tyler calls the moneymaking opportunity of a lifetime.
That's why Harvey C. Jewett makes Rep. Tyler's list of witnesses who should be subpoenaed to testify to the Legislature under oath about what they knew about Bollen's EB-5 activities and when they knew it.
http://fortune.com/2014/06/10/most-corrupt-states-in-america/
Seriously, if subpoenas are needed for GOAC, include Marty Jackley and make him answer under oath if Richard Benda was the only person who would be the subject of a grand jury and felony charges. Was he also including Joop Bollen in the same net?
If, indeed, Jackley conducted an investigation of EB-5, how could he not have seen the same information that Rep. Kathy Tyler saw? My guess is he saw a lot more information with much clearer lines involving several individuals in criminal activities.
It looks like the buzz of loose money and zero oversight made a lot of people drunk with greed and hubris in this state while Rounds and Daugaard were in office. Perhaps Rounds should show up at the KSFY debate and answer some serious questions.
Were the Regent's rules legally binding, Cory. i.e. could you be arrested and indicted for breaking them? Or just fired and maybe sued?
The Regennts own this mess lock, stock, and barrel.
Here are the policies:
The public charge to the Board encompasses both the legal custody and protection of all properties acquired by the institutions, including those created in the course of their work by faculty members, other employees and students contributing to sponsored or faculty-directed
research, and the duty to assure that such properties are used to advance the missions of the several institutions.
A.
Board Owned Intellectual Property
1.
Subject to the exceptions provided in this policy, the Board owns intellectual property:
a. created or reduced to practice by employees in the course of or as a direct result of their employment duties;
b. created or reduced to practice, in whole or substantial part, by employees in the course of sponsored research, or.in facilities or using
funds or other resources controlled by or administered under
the authorization of the Board, unless such facilities or resources are available without charge to the public or unless all applicable use fees were fully paid; or
c. created or reduced to practice, in whole or substantial part, by students contributing to sponsored or faculty-directed research.
What disciplinary measures are relevant to breaking these policies would involve harsh punishments for any facullty, but the attorney general probably will be asked to formulate a policy for any regents.
Bill, Policy 4:37 (Fraud) says that punishment can include termination, civil action, and "forwarding information to the appropriate authorities for criminal prosecution." 4:35 (conflict of interest) and 4:34 (intellectual property) are not as clear; issues go to the BOR exec and probably go civil after that. Violating BOR policy as a BOR employee is naughty; not enforcing BOR policy on naughty employees is also naughty. If any criminal prosecution arises, the charges would likely be on state statues on fraud, theft, etc., rather than on BOR policy.
But I'm a blogger, not a lawyer. Readers, advocates in the crowd, how do you answer Bill's question?
http://www.followthemoney.org/entity-details?eid=13010253
Here's Monty's most recent report. Looks like "if only we had known" is the official position upline. http://www.argusleader.com/story/news/politics/2014/09/09/bollen-still-worked-sd-deal-signed/15320305/
The timing of Kevin Schieffer going to BOR is suspicious: it's just before Benda died.
http://news.sd.gov/newsitem.aspx?id=14948
Interesting that Rounds made sure his campaign manager Rob Skjonsberg got appointed to the South Dakota Board of Economic Development a year ago in January. He can keep a close eye on the scene of the crime.
SDCL 22-30A-3 Theft by Deception. Any person who obtains property of another by deception is guilty of theft. A person deceives if, with intent to defraud, that person:
(1) Creates or reinforces a false impression, including false impressions as to law, value, intention, or other state of mind. However, as to a person's intention to perform a promise, deception may not be inferred from the fact alone that that person did not subsequently perform the promise;
(2) Prevents another from acquiring information which would affect the other person's judgment of a transaction;
(3) Fails to correct a false impression which the deceiver previously created or reinforced, or which the deceiver knows to be influencing another to whom the deceiver stands in a fiduciary or confidential relationship; or
(4) Fails to disclose a known lien, adverse claim, or other legal impediment to the enjoyment of property which the deceiver transfers or encumbers in consideration for property the deceiver obtains, whether such impediment is or is not valid, or is or is not a matter of official record.
The term, deceive, does not, however, include falsity as to matters having no pecuniary significance or puffing by statements unlikely to deceive reasonable persons.
Knock Knock, anybody home at the US Attorneys office? The mission of the offices says the following. Can anybody explain which of these words are actually being performed by this office?
Welcome to the District of South Dakota. Our mission is to protect and serve the citizens of South Dakota through the vigorous and impartial enforcement of the laws of the United States. We strive to defend the national security, improve the safety and quality of life in our communities, and protect the public funds and financial assets of the United States.
–Brendan V. Johnson, United States Attorney
I am glad to add to this wood pile:
SDWC did a post about a fundraiser Jewett hosted for Lt. Governor Dennis Daugaard. An anonymous comment said this:
"Oh, and don’t get me started on the Jewett connection. He’s got his finger in everyone’s pie. And don’t think it doesn’t buy him favors, either.
Anything the Regents want, the Regents get… and that all traces back to Janklow bailing out Jewett’s company, giving Jewett an enormous amount of wealth and setting him up as a someone who could buy politicians for years.
If there’s a reporter that reads this blog at all, there’s a real story behind the scenes with the ties between Janklow, Jewett and the Board of Regents.
It’s a political story with more impact than Sutton, Klaudt and Schuldt combined.
I mean… when was the last time Rounds didn’t bend over backwards for the Regents? Need a Sioux Falls campus? We’ll get you one, overinight almost. More FTE? Take as many as you need. What’s that Harvey? You don’t like competition from Tech schools? Well… I have a veto, we can just use that.
But, hey… we’ll see what happens, I guess. The Regents just asked for a HUGE chunk of money for the Governor. Let’s see how much opposition there is."
And now we have the Regents planning to go to warp speed with their Internet service (while South Dakota k-12 students and South Dakota’s government employees only get a 2.5% budget increase) funded with a so-called "public-private partnership" with money from the 2009 budget and funds from the Great Plains Education Foundation.
I have received other information that there was some trouble with the Student Loan Finance Corporation during the Janklow era, but I can’t get anything substantive to Google up.
I did find a Rounds for Governor campaign report that was received by the Secretary of State on October 30, 2006 that disclosed a contribution from Harvey Jewett of $1,000. There were four other Jewetts who each gave $1,000 that listed the same address as Harvey’s
http://sibbyonline.blogs.com/sibbyonline/2007/12/the-gpef-and-ha.html
Punishment should be death,if you are serious about stopping wingnut corruption.
Steve Sibson,
I am well aware of what you are speaking. I believe the Student Loan scandal was exposed in the late 80's so not sure what is available on-line.
Players involved in that were Jewett, Norg Sanderson, Vi Stoia and I believe one other person.
Yes, Great Plains Educational Foundation was a 'Design by Janklow' to help bail them out along with helping with many of Jancklow's pet projects over the years and apparently it continues today.
And here is more regarding Jewett and Rounds from 2007:
What is the "Great Plains Education Foundation"? I found this on the Hog House Blog in regard to the Technical Institute governance controversy from the last legislative session:
Sen. Tom Katus, D-Rapid City, called out Board of Regents Chairman Harvey Jewett - although he never uttered his name - and said he had been approached by other regents who say it isn’t them who’s been beating the drum against a change in governance for South Dakota’s 4 technical institutes.
Katus told the crackerbarrel crowd:
The chairman of the Regents is a very powerful individual in this state. When he walks into the governor’s office, it doesn’t take long to connect the dots.
Katus also complained that Jewett controls the Great Plains Education Foundation, an $83 million fund created out of a court settlement over student loans. The foundation is "our money," Katus said, yet is absent from legislative control and lacks any application forms or so much as an informational brochure. (Add to that a website. A Google search produces no home page.)
http://sibbyonline.blogs.com/sibbyonline/2007/12/great-plains-ed.html
I concluded the post with this observation:
Interesting that Harvey Jewett is chairman of both the Board of Regents and the GPEF. There seems to be a lot of back door dealing going on involving taxpayers money regarding Governor Rounds and his plans to make South Dakota a technology and research giant with the help of Harvey Jewett and the millions he has been handed control over (and money whose source is not yet clear). The questions include, who is (and going) to benefit financially from this, and when will the South Dakota taxpayers see their return on investment, if ever?
http://www.greatplainsedfoundation.org/
"I believe the Student Loan scandal was exposed in the late 80's so not sure what is available on-line."
Shirley, I found the scandal broke during the Clinton administration around 1994. Here is a link:
http://sibbyonline.blogs.com/sibbyonline/2007/12/gpef-slfc-and-n.html
Thanks Steve. I knew it was a long time ago but was off with my dates.
Sibby has a trove of Bendagate-related posts like this one:
http://sibbyonline.blogs.com/sibbyonline/2013/11/so-will-this-economic-development-controversy-teach-troy-jones-a-lesson-on-how-the-new-world-order-w.html
i put a bunch up in my twitter feed posted at ip.
Those who would say or believe Harvey didn't know, have never seen Jewett in action with the BOR.
I'm not sure what truth came from the student loan scandal. The sheep covered for the wolves and casualties were limited.
To limit the timeline of defrauding the Regents to between 2008 to 2009 is pretty naive and undermining the obvious. He started filling his coffers way, way before that. Look at all the real estate he amassed. Several big homes, apartment buildings, out of state rental properties. Art work purchased and donated. All prior to 2008. He acquired, not sold. He transferred property title to family members prior to 2008. How was he able to afford all this on a state employees salary? By the way, which of his big homes is he enjoying today?
Jane, you cannot follow the money when public/private partnerships are allowed in a system of legal corruption. SDGOP Establishment admitted that in the EB5 scandal, and they admitted that in legislative testimony when the bill involved transparency in regard to economic development programs.
OK. I'm beginning to see why researching past scandals, particularly how they operate using various state agencies and entities, might be relevant to understanding how incipient future scandals could be incubating.
It seems the Board of Regents and the university system have become, for the elites and the leadership of South Dakota, easy places to hide, house and spawn these sorts of corrupt entities. You are seeing right now a similar situation developing with the Board of Regents and one of their universities with the issue of "shale research," which is really code for "paving the way for a nuclear waste dump."
One member of the BOR has long-time consulting ties to RESPEC, the company that is associated with SDSM&T in the "shale research" project, which received over $400,000 in state money last year in a last minute effort to provide a bit of academic cover for Daugaard's efforts to site a nuclear waste dump. Whether this Regent is directly or indirectly profiting from this money, it seems likely that she could profit from such efforts in the future. Both she and RESPEC have profited from nuclear waste siting efforts at Yucca Mountain and similar siting efforts in South Dakota would make her a multi-millionaire.
Add Heather Wilson into the mix Mr. Pay and you almost have a trifecta http://www.nukewatch.org/watchblog/?p=1617
This is what Condi Rice would call the smoking gun. Thanks Mr. Pay for that post. It was always very clear to me that there had to be a strong reason why and how Wilson ended up at the School of Mines.
It's always nuclear waste dumps here, nuclear waste dumps there with you, Mr. Pay. They are like your gravy taters aren't they?
Thank you Mr. Pay for pointing out all the Regents connections and involvement with the money.
If Republicans had their way, they'd turn all of South Dakota into a nuclear waste dump and grudz would be saying it was the Democrats fault because America has a black president.
"Left-wing Rag!" Also see rcj 3.28.09 editorial criticizing Regents, estes, johnson, jewett's qustionable "no-bid" conflict of interest regarding 12 acre donation morphing into 40 acre $2 mill purchase by rounds signature for Elk Vale/I-90 West River Higher Ed facility.
don-where is the daugarard/nuke waste disposal supposition documented, and the RESPEC/Regents relationship? Do these go back to the Janklow or Michelson Administration/Provo baled urban waste by rail which was voted down?
Don't expect Ol Harv to get off the meds long enough for a coherent deposition. At least, that's my legal advice to him leslie.
Grudz-nuclear waste dump gravy taters stay warm for tens of thousands of years. Never have to reheat them in your lifetime.