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Rounds Approved Bollen 2009 Contract; Money More Important Than Rules

Last updated on 2016.09.05

Mike Rounds insists he wasn't involved in the "transactional details" of his EB-5 program. But he seems to have been keenly aware of one central transaction in the privatization of his EB-5 program: the issuance of a private no-bid contract to state employee Joop Bollen to continue running it.

Bob Mercer asked the former governor, now GOP Senate candidate, about his role in the privatization of EB-5 back in May. Rounds finally provided answers to Mercer this week:

[Mercer]: In 2009, Richard Benda as secretary of tourism and state development and Joop Bollen as SDRC president reached a contract that privatized South Dakota's EB-5 administration and other activities. The contract was drawn by Tim Engel of the May Adam Gerdes Thompson law firm, under a long-standing contract agreement, for the Department of Tourism and State Development, and Jeff Sveen on behalf of SDRC. Did you approve of the concept? What was your role in the contract? Did you inspect the 2009 contract before it was signed by Benda? Did you approve him to sign it?

[Rounds]: Not unlike the hundreds or thousands of state agency contracts, this transaction was handled at the department level and they utilized department counsel. I was aware of the desire to privatize the program in order to better compete with the 500 regional centers located around the country. I was advised that there were only two state government-managed regional centers and that privatization would help South Dakota compete at the national level. From a competitive standpoint, I agreed with the concept of privatization. I was not involved in the transactional details nor did I review the contract.

[Mercer]: Under what state legal authority was the contract formed in such a way that state government derived money from a portion of the fees charged by SDRC to EB-5 investors/lenders?

[Rounds]: I was not involved with the transactional details of the contract. It was handled by the state agency in consultation with their counsel [Bob Mercer, "Rounds Answers Reporter's Questions on EB-5 Scandal," Black Hills Pioneer, 2014.10.02].

If I take Rounds at his words, I get a picture of his economic development chief Richard Benda saying, "We need to privatize EB-5. Can we?" and Governor Rounds saying, "O.K., see you later."

Rounds's own description to Ben Dunsmoor indicates that his approval went further, from concept to execution, to approval of the executioner:

At one time Bollen, was a state employee working for the Board of Regents doing the same kind of work. But Rounds told KELOLAND News both the Board of Regents and Benda's office asked Rounds in 2009 if the state could privatize EB-5 to be more competitive with other offices recruiting foreign investors across the country.

"What I also asked was, 'So who's going to do this? Because there aren't a lot of people who understand the EB-5 program at the federal level.' And the response I received back was Mr. Bollen, who was working for the Board of Regents, has agreed to separate himself out and do this,” Rounds said [Ben Dunsmoor, "Rounds: I Was Told Bollen Was the Man to Run EB-5,", 2014.10.02].

Rounds is saying that he knew Bollen was going to run EB-5 when it was fully privatized in 2009. That statement implies that he approved of issuing that contract to Bollen specifically.

But why? With the state's knowledge of Bollen's numerous misdeeds, why did Rounds reward Bollen with a no-bid contract instead of firing him? That fundamental character question cries for an answer.

Perhaps stunningly, Rounds appears to have answered it... and not in a way that wins any moral votes:

Rounds says the Board of Regents and the economic development office recommended Joop Bollen run the private firm simply because he knew how to navigate the complicated EB-5 program.

The recommendation came despite the fact that state officials knew Bollen had inappropriately filed legal documents in a lawsuit he got involved in with a California recruiting firm.

"We weren't worried about whether Mr. Bollen was privatizing or not. We were worried about whether or not the projects that needed this outside investment would have access to an office that knew what they were doing. It was not the time to go out and start somebody brand new and find out later on they didn't know what they were doing," Rounds said [Ben Dunsmoor, "Rounds on EB-5: 'There Is No Conspiracy',", 2014.10.02].

Rounds has previously said that the Board of Regents, not he personally as Governor, was responsible for Bollen's employ. But here, Rounds tells Dunsmoor that the Regents and his own office of economic development recommended giving Bollen the contract.

That language creates a very different picture: before Benda gets out the door, Governor Rounds asks, "Who's going to do this?"

Benda leans against the door frame, worried the jig is up. "Bollen."

"Bollen?!" Rounds shouts. "That meathead? Didn't he get us into that lawsuit and break all those rules? No way! Let's find someone else."

But as Rounds says here, he doesn't say that. He lets slip this golden opportunity for good management. He wasn't worried about whether the person in charge had broken any rules; he just wanted someone who knew how EB-5 worked. The state didn't have time to gamble on a new person. He thus overlooked Bollen's infractions and approved the plan with Bollen on top.

Mike Rounds answers the character question with Bosworthian clarity: if there's money at stake, Mike Rounds doesn't care if his people break the rules. Mike Rounds doesn't have time to go find honest dealers.

Voters, Mike Rounds just summarized all you really need to know to see why EB-5 means you have to cast your vote for someone other than Mike Rounds to get a Senator you can trust.


  1. Donald Pay 2014.10.05

    Exactly, Cory.

    The Mike Rounds I was familiar with was extremely detail-oriented, and, on one of his pet projects, he would have known the details. He would have asked for the pros and cons of privatization, and how to do it. (The passive voice, "I was advised....", is meant to obscure his active participation.) It would have all been spelled out in some way for him, and he would have had opportunity to question it or change it.

    It would be completely out of character for Rounds not to have known, and not to have participated. Sure, he didn't draft the contract language, but he knew what was in it, and probably had questions and suggestions.

  2. caheidelberger Post author | 2014.10.05

    "I was advised" is fine and dandy, but Rounds still appears to have decided. He didn't have to draft the contract, but he did have to give that drafting and contracting the go-ahead.

  3. larry kurtz 2014.10.05

    Nearly, if not all, EB-5 projects were also supported by Future Fund cash doled out by the Governor's office, right? Why would he be hands-off Bollen and Benda when his pet causes were involved?

  4. mike from iowa 2014.10.05

    Them durn regs and oversight cost too much time and money. Let's privatize stuff and tell the Dems to suck eggs,just like dumbass dubya did.

  5. Deb Geelsdottir 2014.10.05

    "Bosworthian clarity." Oh wow. That is so good. And so funny.

    Cory and others who have been contributing research and thoughtful conjecture, thanks for your efforts to clean up SD government. I'm one who has been sending emails to news outlets urging them to cover this story. They need to make it so.

  6. Joe 2014.10.05

    I'm sorry, but the whole we needed someone with experience, so we put somebody we know in the position. OK, but then the ? needs to be asked, didn't he just get us sued, and then tried to cover it up?

    So he didn't know what he was doing to the point he got us sued, and then tried to cover it up, but someone mentioned his name so I said ok?

    Also as previously stated, this wasn't just a regional center that found capital for dairies and a few companies. Many of these as stated were also supported by the futures fund, many leaders for these companies seeking the investments were also involved with the buffalo roundup, and the governors pheasant hunt.

    So the whole I ok'd the contract because I was advised to should be a double negative because of how involved the Governor's office was with all of this.

  7. lesliengland 2014.10.06

    were Regents trying to dump joop because of misdeeds, but the good 'ole boys syndrom gave him a golden parachute of privatization?

  8. PrairieLady - Gayle 2014.10.06

    Where are all the secretaries and office staff of these misdeeds?

  9. Jana 2014.10.06

    Rounds like Bush was the "decider." It also sound like they both thought they could create their own 'reality.'

    Unfortunately that 'reality' has come back to bite them in the ass.

  10. judy judy 2014.10.07

    A question: When Rounds says the Board of Regents advised him who or what is he referring to? Was it a particular individual? Several? Who spoke for the Board of Regents? Did they take official action reflected in their minutes or did they write a letter to the Governor expressing their recommendation? Was it someone connected with Jeff Sveen's law firm? It seems to be the criminal enterprise at the center of everything.

  11. caheidelberger Post author | 2014.10.07

    Prairie Lady: Bollen's secretary at SDIBI, Cherri Brick, quit her state job in early 2011 and went to work for Bollen again at his private SDRC Inc., shortly after Benda parachuted out of GOED into SDRC Inc. Brick hasn't said a word in the press.

  12. caheidelberger Post author | 2014.10.07

    Golly gee, Judy, I hate to speculate, but it would seem that the logical person on the Board of Regents to have filled Rounds in on what was going on with SDIBI and SDRC Inc. and Northern Beef Packers in Aberdeen would be the Regent from Aberdeen and law partner in the firm representing Bollen and SDRC Inc., Harvey Jewett.

    Leslie, you raise an interesting prospect. Maybe someone in the Regents did say, "Holy crap! We gotta dump this risk!" but couldn't pull the trigger because someone else wanted to keep the money flowing.

    And keep in mind that Bollen's monkeyshines came to light in 2009, when Northern Beef was struggling to get funding and when Dakota Provisions in Huron (Jeff Sveen's keen financial interest) was in line for $60 million in EB-5 funding. SDRC Inc. is up and running, big recruitment and administrative fees are on the line alongside funding for key projects—there would be all sorts of financial pressure not to put a kink in the EB-5 hose by changing staff. Those investors had to be at least a little nervous; they had visas at stake. Suddenly removing Joop's friendly face and throwing a new EB-5 czar at them could have made them wonder if something had gone wrong.

  13. lesliengland 2014.10.07

    tip 'o the iceberg, so far. sdgop will only give up info taken by oath.

  14. lesliengland 2014.10.07

    collusion and delay has scored sdgop a shallow victory as early and absentee voting commence.

  15. lesliengland 2014.10.07

    i note rounds ads "urge early voting", before cory et al. reveal more sdgop dirt, "at your county courthouse" patently excluding wanblee voters.

  16. Bill Fleming 2014.10.07

    Yeah, Jana, that stretches credibility to the breaking point, doesn't it?

  17. Bill Fleming 2014.10.07

    They're either outright lying, or outright admitting to being asleep at the switch. Take your pick.

  18. PrairieLady - Gayle 2014.10.07

    Cory, I knew about Cherri Brick, but there must be more than her. Someone, somewhere is going to talk eventually. There must be someone with a conscious.

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