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Roundsa Culpa: Darley Answers None of the GOAC Questions about EB-5

Journalists Bob Mercer and Seth Tupper have rightly resisted Mike Rounds's audacious lie that yesterday's arbitration ruling in the Darley v. SDIBI case somehow "proves... that everything my opponents have been saying about EB-5 are lies, innuendo, and nonsense misinformation."

This lie is so big that it deserves more resistance. Rounds is counting on the complexity of EB-5 to so confuse people that they will accept his outrageous assertion as an excuse to tune any further discussion out and just focus on the puppies and bunnies Rounds will promise.

In an effort to demonstrate the irrelevance of the Darley decision to nearly all of the substantive issues surrounding Rounds's EB-5 program, let's look just at the questions submitted to Rounds and his lieutenant Dennis Daugaard in the Government Operations and Audit Committee inquiry last month.

Questions Addressed in Darley
1. Where is the $550,000 from the $1 million state grant that Mike Rounds cabinet secretary Richard Benda stole from Northern Beef Packers? No
2. Who in state government did the Northern Beef CEO talk to ahead of time to feel comfortable giving Benda a check for $550,000 upon his delivery of the $1,000,000 Futures Fund grant? No
3. Who in the Rounds Administration approved the $1 million Futures Fund grant for construction reimbursement to Northern Beef Processors (the check Benda ended up securing in physical form as a member of the private sector)? The Letter of Agreement authorizing the $1 million grant was signed by Governor Rounds. This information was obtained by the South Dakota Department of Legislative Audit as part of their audit of the governmental funds of the Governor’s Office of Economic Development. No
4. Was Richard Benda working alone when he stole the state’s money? No
5. How is it possible that Benda stole the $550,000 state grant money without conspiring with either state officials, Northern Beef Packing plant employees or SDRC, Inc. President Joop Bollen? No
6. How close did Mike Rounds work with Richard Benda & Joop Bollen on the EB-5 program? No
7. Did Mike Rounds know the intended purpose of the $1 million grant he approved for his departing cabinet secretary Richard Benda? No
8. Why is Governor Dennis Daugaard pointing the finger at the Rounds administration but former Governor Mike Rounds says the check is the Daugaard administrations fault? No
9. How did Joop Bollen get the contract to privately manage the EB-5 visa program for the State of South Dakota? Was there a public bidding process? a. KELO reported that Mike Rounds sliced Joop Bollen’s pay in half for managing the state’s EB-5 program to grant Bollen the lucrative EB-5 contract through a no bid process. No
10. Follow up on Keloland story: Why did Mike Rounds think it was ok to grant a no-bid contract to a state employee for the lucrative EB-5 contract? No
11. What were the full terms of Joop Bollen’s contract to manage the EB-5 program? That contract has been made available to the public (see attached copy). No
12. Who determined the terms of Joop Bollen’s contract to privately manage the EB-5 program? No
13. Who wrote the contract to privatize the EB-5 program for Joop Bollen? No
14. Who else was earning money from the state’s privatization of the EB-5 program? No
15. Did any beneficiaries of the EB-5 program make political contributions to elected officials, and/or their party committees, who oversaw the EB-5 program? No
16. Is there any information you can provide the Committee regarding the results of the investigation being done by the private attorney to pursue the possible recovery of $550,000 that was allegedly misappropriated by the late Richard Benda? No
Supp1. As a state employee, Joop Bollen granted SDRC Inc, a private company he owned, the contract to administer the EB5 program on January 15, 2008.
S1a. When did you approve this contract?
S1b. Why did Bollen sign the contract on behalf of the State when he incorporated and owned SDRC, Inc.? No
S1c. Have you requested or reviewed a copy of Bollen’s deposition transcript in the Darley arbitration where Bollen discusses the transactions between the State, his own company, Darley International LLC and Hanul Law Corporation? No
S1d. Did you know Bollen was asked at deposition “why didn’t you sign on behalf of SDRC, Inc.” and he responded “it would look silly”? No
S1e. Was this transaction (the contract signed on January 15, 2008) between the State and SDRC, Inc. reviewed by an attorney acting on behalf of the State? Who? No
S1f. Do you know if anyone else had an ownership interest in SDRC, Inc. besides Bollen when he signed this agreement on behalf of the State 5 days after forming his company in January 2008? No
S1g. Did you know Bollen did not resign from the State until December 21, 2009? No
S1h. Did you know Bollen took all the EB5 records with him on December 21, 2009 without permission from NSU? Do you know if anyone from the State gave him permission? Do you know whether the State has copies of those EB 5 files now? No
S1i. Did you know that Bollen, on behalf of South Dakota, was requesting recognition of SDRC, Inc. (his own company) by U.S. Immigration Services while he was a state employee? No
S1j. Did you know that the foreign investors must invest the proper amount of capital in a business, called a new commercial enterprise, which will create or preserve at least 10 full-time jobs, for qualifying U.S. workers, within 2 years of receiving conditional permanent residency? Do you know if there is a listing of jobs created with each project in the state that received EB5 funds? No
S1k. Do you know how much in fees has been received by the State under the Agreement with SDRC, Inc.? How much SDRC, Inc. received? No
S1l. When did you first learn about this contract? Did you read it? Ask an attorney to review? Distribute? No
S2. Clause 6 of the same contract signed between SDIBI and SDRC, Inc. on January 15, 2008, states “SDRC, Inc. shall indemnify, defend, and hold harmless SDIBI, SDIBI/SDRC, the state of South Dakota and its officers and employees from liability and any claims, suits, judgments, and damages arising as a result of SDRC, Inc. acts and/or omissions performed under this agreement.” South Dakota had multiple opportunities to protect taxpayers:
S2a. Who selected the attorneys to represent the States’ interests in these matters?
S2b. Who are the primary State contacts with the attorneys representing the State’s interests in the Darley arbitration? No
S2c. Didn’t some of the attorneys representing the State in the above-described matters have an affiliation with Hanul Law Corporation who is a defendant in the Darley arbitration? No
S2d. When did you first learn about potential issues with the administration of EB5 issues? Didn’t Attorney Rich Williams in the SD AG’s office receive notice of EB5 issues several years before the contract with SDRC, Inc. was finally terminated? No
S2e. What was your participation in EB5 investor recruiting? Trips? Discussions? Correspondence No
S3. [Rounds only] Once you, Attorney General Larry Long, and the South Dakota Board of Regents were made aware of the Darley International lawsuit, did you fully brief state legislative leadership or members of the joint appropriations committee of this ongoing legal matter? No
S4. [Rounds only] Did you provide the authority for Joop Bollen to sign the contract granting SDRC, Inc. the right to administer the EB5 program on January 15, 2008, since the South Dakota Board of Regents did not grant such authority? No
S5. [Rounds only] When you were served legal matters of the Darley petition in July of 2009 to force South Dakota into arbitration because of Joop Bollen’s actions, why didn’t you fire Joop Bollen and why didn’t you initiate legal action against SDRC, Inc. which had pledged to hold harmless and indemnify the state of South Dakota? No
S3. [Daugaard only] Did you inquire whether there was any ongoing litigation that the Board of Regents was engaged in? No
S4. [Daugaard only] When did you become aware of the Darley International LLC litigation in California court? No
S5. [Daugaard only] In September 2013, you cancelled the EB5 contract with SDRC, Inc.; however, SDRC, Inc. continues to earn money managing existing EB5 loans. Why didn’t you rescind the right to manage old EB5 loans when you cancelled the right to manage new loans? No
S6. [Daugaard only] Did Attorney General Marty Jackley inform you that as a state employee, Joop Bollen formed limited liability partnerships that managed EB5 loans? No
S7. [Daugaard only] If you were indeed aware of the ongoing Darley International lawsuit concerning Joop Bollen and the EB5 program, why was this information not provided by Commissioner Pat Costello to the Government Operations and Audit Committee earlier this year? No
S8. [Daugaard only] When you asked Attorney General Marty Jackley to investigate the EB5 program in the spring of 2013 in response to federal grand jury subpoenas, did Jackley remind you about the substance of the ongoing Darley International lawsuit? No
S9. [Daugaard only] Why didn’t you rescind the right for SDRC, Inc. to manage existing EB5 loans when you cancelled the right for SDRC, Inc. to manage the EB5 program in September of 2013? No

The GOAC questions are not an exhaustive list of the questions raised surrounding Mike Rounds's EB-5 scandal. But just this chart should make clear that Mike Rounds is lying: the Darley ruling says very little about the questions that South Dakotans have raised about EB-5.

With his comment about a noteworthy lack of oversight by the Governor's Office, the Darley arbitrator actually reinforces what may be the most important question on that list, Question S5 to Rounds: After Joop Bollen violated a raft of state laws and rules, why did Mike Rounds not only not fire him but reward him with a no-bid contract worth millions in EB-5 recruitment fees? The only thing close to an answer that Rounds has given to that question is his assertion that keeping the money flowing was more important than worrying about proper behavior. Darley does nothing to give Rounds a better answer.

Sorry, Mike: you're still on the hook. Your portrayal of Darley as complete vindication only adds to the lies you've told South Dakota.

* * *

So, should there have been more supervision for what Bollen was doing in administering this program? This is what Rounds told KELOLAND News.

"I think what the judge was trying to say was that he found no liability on the part of the state. And he went to the inception of the program in the 1990's and he found that there was no liability from the state and that everything we have been accused of in this has been wrong," Rounds said in response [Ben Dunsmoor, "Rounds Feels Vindicated by Dismissal of EB-5 Suit,", 2014.10.07].

Update 09:12 CDT: John Tsitrian says Mike Rounds is delusional and desperate. P&R Miscellany says we Democrats are and concludes, mistakenly, like Rounds, that the Darley ruling shows we have nothing on Rounds or Bollen.

Meanwhile, Rounds tangles his own Darley mythology, telling Denise Ross that the ruling shows Joop Bollen is a great guy who did great things for South Dakota, but then insisting, in absolute contradiction to his own hasty, full-throated spin and the arbitrator who is suddenly Rounds's best friend, that he was not at all responsible for Bollen's actions.


  1. lesliengland 2014.10.08

    excellent, excellent work cory. rounds denied the transactional details and would not even name what state agency did know the details. a conspiracy of covering every GOP crony's tracks, perhaps all the way to DC. then jackley, tidemann & committee, regents and even somehow, lucas scratch each other's backs and refuse to investigate in any meaningful way. where is law enforcement? Checks and balances? auditors?
    even rep. tyler's obtaining select information might have be intentional on the regent's part. deception of the public as a goal using dems as unknowing tools. yes, troy, I guess I have become a nutty conspiracy believer.

    its all REPUBLICAN politics. wow. we have a failed state in SD.

  2. 96Tears 2014.10.08

    PREDICTION: Mike Rounds drops out of debates on KELO and SDPTV.

    The gangsta Governor will answer no further questions on these allegations.

  3. mike from iowa 2014.10.08

    Good news/bad news. Good news for Rounds-according to Fur,Fish and Game Magazine pheasant numbers are up 76% in South Dakota this year. Bad news for Bollen if he gets an invite to go with the Guv. Make the best of a bad situation and stay away from shelterbelts,Joop.

  4. Chris Francis 2014.10.08

    Again, great reporting for sure Cory.

  5. Steve Sibson 2014.10.08

    On Keloland Rounds ducked the question about Bollen not being supervised by repeating the talking point: the court ruling proves EB-5 is good for South Dakota. The only thing the court ruling proved was that Darley did not deserve the money. What money? The money SDRC made bringing communists to America.

  6. caheidelberger Post author | 2014.10.08

    Steve, you understand Rounds's lie pretty clearly. He keeps thinking we're debating the merits of EB-5 visa investment and that everything is justified if he can say it brought money and jobs to the state. (He also still hasn't shown us the 5,000+ South Dakotans working those jobs.)

  7. larry kurtz 2014.10.08

    Were the green card recipients compelled to convert to some christian cult?

  8. WayneF 2014.10.08

    Mike from Iowa: I had a sad laugh at your last line about pheasant hunt invitation: "stay away from shelterbelts, Joop."

  9. JeniW 2014.10.08

    Indeed, Wayne...

    Never know if there is another Dick Cheney out there "hunting" and cannot tell the difference between a human and a pheasant.

  10. Roger Cornelius 2014.10.08

    There is one thing for certain, Joop Bollen shouldn't go hunting with any Republicans with a loaded shotgun. Someone would certainly be looking for a shelterbelt and a twig.

  11. mike from iowa 2014.10.08

    PNR Misc makes it sound like Dems were the driving force behind the Darley arbitration. He calls it their one big court case and they didn't win. Sounds like PNR inhaled Sibson or something.

  12. lesliengland 2014.10.09

    Talk about validation, Rounds will spin the "victory" but the real validation is all the hard work Cory put into turning this race around by clearly uncovering greed, graft, coverup, failure and "monkey business" of SDGOP ingrained/embedded legislature and administration and Regents.

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