Last updated on 2016.09.05
SDRC Inc., the private company state employee Joop Bollen created to make big money on EB-5 investments in South Dakota, created an offering memorandum on January 10, 2010, that pitched Northern Beef Packers to EB-5 visa investors. That offering memorandum was appended as Schedule 10 to the Northern Beef Packers–Epoch Star loan agreement of March 18, 2010.
That offering memorandum explains why NBP needs the new loan fund into which SDRC Inc. would place the EB-5 funds it was soliciting:
The Funded Business, Northern Beef Packers Limited Partnership ("NBP LP"), is a South Dakota Limited Partnership formed in April, 2007. It was established in order to build a state-of-the-art beef processing facility in South Dakota through investment of local managing partners and seventy (70) EB-5 investors seeing immigration to the U.S. This facility is designed to process over 7,500 head a week on a single shift and up to 20,000 head a week on a double or triple shifts, and other associated facilities are to be managed and operated by NBP LP. According to original plan, the construction was planned for completion in 2009. However, in the course of development, the completion date was postponed due to expansion of the business which additionally included construction of rendering plant and waste facilities. In order to facilitate new construction and operating cost, the Funded Business plans to receive additional financing from the Limited Partnership [SDRC Inc., offering memorandum, 2010.01.10, included as Schedule 10 to NBP–Epoch Star loan agreement, 2010.03.18].
There are two key lines of bunk in this pitch. First, 2009 was not the originally planned completion date. A pitch apparently prepared by SDRC Inc. partner Hanul Professional Law Corp. in 2007 says "The construction will start from May 2007 and plans to be completed by April 2008 in Aberdeen, South Dakota."
Second, rarely have I heard the delays at NBP attributed to an expanding business plan. Delays in the construction of Northern Beef Packers came from a host of factors: "financial issues, local opposition, the recession, and flooding."
As with so many of the affairs of SDRC Inc. and Northern Beef Packers, this 2010 investor pitch appears to be another load of bull.
p.s.: This detail may be entirely trivial, but that Hanul 2007 pitch represents to investors that Northern Beef Packers would have an April 2008 completion date, a total estimated business cost of $52 million to $55 million, and an estimated workforce of 600 to 700. Section 3.2 of the Northern Beef Packers–Epoch Star March 2010 lending agreement avers that "...Borrower has made no representation, warranty, or covenant to any 2008 EB-5 investor or other third party concerning the completion date, cost of construction of the Improvements, the date of commencement of Borrower's business as a packer at the Property, or the number of jobs to be created following commencement of the business."
But hey, since Northern Beef Packers bought Epoch Star eight months after making that agreement, I guess there's no one left to complain about that contradiction, is there?
Notice also that while the Hanul 2007 pitch claims 600 to 700 jobs, the 2010 offering memorandum claims NBP will create 563 jobs. It also pegs the total cost at $95,583,691. Hmm... expand operations, but create fewer jobs....