Last updated on 2014.11.01
With national media and money breathing down his neck, Mike Rounds seems to be rediscovering his affection for speaking to the public. He raced to the Sioux Falls Rotary forum yesterday; now the Black Hills Pioneer publishes a lengthy interview Rounds granted to Adam Hurlburt.
Of course, the more Mike Rounds opens his mouth on EB-5, the more he gets wrong. Let's do some point-by-point:
1. Rounds Misportrays Nature of Privatized EB-5 Loan Funds
One of the marketing ploys that had been utilized against the South Dakota plan was that the other plans are all private, with the exception of, I believe, one. And the other plans, because they were all private, could put a consortium of projects together and then form a partnership. The state can’t do that.... And the reason to put together four or five of the projects is the security that, if you put $500,000 into one egg, you make it or you break it. If you’ve got a series of eggs put together and one doesn’t make it, you’ve got the protection of the other ones. Remember, under the federal guidelines, the money is at risk. They can’t put it into a bank; they can’t put it into a secured loan. So, the other ones are telling people, ‘well, if you go with these projects it’s all in one, it’s combined with other projects so you can spread your risk [Mike Rounds, interview with Adam Hurlburt, "Mike Rounds on EB-5's 'Black Eye'," Black Hills Pioneer, 2014.10.14].
Mike should have had a V-8 with his omelet. He appears to be saying that Joop Bollen's privatization of his EB-5 duties into SDRC Inc. allowed him to pour EB-5 investors' money into one big pool and then loan mingled funds to multiple projects. As I understand it, SDRC Inc. offered EB-5 investors no such pooled security. Pre-privatization, EB-5 investments went directly into dairy projects. The investors in each dairy sank or swam together. Post-privatization, EB-5 investments went into separate loan pools for each project. The investors in each loan pool sank or swam together. When Northern Beef Packers went under, its EB-5 investors didn't just lose $100K while their other $400K floated safely in Dakota Provisions and the Deadwood Mountain Grand; they lost their whole $500K. Whatever eggs Rounds is talking about, he's not talking about how his EB-5 program ran.
2. Rounds Still Confused on Being Served in Darley Lawsuit
I never saw it. Didn’t know anything about it. But I normally wouldn’t. If it’s that kind of notice, that we handle clerically.... We knew about the lawsuit — I mean, the Board of Regents was already on it, and the attorney general was working with the Board of Regents. The notice that came to my office was — it was a petition basically saying "we’re going to go to arbitration," which I would suspect would happen with lawsuits occasionally, and you’d get a notice as the agent for the state. But it didn’t come to me, it came to my office [Rounds, in Hurlburt, 2014.10.14].
Good grief, Mike. You already dropped the ball big on your office being served in this lawsuit. Could you at least go back and read the documents so you can stop making dumb mistakes? The document about which you made your now famous and potentially felonious misstatement was not an arbitration notice. It was notice of a new lawsuit commencing and demanding the state's appearance in court.
And "it didn't come to me, it came to my office" doesn't work. You are the Governor. You are your office. Just own it, o.k.?
3. Bollen's Involvement Discussed Before Granting Bollen SDRC Inc. Contract
Rounds said Bollen’s involvement in the Darley v. SDIBI lawsuit “was brought up and discussed” before he was contracted to manage EB-5 in South Dakota through SDRC Inc. [Hurlburt, 2014.10.14]
Wait, wait—curse this passive voice! Was Bollen's involvement in Darley v. SDIBI brought up and discussed by you? By advisors in your presence before he was contracted by you?
Recall your September 22 responses to GOAC: you said you became aware of potential issues with the administration of EB-5 in October 2013. Darley was a potential issue. If you are saying you discussed Bollen and Darley before Bollen's December 2009 contract was finalized, then you've just contradicted your GOAC statement again. If you aren't saying that, then who had that discussion, and when were you briefed on it?
4. We Don't Fire a Guy for Getting Sued...
You have things that occur in the normal course of providing administerial services. In this particular case, having a question of — what I think is a question of splits in commissions or receipts for that would be something that I would consider that’s not of an inappropriate nature, but rather one of a question of business practices or a disagreement among people working in the same field.... In terms of having a disagreement on commission splits with another entity that’s involved in the EB-5 program, no, we did not see that as being a disqualifying event” [Rounds, in Hurlburt, 2014.10.14].
So Mike, is concealing a lawsuit against the state a disqualifying event? How about breaking state conflict-of-interest law? How about breaking Board of Regents policy? How about evading bank franchise tax? Just whom does one have to screw to get fired by you, Mike?
5. EB-5 Also Makes Sun Rise in East
He noted that two natural gas-fired power plants in eastern South Dakota, the Deadwood Mountain Grand casino resort, and a turkey processing plant in Huron came online through the EB-5 program and continue to operate successfully today [Hurlburt, 2014.10.14].
Mike! Read your notes! Dakota Provisions began grinding turkey in Huron in December 2005. You attended the grand opening in April 2006. Joop Bollen and your lawyer pal Jeff Sveen went to China to recruit EB-5 investors for Dakota Provisions in 2008. SDRC Inc. organized its first loan pool and disbursed EB-5 money to the turkey plant in 2009. EB-5 money did not bring Dakota Provisions online.
6. Nothing But Benda:
“Here’s where the controversy begins to arise. In December of 2010 I had agreed to do a future funds grant to Northern Beef — a million dollars,” Rounds continued, stating that he laid out a plan to give Northern Beef the money in reimbursement for construction receipts, which they would have one year to produce.
Rounds said he had Richard Benda, his secretary of tourism and economic development, deliver the grant award letter.
“But when he delivered the letter he changed the dates, and he changed it from a year to 90 days in which to get their construction receipts together. He initialed it, but I never saw the letter,” Rounds said [Hurlburt, 2014.10.14].
Thus begins Mike Rounds's lengthy rehash—over a third of the article—of Richard Benda's malfeasance, alleged theft, and suspicious death. “That’s where the EB-5, now, gets a black eye,” Rounds concludes, begging us to believe that the only thing hinky about his EB-5 program was Benda.
Rounds has far too eagerly piled all the blame on the dead guy. Rounds and his nervous SDGOP pals have followed that tack since Governor Dennis Daugaard set it up by personally announcing the discovery of Benda's body last October 22. Benda did plenty wrong (see also AG Jackley's draft arrest warrant, Benda's strong-arming of Northern Beef Packers, and his greedy pitch to make Keystone XL an EB-5 project), but those wrongs took place under administrations whose lax oversight and lust for easy money made corruption more feasible.
Plus, making Benda the fall guy ignores all of the major EB-5 revelations that have fueled the ads, the now-national media storm, and the public doubt that endanger Rounds's Senate aspirations. Joop Bollen, not Richard Benda, figures centrally in many of the new discoveries and allegations. Rounds ignores most of the new points and keeps pointing his trembling finger at Benda while saying Bollen did nothing wrong.
I am glad Rounds was willing to talk with Hurlburt about EB-5. I just wish (and I suspect his staff wish) he could get his facts straight. If you think the Black Hills Pioneer was tough on you, just wait and see what happens when you get your facts wrong with the New York Times.