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Rounds Botches Multiple EB-5 Points in Black Hills Pioneer Interview

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.


  1. mike from iowa 2014.10.15

    So,you're basically saying ex-Gov Rounds is a big poopy?

  2. caheidelberger Post author | 2014.10.15

    Mike, I would not insult poopy in that fashion.

  3. Tim 2014.10.15

    Rounds reminds me of a little kid caught in a lie, keeps telling more and more to keep out of trouble, at some point there are so many lies you can't keep them all straight.

  4. Tim 2014.10.15

    Cory, thanks for the George's Pizza tip, fantastic pizza! lol

  5. mike from iowa 2014.10.15

    While I am glad he is making a fool of himself,his lawyers must be in apopolectic shock by now.

  6. Francis Schaffer 2014.10.15

    My take on this is that either he was out of touch with the program or he is lying, or both; just what we need in Washington representing the State of South Dakota

  7. Bill Fleming 2014.10.15

    Seems like there are two ways to look at this. Rounds is either a master conspirator or a hapless, clueless front man. Which one makes for a better senator? LOL

  8. lesliengland 2014.10.15

    add to para. 4, unauthorized representation of state in lawsuit and practice of law w/o license.

  9. Steve Sibson 2014.10.15

    Point 6 regarding the promised and paid $1 million GOED grant to Northern Beef. According to Denise Ross in today's Mitchell paper, Rounds was unaware that the state of South Dakota promised $10 million in GOED money in order to get the $30 million from Epoch Star:

    In addition, the 87-page loan agreement outlines a requirement that the state commit to two separate $5 million loans to Northern Beef in addition to Epoch Star's $30 million. That loan agreement was not publicly available at the time Rounds was interviewed, and those requirements of the state's commitment were not known.

    Rounds said he did not speak with any of the banking commissioners about the loan deal.

    So shouldn't South Dakota still be on the hook for $9 million. And Rounds says he never talked to the bank officials. Did he have someone else talk to them?

  10. Bill Fleming 2014.10.15

    Sibby, Cory, that article by Denise looks kinda like a smoking gun. Is this the first we've heard about the State being on the hook for the $10 million?

  11. larry kurtz 2014.10.15

    Can DD just pardon the whole kit n kaboodle?

  12. larry kurtz 2014.10.15

    No state court can indict Daugaard only the feds could do that.

  13. Paul Seamans 2014.10.15

    TransCanada claims that they are a $50 billion corporation. I doubt that they would have accepted EB-5 money even if it was offered to them, why get mixed up in something that could potentially cause them a lot of grief?

  14. jerry 2014.10.15

    Someone needs to contact Howie and tell him that there is yet another valid report on Rounds and his lies.

  15. Roger Cornelius 2014.10.15

    Were the two state $5 million dollars to come from GOED or from other state source?
    Maybe I didn't read Denise's article correctly, so I'm not sure if the state actually made the loans to Northern Beef Packers.
    I'm like Bill and was not aware of the state promise this $10 million loan.

  16. mike from iowa 2014.10.15

    Didn't rounds assure everyone the state lost no money?

  17. Joan Brown 2014.10.15

    Larry, being DD is so busy making repairs on the governor's mansion even though he doesn't have to, he is too busy to do pardons, hopefully.

  18. Francis Schaffer 2014.10.15

    That ad puzzles me. His wife apparently thinks Denny needs to make some changes, but she hasn't gotten him to do it. So is he just too stubborn to change, or doesn't feel the need to change or does not respect his wife enough to change. The list can go on and it may not matter but I did not start the conversation either.

  19. SDBlue 2014.10.15

    Very funny, Joan! When I saw that particular ad depicting our dear Governor as a handyman, my first thought was he missed his calling.

  20. Nick Nemec 2014.10.15

    There are skeletons up in the attic of the Governor's Mansion left over from the Rounds' administration. It's DD's job to make sure they don't start to smell. Lately it's been a full time job.

  21. Jim 2014.10.16

    Mike was so busy, he had to fly himself everywhere. Dennis is idle enough, he can go play tool time up in a crawl space. Dennis, many would rather see you tending to the state's business, rather than pulling nails in the attic. That is why we have a building maintenance department.

  22. caheidelberger Post author | 2014.10.16

    Ha! Dennis climbing up in the attic to make sure nobody's messed with the EB-5 boxes.

    But hey, even I have to admit the "Dennis hasn't changed" ad is a thing of warm fuzzy beauty.

Comments are closed.