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NSU Counsel Testifies Bollen Ran EB-5 Under Governor’s Office, Not Regents

Last updated on 2014.10.20

One of the main responses Mike Rounds has offered to revelations of misconduct in the state's EB-5 visa investment program is that he didn't run EB-5; the Board of Regents did.

Testimony under oath from Northern State University counsel John Meyer on April 24, 2014, in a deposition for the Darley v. SDIBI arbitration contradicts Rounds's statements:

[Darley attorney Jennifer Elkayam]: Or what entity provides SDIBI with the authority to conduct foreign direct investment activities?

[Meyer]: In the State of South Dakota, that area is handled and funded through the Governor's Office of Economic Development, which is a subbranch of the South Dakota Department of Tourism and Development [John Meyer, deposition, Darley v. SDIBI, Los Angeles, California, 2014.04.24, p. 23].

Agreements between GOED and NSU authorizing SDIBI's work show budget items from NSU, but Meyer says those items included little cash:

[Elkayam]: Did SDIBI ever receive funding from NSU at any point in time?

[Meyer]: Well, I notice here it mentions a cooperative effort. That cooperative effort was limited on NSU's part. I have observed, in some of the documentation, that NSU's contribution was roughly $100,000 per annum. The remainder of the budget, which would be much larger, would have come directly from "GOED" or GOED. I should also add that the bulk of that $100,000 contribution would be in provision of office space, the general overhead support, utility support, communication support, et cetera. I believe the actual cash infusion from NSU would be negligible [Meyer, 2014.04.24, p. 25].

Bollen testified in his April 16, 2014, deposition in Darley v. SDIBI that he answered to NSU Dean of Business Clyde Arnold but that such answering was generally limited to cc-ing Dean Arnold on monthly updates e-mailed directly to the Governor's Office of Economic Development. Elkayam asks Meyer about the chain of command:

[Elkayam]: Do you know whether Mr. Bollen reported to Dr. Arnold between 2007 and 2009?

[Meyer]: Actually, he reported to the titular head of the Department of Tourism and State Development or GOED, and I believe that position was sort of a two-hatted division of the secretary of that department [Meyer, 2014.04.24, p. 28].

The titular head of GOED during the specified time frame was Richard Benda.

Meyer says any accountability Bollen had to NSU was on minor accounting matters, not the core operations of the EB-5 program or SDIBI in general:

[Elkayam]: Who did Mr. Bollen report to within NSU between 2007 and 2009?

[Meyer]: Well, we're looking at "Operations" down there at the bottom of this current exhibit, and I would have to say that for operational purposes, for those functions, he reported to whoever was the titular head of the Department of State of Tourism and Development or, as I said, who would also be heading the GOED operations.

[Elkayam]: So no one within NSU?

[Meyer]: Not for operations.

[Elkayam]: For any other purpose?

[Meyer]: What -- what would occur is reconciliation of payroll expenditures. For instance, we just looked at this previous exhibit that's identified as 1(8). Obviously there would be some accounting reconciliations concerning his salary, travel, et cetera [Meyer, 2014.04.24, p. 34].

Meyer says Bollen submitted his primary budgets (the accuracy of which Bollen himself called into question in his deposition) and accounting information to GOED:

[Elkayam]: Did he [Bollen] ever submit any type of budgets for approval to anyone within NSU?

[Meyer] I don't believe he did, to my knowledge. I believe he submitted his budget requests and his accounting of expenditures to GOED [Meyer, 2014.04.24, pp. 34–35].

Meyer states under oath that he does not believe Bollen obtained authorization from anyone at NSU or the Board of Regents for his January 2008 SDIBI–SDRC Inc. contract [p. 45]. He says that the functions described in that contract exceeded the parameters of the SDIBI mission statement approved by the Regents in 1994 [p. 48] as well as the operating authority granted to SDIBI by GOED and the U.S. Customs and Immigration Service [p. 51]. Meyer also says that Bollen and SDIBI received no Regental authorization for memoranda of understanding sent to EB-5 investors [pp. 57–58].

Operating thus outside the bounds of granted authority, as exhibited by SDIBI's off-book partnership with the Hanul law firm, prompted a meeting involving NSU's new president, Dr. James Smith, in 2009:

[Meyer]: ...there was a meeting that occurred at NSU between myself and Dr. Smith and Rich Benda and Joop Bollen and [V.P. finance and administration] Don Ehrlenbusch, and that meeting would have occurred in July of 2009.

[Elkayam]: And what did you talk about at that meeting?

[Meyer]: The -- you know, it's been five years now and the meeting was attended by myself, because I was asked to come, because there was a concern about the -- the employment of Hanul Law Firm. And there was also a concern at NSU about, shall I just say the activities that had been uncovered, and it was prompted by the transition between Dr. Laurie Nichols, who had been an interim president at Northern, and Dr. Smith's arrival, taking over her duties.

[Elkayam]: You said the employment of Hanul. Was that employment by SDIBI of Hanul?

[Meyer]: There was a concern that there had been no employment that any of us were aware of and that there should not have been [Meyer, 2014.04.24, pp. 56].

This July 2009 meeting fits the narrative that emerges from Bollen's deposition that NSU and the Regents may have been trying to shut SDIBI down and that only intervention from Benda and the Governor's Office of Economic Development kept Bollen and EB-5 going.

Meyer concludes that he does not believe that Bollen "was supervised by NSU in the sense that you would expect as an employee" [p. 73].


  1. Kate 2014.10.19

    Nobody wants to own this. I'm wondering is Mr. Adelstein is still endorsing Rounds. I thought Stan was smarter than that.

  2. JoeBoo 2014.10.19

    Does anyone know who all deposed? Right now 3 depositions have came out, are there any more?

  3. Roger Cornelius 2014.10.19

    Stan has continue to disappoint.
    He had a letter in today's Rapid City Journal endorsing the Rounds candidacy.
    I'm starting think that maybe Stan should also be deposed.

  4. lesliengland 2014.10.20

    hahahahaha-i wondered same as kate. but it was federal (evil word) AND a university (liberal bastion of subterfuge) was employer, so ROUNDS DIDNT DO IT. sounds like Regents just finally read the depo. they were too busy to release to the public. Daugaard is likely putting pressure on them to point the finger away from himself and back at rounds and preserve dr. smith and NSU's independence. next week: will the regents fall on their sword?

  5. lesliengland 2014.10.20

    stan could play the lawyer (his choice) 1.) who bailed joop (artistic license) out of korean prison, or 2.) the lawyer who sent monty the deposition saying "i despise monkey business". in either case wearing wire rims, smoking with a cigarette holder, a terrible 40s bowl cut above the ears, and raspy voice.

  6. caheidelberger Post author | 2014.10.20

    Joe, I don't know the full roster. I can tell you we have depositions from Bollen, Shekleton, and Meyer, then sworn testimony at the hearing by James Park from Hanul and Robert Stratmore from Darley.

    Roger, if you catch Stan Adelstein at breakfast, hand him one of the EB-5 briefs from this blog and see what he says.

  7. Jim 2014.10.20

    Another miscalculation by rounds: the depo transcripts won't be available for public review. His answers to GOAC are now further contradicted.

  8. mike from iowa 2014.10.20

    Where's the beef? Here is Round's take-I do not recall any of these details,but I clearly remember these details were not among the ones I don't I have had no personal conversations with Richard Benda about this stuff since October last.

  9. Jane 2014.10.20

    Thesis intended to help state economy got snatched up by money grubbing statesmen, and opportunists Bollen and Park. And they are the untouchable.

  10. caheidelberger Post author | 2014.10.20

    "Where's the beef?"—I'm surprised Gordon, Larry, and Rick haven't all three used that line on Rounds. $95 million in EB-5 investment isn't producing any beef in Aberdeen.

    But here's the thing: why is Mike appealing to such a transparent dodge? Instead of playing organization-tree semantics, why not just acknowledge the obvious fact, that SDIBI and EB-5 were his babies, operating under GOED authority, and directly address the mounting allegations of wrongdoing?

  11. mike from iowa 2014.10.20

    Rounds hasn't gotten past the first rule of scandals-deny,deny,deny. He has to be aware that whenever he does say something,those words come back to haunt him.

  12. mike from iowa 2014.10.20

    Cory,the truth is Rounds reads your blog and sees how much trouble he is in.

  13. caheidelberger Post author | 2014.10.20

    Mike, I lack Ryan Gaddy's time and proximity to chase Rounds down on the campaign trail for comment. But I would love the chance to sit down for an honest, on-the-record conversation with him, starting with his driving me out of the GOP in 2003 with his defense of No Child Left Behind and working through the last eleven years of EB-5, NBP, and this campaign.

  14. lesliengland 2014.10.21

    it seems, despite MSNBC's spotlight helping Weiland, Republican Presseller's lead is nullifying any deep reporting on EB5 capable of boiling down its complexity for a "coup de grace" taking out Rounds and Daugaard.

    Atty DUFFY'S video press release could be very helpful if distilled for the ordinary voter's perspective.

    sadly, Daugaard's ILLEGAL COVER-UP OF DELAY AND DISTRACT has largely succeeded in these waning days. that is the dilemma of our one-party red state.

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