Last updated on 2019.03.17
During his Senate campaign, candidate Mike Rounds insisted repeatedly that, as governor, he had no involvement with the "transactional details" of South Dakota's visa investment program. When asked by the Government Operations and Audit Committee who worked out the details of the plan to allow the state employee running EB-5 to privatize the program into his own private corporation, Rounds wrote on September 22, 2014, "I did not participate in those specific transactional details."
That former state employee, Joop Bollen, offers his account of the creation of that privatization plan to GOAC. After a series of interactions with a variety of state officials, Bollen comes to August 24, 2009:
Tim Engel emails my attorney indicating he's sending a draft agreement between TSD and SDRC, Inc., that Richard Benda had reviewed it and approved the terms. The email indicates that the draft had been reviewed and approved by Richard Benda but would be subject to final review and approval by Neil before Richard would sign it [Joop Bollen, letter to Government Operations and Audit Committee, 2014.11.10, p. 8].
Tim Engel was and is the attorney for the Governor's Office of Economic Development, which in 2009 was part of the Department of Tourism and State Development (TSD). SDRC Inc. is the private corporation Bollen created. Richard Benda was the GOED Secretary.
And Neil—who's Neil?
It would seem that in August 2009, the only Neil in a position in state government to be anywhere in the chain of command above a cabinet secretary like Benda would have been Neil Fulton, chief of staff to Governor Mike Rounds from September 2007 to June 2010.
Bollen says Fulton had to review and approve the TSD–SDRC Inc. contract. Last spring, Fulton denied having any direct involvement with that contract:
The tie between Bollen’s SDRC and state government deepened in 2009 when the contract was drawn. Sveen represented SDRC, while Benda’s department had its work performed by Tim Engel, a lawyer at the May Adam Gerdes and Thompson law firm in Pierre.
Fulton worked for the MAGT firm before accepting his appointment as Rounds’ chief of staff. Fulton said he was aware of the contract and thought he spoke with Engel once about it but wasn’t involved beyond that [Bob Mercer, "As EB-5 Use Quietly Expanded, ‘It Was Not a Plot,’ Official Says," Black Hills Pioneer, 2014.05.03].
Here are your logical possibilities:
- Bollen made a false statement.
- Fulton forgot.
- Fulton fibbed: he approved the contract (though tell me, please: do chiefs of staff have authority to approve any formal government contracts or other actions?).
- Fulton parsed: he wasn't involved in the contract, but when Richard Benda passed it up the ladder for approval, Fulton handed the contract to the man who had the authority to review and approve it—Fulton's boss, Governor Mike Rounds.
Let's review why this all matters: Joop Bollen ran South Dakota's EB-5 program for Mike Rounds and Dennis Daugaard. From 2004 to December 21, 2009, he ran it as a state employee. On December 21, 2009, Bollen quit his state job. On December 22, 2009, Bollen signed a five-year contract on behalf of SDRC Inc. with GOED to do pretty much the same EB-5 recruitment and management he was doing while working for the state. Bollen, Benda, and maybe unknown other SDRC Inc. employees and partners made pretty good money on this private gravy train.
One hinky part of this deal is that Bollen used his position as a state employee to sign a contract locking his private SDRC Inc. in as the state's partner in EB-5 in January 2008. The state allowed Bollen to do this and rewarded him with the December 2009 no-bid contract even though numerous state officials knew that Bollen had broken a tub of state laws.
Mike Rounds has told us he had nothing to do with this stunningly bad management.
Yet Joop Bollen is telling us that Mike Rounds's chief of staff had to approve Bollen's golden parachute in 2009.
And if Chief of Staff Fulton did his job and handed that contract to his boss for approval, then Mike Rounds transacted one of the central details of the EB-5 program... in direct contradiction to the words he said to get elected Senator.
Update 20:21 CST: Recall how Rounds explained the GOED–SDRC INc. contract to Bob Mercer at the beginning of October:
[Rounds]: Not unlike the hundreds or thousands of state agency contracts, this transaction was handled at the department level and they utilized department counsel. I was aware of the desire to privatize the program in order to better compete with the 500 regional centers located around the country. I was advised that there were only two state government-managed regional centers and that privatization would help South Dakota compete at the national level. From a competitive standpoint, I agreed with the concept of privatization. I was not involved in the transactional details nor did I review the contract [emphasis mine; Bob Mercer, "Rounds Answers Reporter's Questions on EB-5 Scandal," Black Hills Pioneer, 2014.10.02].