Can't get permanent Daylight Saving Time, can't get an Ethics Commission... do we have to initiate everything?!

The South Dakota House decided Wednesday that a statewide Ethics Commission is a bad idea. Democrats had proposed not even a bill, just a measly resolution, HCR 1006, that called on the Executive Board of the Legislative Research Council to work with the executive and judicial branches to whip up a proposal to reinstate a South Dakota Ethics Commission and propose legislation to that effect for next year's session.

We had a South Dakota Ethics Commission once. Democrats created it under Governor Dick Kneip in 1975. It was supposed to look into campaign activities and audit campaign finance reports. Governor Bill Janklow and resurgent Republicans put a stop to that foolishness in 1979.

Republicans aren't inclined to let such foolishness start again, either. Their arguments against a new Ethics Commission boiled down to...

  1. Rep. Lee Schoenbeck (R-5/Watertown): ethics commissions don't work. "If this idea works, I want a Tom Cruise commission to make us all strong and handsome." That's debatable, say the 41 states who do have ethics commissions.
  2. Rep. Brian Gosch (R-32/Rapid City): We have lots of other mechanisms to deal with ethics issues (all of which are controlled by Republicans and thus have a hard time investigating Republicans).
  3. Rep. Mark Mickelson (R-13/Sioux Falls): The Government Operations and Audit Committee took "an exhaustive amount of testimony" on the EB-5 scandal last year, showing current mechanisms are sufficient. Exhaustive? Perhaps Rep. Mickelson got tired of making excuses and avoiding evidence, but GOAC hardly delved into all of the issues of the EB-5 scandal.
  4. Rep. Justin Cronin (R-23/Gettysburg): GOAC worked hard and found nothing wrong but Richard Benda's double-billing, and now Richard Benda's dead, so there's no more information to be found, and the whole investigation just led to people "blasting and smearing" our Republican leaders. Ah, yes, the debate did turn to a defense of last year's EB-5 "investigation," which only shows that Rep. Cronin and other nervous Republicans want us to think that "investigating ethics" is just a witch hunt. Rep. Cronin's response also shows the intensity of his devotion to blowing smoke: Do the very alive Joop Bollen, Mike Rounds, and Jeff Sveen really have no knowledge that would illuminate the EB-5 scandal for us?

The vote against HCR 1006 was mostly party line. Democrats did win four Republican supporters: Rep. Lynne DiSanto (R-25/Rapid City), Rep. Steve Hickey (R-9/Sioux Falls), Rep. Dan Kaiser (R-3/Aberdeen), and Rep. Lance Russell (R-30/Hot Springs). Rep. Hickey complained that Democrats did not seek Republican sponsors for their Ethics Commission resolution. I appreciate Rep. Hickey's vote and those of his three brave colleagues, and I point again to those Mugwumpy Republicans as opportunities for Democrats to forge some unlikely alliances... but I also have to note they are only four out of 58 in the House. The Republican monolith remains mostly united against those of us seeking ethics and accountability.


Various observers have raised concerns that South Dakota's use of the EB-5 visa investment program may have opened our doors to Chinese spies and mafia. Now, two years after Iowa Senator Charles Grassley started beating the drum about the possible national security risks posed by EB-5, ABC News goes to town and trumpets the evidence we've had for two years that EB-5 is rank with fraud and corruption:

But an ABC News investigation found that in addition to reaching wealthy foreign investors, the program has become a magnet for those seeking to sidestep the scrutiny of the traditional immigration process. In one case, immigration officials pushed through a visa application from Chinese investor in a Las Vegas hotel project despite an internal review that found the investor had previously been turned back at the border, and much of his visa application had likely been fabricated, immigration records show.

A Feb. 1, 2013 Homeland Security internal review obtained by ABC News also lays out in stark detail the breadth of the troubles afflicting some of the roughly 600 so-called regional centers -- private sector entities certified by Homeland Security to recruit foreign investors for specific business ventures that will qualify for EB-5 visas. The document summarizes 41 investigations, some open and some now closed, into allegations ranging from espionage to fraud to drug trafficking involving investors in various EB-5 investment projects [Brian Ross and Matthew Mosk, "Whistleblowers: US Gave Visas to Suspected Forgers, Fraudsters, Criminals," ABC News, 2015.02.03].

Ross and Mosk mention our own Senator Mike Rounds and his love of EB-5, though they fail to get into the details. They also mention well-placed Democrats Terry McAuliffe and Nevada Senator Harry Reid (whom this blog mentioned in connection with EB-5 last November) as having used EB-5 to do favors at the expense of national interests.

ABC News also mentions an EB-5 connection to Iranian terror networks (also reported on this blog in December 2013). ABC News says that EB-5 will come before the Senate Judiciary Committee, which Senator Grassley chairs, this year. Fortunately for us, Senator Mike Rounds is not on that committee. Maybe he'll be called to testify about why he gave such strong support to a program that appears to promoted crime, corruption, and possibly risks to American security in projects across the nation.


Mr. Mercer notes that Speaker Wink's constitutional conflict-of-interest excuse for firing Democratic House caucus secretary Kathy Tyler lies in the same topic bubble as House Bill 1023, which may be the only action the South Dakota Legislature takes in response to the EB-5 scandal. I gladly take up the comparison.

HB 1023 outlaws what EB-5 czar Joop Bollen did in 2008 and 2009:

  • The state paid Bollen to manage it's EB-5 visa investment program.
  • In January 2008, Bollen created a private company to do the work that the state was paying him to do.
  • In summer and fall 2009, Bollen negotiated a contract between the state and his private company.
  • On December 21, 2009, Bollen quit his state job.
  • On December 22, 2009, the state formally approved the contract Bollen had negotiated to pay his private company to continue running EB-5, allowing Bollen to claim profits that otherwise would have gone to the state.

Actually, state law already makes illegal what Bollen did in 2008, creating a private company to profit from his ongoing state job. HB 1023 simply extends that prohibition on a conflict of interest to one year after leaving the state's official payroll.

Joop Bollen far more directly and intentionally violated state law in 2009 than Kathy Tyler and the Democrats did. Kathy Tyler voted for a general appropriations bill last year that funds the ongoing position of House caucus Secretary, a job Tyler had no intention of seeking when she voted for the budget last March, since she intended to return to Pierre as a legislator from District 4. Voting for the general appropriation for the Legislature was not an effort to stitch a golden parachute for herself.

Republicans immediately fire Tyler for her debatable infraction. Republicans take no action to reclaim the funds Bollen illegally funneled into his own bank account with his violation of existing statute; they only consider a meager amendment of statute and stay mum on the crimes that arose under their own administration.


In the "No News Is Bad News" Department, I was wondering if the South Dakota Banking Commission had ever ruled on whether SDRC Inc., the controversial Aberdeen company into which Joop Bollen privatized his state duties as EB-5 visa investment manager, was a bank. Recall that in November 2013, I reported that SDRC Inc. had engaged in lending activities but never obtained a state lending license and never paid state bank franchise tax. Brown County, which could be out $1.76 million in tax payments from SDRC Inc., asked the state Banking Commission to look into SDRC Inc's bank status in September. Banking Commission Bret Afdahl said at that point the commission was looking into the issue and that companies like SDRC Inc. usually responded to requests for information within 30 days.

I contacted Director Afdahl Monday and asked what the Banking Commission had found or decided. Afdahl replied thus:

The Division of Banking is investigating whether a license is necessary for SDRC, Inc. and that investigation is not yet complete [Bret Afdahl, South Dakota Banking Commission, e-mail, 2015.01.13].

That sentence means what you think it means: SDRC Inc. remains under investigation, 90 days after we would have expected SDRC Inc. to have responded to the Banking Commission's request, and the Commission cannot comment further. But the rest of us can.


It's –7°F in Huron this morning. Who'd give up tropical sunshine for weather like that?

Political refugees from Burma/Myanmar, that's who. The Karen people are an ethnic group from Southeast Asia. About 50,000 have come to America to escape political oppression and forced labor at the hands of the Burmese military dictatorship.

About 1,600 to 1,800* of those Karen refugees have settled in Huron. The BBC mobile bureau offers this video snapshot of the Karen workers at Dakota Provisions in Huron:

According to BBC's Anna Bressanin's report, Karen immigrants make up 61% of the workforce at Dakota Provisions and 9% of the workforce in Beadle County. (In November 2014, there were 9,495 jobs in Beadle County; 9% of that is 855.) That majority-Karen workforce kills and processes 21,000 turkeys a day. About 500 of their kids attend Huron public schools.

Bressanin's report is snapshot, not in-depth report. She finds one grouchy neighbor, Larry Benston, who complains that the Karen living next door (both sides!) don't communicate at all with him and his fellow Anglo retiree-neighbors. One house has over twenty people living in it, and Benston says they killed a hog in their back yard.

Whether you're proud of South Dakota as a beacon of freedom and $12/hour employment for political refugees or are annoyed that your town is less Anglo than it used to be, remember: the Karen influx is brought to you by the EB-5 visa investment program, the economic development initiative that was pivotal in keeping Jeff Sveen's turkey plant running.

Seven below—nice day to be inside a nice warm turkey plant.

*Update 2015.01.24 10:07 CST: The Greater Huron Development Corporation, in its November 2014 application for a state Community Incentives Matching Program Grant, says the local Karen population is about 2,500.


In my Top 30 Stories of 2014 post this morning, I noted that I wrote 172 blog posts about EB-5 this year. Here comes #173.

I would never have devoted 11% of my 2014 blog output to the EB-5 visa investment program if hadn't been for one man, a man who dictated much of this blog's focus without lifting a finger or uttering a word... because that man was dead.

Richard Benda in happier times, the Philippines, September 2012.

Richard Benda in happier times, the Philippines, September 2012.

Richard Benda died of a gunshot wound on October 20, 2013. His unexpected and suspicious death prompted Governor Dennis Daugaard to reveal the existence last year of a federal investigation into activities that took place in the Governor's Office of Economic Development while Benda headed that office. That revelation drove media attention throughout 2014. We learned that Benda had diverted more than half a million dollars from state assistance to one EB-5 project, Northern Beef Packers, into his own pocket. But we also learned, among other things, that...

  1. ...the head of South Dakota's EB-5 program, Joop Bollen, signed a contract with himself in 2008 to assign his duties as a state employee to his own private company, where he could turn his work for the state into millions of dollars in fees;
  2. ...Bollen attempted to conceal a lawsuit against the state triggered by his own EB-5 activities in 2007 and 2008;
  3. ...Bollen and his associate James Park, neither of whom is licensed to practice law in or on behalf of the state of South Dakota, unsuccessfully litigated that lawsuit themselves in 2008;
  4. ...Northern State University, the Board of Regents, the Attorney General, and the Governor's office knew Bollen had committed these infractions;
  5. ...Governor Mike Rounds ignored all of these known violations and at the end of 2009 granted Bollen a lucrative no-bid contract worth potentially hundreds of millions of dollars to completely privatize the state's EB-5 program.
  6. ...Bollen made possible the half-million-plus golden parachute that Benda took from GOED to Northern Beef Packers.
  7. ...Benda and Bollen tried to arrange EB-5 investment money for the Hyperion refinery (a doomed project) and the Keystone XL pipeline (which already has all the funding necessary and for which EB-5 money would have represented no added value for the pipeline or South Dakota other than the millions that Bollen and Benda would have skimmed in EB-5 fees).

EB-5 czar Joop Bollen committed several violations of state law and policy. Senate candidate and former governor Mike Rounds knew about those violations and continued to reward and defend Bollen.

But now, the very official word, from the Governor, the former Governor now Senator-Elect, the Attorney General, and the Government Operations and Audit Committee of the South Dakota Legislature, is that no one but Richard Benda did anything wrong in South Dakota's EB-5 program.

The research I've done, the conversations I've had, and the extraordinary efforts Mike Rounds and Marty Jackley and Larry Tidemann have undertaken to blame Richard Benda tell me that "Benda did it" is not the whole story, and maybe not even a true story.

Richard Benda could have told us many things to dispel that story. He could have told us what Joop Bollen and James Park were doing to Northern Beef Packers' finances in 2009. Richard Benda could have told us how Northern Beef made $95 million in EB-5 investment disappear into bankruptcy. He could have shared with us—with GOAC, with the FBI—his conversations with Bollen, Park, and Rounds during his tenure as GOED secretary. He could have told us what events carried him from the seemingly happy days of jet-setting to Southeast Asia and the Philippines through 2012 down to being pushed out of Northern Beef Packers and off the EB-5 gravy train in early 2013, bouncing from a consulting job in Sioux Falls to Russ Olson's old job at Heartland in Madison, and ultimately alone (we assume) to a shelterbelt near Lake Andes, where (we are told) he took his own life with a shotgun blast to his gut.

Maybe Benda saw the fix was in. Maybe he didn't think he could beat the evidence the state had against him, real or not. Maybe he saw himself out of the inner circle and all of the people who could have helped him beholden to power and money. Maybe he foresaw perfectly before that fatal shot that his former friends in the SDGOP would put EB-5 in one neat box and bury it with him. Maybe his death said, "Cory, forget EB-5. You can't beat these guys."

I spent this year trying to piece together the story Benda wouldn't tell, the story that would shift some of the blame piled on his defenseless corpse onto the shoulders of those still living and rolling in their ill-gotten EB-5 gains.

In practical terms, I failed. The GOP won its immediate objective: blow smoke on EB-5, win the election, keep GOP hands on all the levels of power we can keep a lid on the story. No one—not Bob Mercer, not Denise Ross, not Kathy Tyler and Patrick Duffy and the Democratic Party—managed to part that smoke with a narrative clear enough to explain to South Dakota voters that EB-5 was built on an absurd and illegal conflict of interest and that our next Senator Mike Rounds knew that and was fine with that.

And Joop Bollen remains a free man, unindicted by a curiously incurious Attorney General.

EB-5 killed Richard Benda. EB-5 did not kill the South Dakota Republican Party that hung Benda out to dry. But EB-5 still epitomizes the corruption and cover-ups of South Dakota's one-party rule. EB-5 remains a story that needs to be told. Richard Benda's unusual and suspicious death rightly riveted my attention and many others' on the EB-5 story in 2014. In that regard, Richard Benda is thus, sadly, the man of the year in South Dakota politics.


Rep. Peggy Gibson (D-22/Huron) is ready to do some serious work in Pierre this session. Responding to her legislative colleagues' inaction on the EB-5 scandal, Rep. Gibson writes in last Wednesday's Plainsman that South Dakota needs an ethics commission to combat both corruption in government and cynicism among the voters:

Did you know that South Dakota has neither comprehensive state ethics laws nor an ethics commission to oversee state officials and bureaucrats? In fact, South Dakota is one of only nine states that lack an ethics commission. Ethics commissions are established in either state statute or the constitution and provide external oversight of ethics laws.

Ethics commissions represent the public's interest and have a similar purpose: to ensure that groups under their jurisdiction follow state ethics laws. As regulatory entities, ethics commissions have various powers and duties, including investigating complaints of violations of ethics laws, providing advisory opinions to individuals under the commission's jurisdiction and offering ethics training. Many commissions have the power to prosecute and/or levy sanctions on the offender [Rep. Peggy Gibson, "News from the House," Huron Plainsman, print edition, 2014.12.03].

The Legislature's Government Operations and Audit Committee proved itself unwilling or unable to investigate and prosecute clear violations of conflict-of-interest rules and state law by players in the EB-5 program. Players throughout state government have been involved in the EB-5 mess, which has evidently made it hard to get any state agency to take the proper action against ethical violations. The Attorney General's office has known about ethical violations associated with EB-5 since 2009 and has refused to take action.

The dereliction of duty our Attorney General and Legislature have shown on EB-5 only heightens cynicism about government. Rep. Gibson cites this 2010 article from the National Conference of State Legislatures to warn us of how cynicism makes our politics worse:

Cynicism discourages qualified people from running for office, promotes a reluctance by members to address unpopular but necessary issues, encourages simplistic institutional reforms such as term limits, and increases the public’s unwillingness to comply with legislative decisions [Karl Kurtz and Brian Weberg, "What Legislatures Need Now," NCSL, July/August 2010].

Rep. Gibson believes a strong ethics commission would dispel cynicism and improve South Dakota politics. Establishing such a commission, however, won't be easy. An ethics commission must come either from the Legislature that doesn't want ethical matters investigated or from an initiating electorate whose cynicism may keep them from believing that such a commission could make a difference.

The difficulty of overcoming both cynicism and corruption makes it all the more necessary for reformers like Rep. Gibson to speak up and fight for an ethics commission.

Rep. Peggy Gibson, column, Huron Plainsman, 2014.12.03

Rep. Peggy Gibson, column, Huron Plainsman, 2014.12.03

p.s.: Speaking of integrity, Rep. Gibson should check with the editors at the Plainsman, who appear to have misplaced some vital quotation marks in her column. The passage I quote above properly appears in quotation marks in the print edition I'm reading. However, the sentences before that passage in Rep. Gibson's column also appear mostly verbatim in Kurtz and Weberg 2010 and should also be enclosed in those quotation marks, lest anyone throw a plagiarism flag.


The South Dakota Banking Commission has yet to take any public action on Brown County's request that it investigate EB-5 czar Joop Bollen's SDRC Inc. for possible evasion of bank franchise tax. Director of Banking Bret Afdahl sent SDRC Inc. a letter requesting information in September; as far as we know, SDRC Inc. is almost 60 days past the normal 30-day reply time.

If the Banking Commission is alarmed, they aren't showing it. Bob Mercer reports that the Banking Commission is meeting Friday at the Minnehaha Country Club (hey, can public bodies meet at private country clubs?), and SDRC Inc.'s bank status is nowhere on the agenda.

Well, maybe not nowhere. There is an executive session at the end. So maybe, just maybe, there's an interesting conversation to be had after the duck à l'orange. We can only hope that somebody in Pierre is taking their obligation to get answers about EB-5 seriously.


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