S.D. political muscle was tapped to intercede for EB-5

The company that lost its contract to administer the state's EB-5 investment program amid an attorney general inquiry was helped by the state's congressional delegation and Gov. Dennis Daugaard less than a year before allegations of wrongdoing surfaced.

SDRC Inc. sought assistance from the state's top elected officials after U.S. Citizenship and Immigration Services indicated that one of SDRC's projects did not qualify under the federal EB-5 program, according to documents obtained by the Argus Leader through a federal Freedom of Information Act request. The project in question involved 200 wealthy foreigners who were prepared to lend at least $500,000 each to a wind power company in the hope they would then qualify for Green Cards and the ability to settle in the U.S.

When U.S. Citizenship and Immigration Services delayed its decision on whether the project would qualify, SDRC's founder, Joop Bollen, appealed to the state's highest elected leaders to intervene. The offices of Sens. Tim Johnson, John Thune, Rep. Kristi Noem and Daugaard responded with a letter signed by all of them asking the federal agency to review the denials it had rendered to the green-card-seeking investors.

Meanwhile, Bollen sent a memo to the investors of the project begging them not to withdraw their money, telling them repeatedly that South Dakota's "political powers" were working on their behalf.

"I can assure you," Bollen's memo said, "that the SDRC and your attorneys, together with the state of South Dakota's governor and its senators will press for and succeed in overcoming the USCIS' erroneous denial and achieve the desired approval of all your cases."

Bollen's memo badly overstated the situation. U.S. Citizenship and Immigration Services did not reverse its denial. Many of the investors in the project withdrew their money or were redirected to other EB-5 projects sponsored by SDRC. About two dozen of them moved their money to the Northern Beef Packers project, where they lost their investments after the plant declared bankruptcy last year.

The Argus Leader obtained Bollen's memo along with hundreds of other pages in a Freedom of Information request filed in November by the newspaper. This month, U.S. Citizenship and Immigration Services released some of the documents the Argus Leader requested.

The EB-5 investment program in South Dakota started and expanded rapidly under former Gov. Mike Rounds, who, as a Senate candidate in this year's election, remains an enthusiastic supporter.

Although Daugaard curtailed the state's emphasis on economic development through EB-5 when he took office in 2011, the May 4, 2012, letter signed by him and the congressional delegation to U.S. Citizenship and Immigration Services shows the state's political leaders would go to bat for an EB-5 project that promised economic development.

'Considerable importance' to S.D.

"With over $100 million of investment that is at risk, this clearly is a matter of considerable importance to South Dakota's economy, both now and in the future," the letter said.

It was not unusual for the agency to receive that type of correspondence. Tim Counts, a spokesman for U.S. Citizenship and Immigration Services, said the agency receives letters from congressional members about specific EB-5 projects, "but no one would hazard a guess as to how many we get or how frequently they arrive."

Ten months after the letter, however, the governor's office received subpoenas from federal investigators requesting travel vouchers from Richard Benda, who had served as Rounds' Cabinet secretary in the Governor's Office of Economic Development with authority over EB-5. Benda had left state government to work with Bollen at SDRC when Daugaard entered office.

The subpoenas touched off an investigation by Attorney General Marty Jackley's office, which found that $550,000 of a $1 million state grant to Northern Beef had been diverted to U.S. Citizenship and Immigration Services. The state revoked SDRC's contract to run the EB-5 program in September, and Benda killed himself in October.

Before everything went south, Bollen and Benda were making frequent trips to China to round up investors into South Dakota EB-5 projects, which included Northern Beef, dairies, a casino and energy projects. One project was a wind farm built by Iberdrola Renewables, the world's largest wind energy company.

Iberdrola's Buffalo Ridge II project consisted of 105 turbines in Brookings and Deuel counties, a $350 million project.

Company spokesman Paul Copleman said in an interview last year that the company worked with Bollen about financing part of the project with money from EB-5 investors. Bollen proposed replacing $100 million of Iberdrola's existing financing with EB-5 money.

Bollen recruited about 200 wealthy foreigners who wanted green cards to help finance the project. That was in 2010. But by then, the wind farm had been completed.

Ultimately, U.S. Citizenship and Immigration Services rejected the project because it already was completed, Copleman said. That meant the 200 investors recruited by SDRC would not be eligible to earn green cards.

Bollen enlisted clout of Johnson, Thune

Citizenship and Immigration already had started to deny some of those investors when Bollen brought the matter to Johnson and Thune. In November 2011, the senators sent a letter to Alejandro Mayorkas, director of citizenship and immigration, asking the agency to suspend any more denials of Iberdrola investors until appeals could be completed for those who already had been denied.

The letter was followed by the one May 4, 2012. This time, Thune and Johnson were joined by Noem and Daugaard. The letter again was addressed to Mayorkas. Its language was carefully crafted.

"We are informed that your agency issued a series of erroneous denials," the letter said, being careful not to outright accuse the agency of making "erroneous denials."

The delegation asked that representatives of the agency meet with Bollen and SDRC to resolve their differences.

"Again," the letter ended, "we ask that all reasonable efforts are made to give these visa applications full and fair consideration."

Spokesmen for the state's elected officials say there was nothing unusual about the letter and, in the case of Thune and Johnson, the earlier letter.

"The letters are standard of what we would send when a constituent expresses frustration with an agency," Thune's spokeswoman Andi Fouberg said.

Perry Plumart, Johnson's spokesman, said the response was an "appropriate" and "routine" act.

"This is the kind of stuff we do every day," Plumart said.

Jordan Stoick, Noem's chief of staff, said that letters signed by the entire delegation and governor aren't "the norm," but they aren't unusual, either.

Tony Venhuizen, Daugaard's director or policy and communications, said the governor signed on to the letter because of concern "that delays could cause problems for future wind development in South Dakota."

Mayorkas responded to the four elected leaders by letter June 1.

"After careful consideration, USCIS concluded that the petitioners were ineligible for the benefits sought and denied the petitions," he wrote. He also declined the delegation's request for face-to-face meetings with SDRC.

Bollen's memo to Iberdrola investors is undated, but its references to the involvement of Daugaard and the congressional delegation imply it was written near the time when South Dakota's four highest elected officials sent their letter to Mayorkas.

Bollen repeatedly referred to the denial by U.S. Citizenship and Immigration Services as "erroneous," and he told the investors that the state's political powers would come through on their behalf. The memo also held out the allure of a green card.

"If you seek to withdraw from this Iberdrola project," he warned, "I believe that you will be making a major and most serious mistake, and, that you will most seriously delay successfully achieving your green card."

Bollen ended the memo with a reassurance:

"Your investment is safe, your achieving the green card is within reach, and the joint efforts of SDRC, Hanul Professional Law, the state of South Dakota, and its political delegation in Washington, D.C. are being marshaled to achieve victory and success on your behalf."

http://www.argusleader.com/story/news/2014/04/27/sd-political-muscle-tapped-intercede-eb/8239593/

Mentions

• South Dakota Regional Center Inc.
• H&H Law
• Joop Bollen
• U.S. Citizenship and Immigration Services
• Northern Beef Packers III
• Deadwood Mountain Grand Hotel, Casino & Event Center
• FPL Day County Wind Farm
• Iberdrola Renewables – Buffalo Ridge II

Litigation Cases

• Darley International LLC vs South Dakota International Business Institute (SDIBI)

States

• South Dakota