FREE Sign upLogin
MERCER: We don't have to be land of scandals

MERCER: We don't have to be land of scandals

EB-5 Visa, EB5 Visa, EB-5 Investment

Scandal Land. Harsh, perhaps, but it doesn’t feel too strong.

Not with seven dead, and four awaiting criminal trials, possibly facing jail or prison, and other persons of possible interest perhaps still in the wings, in two separate scandals that have raised EB-5 and GEAR UP from obscurity into headlines.

Scandals that involved millions of dollars, washing without any high-level accountability for too many years through two state government departments, and enriching private hands.

The latest revelations from state Attorney General Marty Jackley’s investigation of the GEAR UP fiasco suggest many, many thousands of public-paid dollars flowed to restaurants, casinos and an array of private businesses for questionable purposes.

Those details might be why Stacy Phelps of Rapid City, the former GEAR UP director, and Dan Guericke of White Lake, the former director of Mid Central Educational Cooperative at Platte, backdated contracts.

Falsifying documents, in one instance on the hood of a vehicle next to a farm field where a former Mid Central board member was working, took place in the days just before Mid Central wasn’t renewed as a grant sub-recipient for GEAR UP.

Those contracts are key documents in proving an attempted GEAR UP cover-up.

Depending how the contracts were written, the state Department of Legislative Audit could, or couldn’t, dig into the finances of several nonprofits.

They were run by Phelps and two other Mid Central employees, the late Scott Westerhuis and his wife, the late Nicole Westerhuis. Legislative Audit kept digging.

Reconstructed digital communications between Phelps and Scott Westerhuis, the result of solid detective work, are also in Jackley’s circuit court filing made in the past week.

Both GEAR UP and EB-5 have many days ahead in state and possibly federal courts. At their hearts both are federal programs that South Dakota fully engaged during the prior administration of then-governor and now U.S. Sen. Mike Rounds.

GEAR UP relies on $3 million or more annually from the federal Department of Education to help children from low-income households and their families learn what is needed to pursue more education after high school.

EB-5 relies on a federal permit that, in South Dakota’s case, was granted directly to the state government. It involved attracting foreign investors to put at least $500,000 into South Dakota business projects in return for help with immigration.

Both began in earnest through Rounds’ Cabinet members: Then-Education Secretary Rick Melmer and then-Tourism and State Development Secretary Richard Benda.

In October 2013 Benda killed himself with a shotgun while appearing to be hunting pheasants, according to the official investigation’s results. He was about to face a grand jury inquiry over EB-5.

Melmer continued to stay involved in GEAR UP, as did his then-director of Indian education, Keith Moore. They didn’t submit work records for money they were paid several years ago while on the GEAR UP payroll through Mid Central.

The work records were one of the first problems noted by Legislative Audit. This happened under the current administration of Gov. Dennis Daugaard, as problems in GEAR UP worsened.

Education Secretary Melody Schopp took the side of Mid Central initially a year ago when Legislative Audit’s work became public. She later ended the contract. Directly overseeing her for years has been Tony Venhuizen, the governor’s chief of staff and son-in-law.

A variety of other state employees, current and past, and at least one legislator have ties to GEAR UP. A few, who haven’t been publicly identified, appear to have blown the whistle at key times. Others, who remain in the background, weren’t so forthcoming.

The saga of GEAR UP, on the heels of EB-5 which remains in a roil too with Joop Bollen facing criminal charges for allegedly borrowing state money on several occasions, is why members of many of state government’s boards and commissions have been required, starting July 1, to declare potential financial conflicts.

Phelps was appointed to the state Board of Education by Rounds while he was GEAR UP director and Daugaard reappointed him. Phelps resigned last year.

Rep. G. Mark Mickelson, R-Sioux Falls, sponsored the conflicts legislation. The full Legislature endorsed it in the strongest possible way.

The combined vote of the House and the Senate was 102 ayes and zero nays. Board and commission members grumble, but the vote can’t be mistaken for anything other than the message it clearly is.

We don’t have to be Scandal Land.



  • South Dakota

Subscribe for News

Site Digest


Securities Disclaimer

This website is for informational purposes only and does not constitute an offer or solicitation to sell shares or securities. Any such offer or solicitation will be made only by means of an investment's confidential Offering Memorandum and in accordance with the terms of all applicable securities and other laws. This website does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or any invitation to offer to buy or subscribe for, any securities, nor should it or any part of it form the basis of, or be relied on in any connection with, any contract or commitment whatsoever. LLC and its affiliates expressly disclaim any and all responsibility for any direct or consequential loss or damage of any kind whatsoever arising directly or indirectly from: (i) reliance on any information contained in the website, (ii) any error, omission or inaccuracy in any such information or (iii) any action resulting therefrom.