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State to get $1.5 million in EB-5 settlements

State to get $1.5 million in EB-5 settlements

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

The state of South Dakota on Tuesday announced the settlements of two civil lawsuits against a company that managed the federal EB-5 Immigrant Investor Program on behalf of the state.

The settlements with the South Dakota Regional Center will result in the company repaying approximately $1.5 million to the state.

“Today’s settlement and the recovery of $1.5 million form SDRC Inc. not only compensates the state for past EB-5 related expenses, but also ensures the state has the funds it would otherwise have had under the contract with SDRC Inc. to guard against any future claims,” said Tony Venhuizen, Gov. Dennis Daugaard’s chief of staff, in a statement.

The lawsuits stem from the scandal over management of the EB-5 program in South Dakota. The federal EB-5 program allows wealthy foreign investors to acquire green cards to the United States for investing $500,000 in qualifying projects that increase economic development in rural or impoverished areas of the United States.

Under former Gov. Mike Rounds, the EB-5 program was run through the Department of Tourism and State Development by a state employee named Joop Bollen. In 2009, Bollen quit his job with the state and signed a contract with the state to manage EB-5 projects through his company, SDRC. In 2011, the former head of Tourism and State Development, Richard Benda, went to work for Bollen and SDRC.

In the spring of 2013, state officials learned that the U.S. Department of Justice was investigating the administration of the EB-5 program in South Dakota. Benda committed suicide that October as state authorities moved to indict him for directing $550,000 in state funds to SDRC.

One of the projects funded by the EB-5 program, the Northern Beef Packers Plant in Aberdeen, filed for bankruptcy that year. The $550,000 that was directed to SDRC was among $1 million in state money that was supposed to go the plant.

Last month, Bollen pleaded guilty to one felony count for diverting money from an account to protect the state from potential liability claims. He received probation.

Management of the EB-5 program became an issue in 2014 when Rounds ran and won a U.S. Senate seat. The South Dakota Democratic Party released a statement Tuesday criticizing the settlement.

“Like the lenient plea deal reached between Attorney General Marty Jackley and Joop Bollen, today’s settlement means the public will not get less information about the EB-5 scandal because no trial will take place to expose the facts of the corruption,” the statement said. “Once again, the Republican establishment in Pierre is sweeping corruption under the rug.”

Tuesday’s settlements don’t end litigation surrounding the EB-5 program. Some of the investors in the Northern Beef project have sued SDRC and the state of South Dakota, alleging they were defrauded out of their investments. The state has asked that the lawsuit be dismissed.

Another entity related to the program, SDIF Limited Partnership 2, also run by Bollen, is party to a lawsuit involving a gold mine and Deadwood hotel.


Source: http://www.argusleader.com/story/news/2017/03/14/state-get-15-million-eb-5-settlements/99185150/

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