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Decision favors South Dakota's EB-5 center

Decision favors South Dakota's EB-5 center

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

South Dakota government officials will be allowed to keep their controversial immigrant-investor center alive, at least for now, and have received some rare recognition of the center’s successes.

A federal agency’s earlier decision to terminate the center was withdrawn last week and remanded for further review. The withdrawal and remand, dated March 15 and submitted to state officials this week, came from the Administrative Appeals Office of the U.S. Citizenship and Immigration Services.

At issue is the South Dakota Regional Center, which handles foreign investments in South Dakota projects via the federal government’s EB-5 program. The program offers permanent residency to immigrants who invest at least $500,000 in a U.S. business project that creates at least 10 jobs. “EB-5” is shorthand for the employment-based, fifth-preference visa — also called a “green card” — which is awarded to participants who meet program requirements.

In the March 15 decision, the Administrative Appeals Office determined that the positive and negative aspects of the South Dakota Regional Center’s operations were not balanced against each other in the earlier termination decision.

“This case contains evidence of the diversion of funds away from job-creating activities, as well as evidence of substantial economic activity that created thousands of jobs,” the appeals office said. “USCIS must consider all relevant factors in determining whether the applicant’s regional center designation should be terminated or maintained.”

For example, the appeals office reported that more than 1,000 individual investors have pumped at least $500,000 each into 32 projects since the inception of the South Dakota Regional Center in 2004. Hundreds of those investors have obtained lawful permanent resident status, the appeals office said.

Yet the appeals office also acknowledged the negative evidence in the case. Much of that stems from the activities of Aberdeen resident Joop Bollen, whose private company, SDRC Inc., formerly managed the regional center’s EB-5 operations through a contract with state government.

In 2013, former state bureaucrat Richard Benda committed suicide while he was under investigation for reportedly diverting state grant money to Bollen’s company.

Last month, Bollen pleaded guilty to a felony for illegally transferring money out of an EB-5 account that was intended to shield the state from EB-5-related costs and liability. He was sentenced to two years of probation and a $2,000 fine.

In a separate civil matter, the state announced last week that it had reached a settlement to recover about $1.5 million from Bollen's company. The settlement ended two pending lawsuits over the terms of Bollen's former contract with the state.

Issues raised in the various legal proceedings were among the problems that led the USCIS to declare in September 2015 that it intended to terminate the South Dakota Regional Center. State officials had already cut ties with Bollen and had stopped accepting new investments through the center, but they fought to keep the center open, in part for foreign investors whose residency applications were still pending. Because of the complex and novel issues involved in the termination, the USCIS sent its decision to its own Administrative Appeals Office for review.

The appeals office, in its decision, said state officials should share the blame for the regional center’s problems. The state, the appeals office said, “cannot immunize or absolve itself of responsibility for its management company’s wrongdoing simply by the fact that it contracted out its operations to that company.”

Tony Venhuizen, chief of staff for Gov. Dennis Daugaard, said the appeals office decision is “overall a win for the state.”

“The decision clearly took many of the state’s points into consideration and acknowledged the multiple factors that USCIS must consider in making a decision to terminate,” Venhuizen wrote in an email to the Journal.

According to Venhuizen, the regional center, which is now under the state’s operation, is servicing existing investment projects and resolving issues stemming from Bollen's management. About 90 individuals who invested in projects through the center are still awaiting processing of their residency applications, Venhuizen said.

The Journal was not able to reach a USCIS spokeswoman Tuesday to pose questions about the agency's next steps. The appeals office provided no future timeline while remanding the case "for further proceedings consistent with the foregoing opinion and for the entry of a new decision."



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