FREE Sign upLogin
Several members of South Dakota’s delegation question continuation of EB-5 immigrant visas

Several members of South Dakota’s delegation question continuation of EB-5 immigrant visas

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

A current survey found two of South Dakota’s three members of Congress, and several candidates seeking to succeed one of them, doubt the integrity of the federal immigrant-investor program.

Known as EB-5, the program blossomed in South Dakota a decade ago under the sponsorship of state government. EB-5 now sits in political mothballs, put on hold by Gov. Dennis Daugaard.

Daugaard’s suspension of EB-5 came after a flurry of projects under his predecessor, Gov. Mike Rounds.

They were for meat processing, electricity production and gambling. They relied on private investments from people in China and South Korea seeking federal approval to permanently live in the United States.

Allegations of corruption in South Dakota led President Obama’s administration to begin action to shut down the South Dakota regional center in 2015. A final decision hasn’t been reached by President Trump’s new administration.

State Attorney General Marty Jackley obtained a guilty plea this year from Joop Bollen of Aberdeen, the regional center’s former chief executive, for illegal use of money that was set aside to protect state government. Bollen didn’t serve prison time.

Richard Benda allegedly committed suicide in October 2013 as Jackley arranged for a state grand jury to question Benda about double-billing state government for trips while he was state government’s secretary of tourism and state development.

A reporter for this newspaper asked where the men and woman who represent South Dakota in Congress, and the men and woman seeking one of the seats, stood on the minimum EB-5 investment required to qualify for permanent U.S. residency.

The amounts were set in 1990 and haven’t been adjusted. Four top members of Congress – two Republicans and two Democrats – formally issued recommendations this year on EB-5 reforms. One would raise the minimum investment to $1,350,000. It has been $500,000 for 27 years.

The defender of EB-5 in the South Dakota delegation is U.S. Sen. Mike Rounds. As governor from 2003 through 2010, Rounds oversaw the program’s growth in South Dakota. Daugaard was his lieutenant governor.

“I believe the federal EB-5 program has been – and can continue to be – an important tool for economic development, particularly in areas underserved by traditional financing options and I would be open to an inflation increase as long as reforms to improve federal oversight of the program are included,” Rounds said in a statement last week.

Congress faces a Sept. 30 deadline whether to reauthorize EB-5 nationally. Reports filed with the U.S. Citizenship and Immigration Services agency for the South Dakota regional center from 2010 through 2015 showed 332 foreign nationals received permanent U.S. residency through EB-5 investments made in the South Dakota program.

They invested in loan pools assembled by Bollen and were required to create or maintain at least 10 jobs per investment. Meeting those minimums typically qualified the investor, along with a spouse and any children under age 21, to eventually become permanent U.S. residents.

Benda was a member of Rounds’ cabinet. Bollen, who worked from the Northern State University campus in Aberdeen, pursued expansion of EB-5 in coordination with Benda and others in the Rounds administration.

Bollen started SDRC Inc. in 2008, left state employment the next year and signed a series of contracts with Benda to privately manage EB-5 for South Dakota. Benda worked for Bollen after Daugaard didn’t retain Benda upon winning the 2010 election for governor.

U.S. Sen. John Thune said this in a statement last week: “While there are a few examples where investments through the EB-5 program benefited local communities, it’s clear that the program is flawed and, if renewed, is in need of significant reform.”

U.S. Rep. Kristi Noem had this to say in a statement last week: “While the program has been helpful in some parts of the country, I believe it is too often unaccountable and not transparent enough to be renewed as a stand-alone program without reforms.”

Rounds, Thune and Noem are Republicans. Noem is running for the Republican nomination for governor in 2018. Among her opponents for the nomination are Jackley and former state legislator Laura Hubbel.

Seeking the Republican nomination to succeed Noem in the U.S. House of Representatives are Dusty Johnson, who gave up a seat on the state Public Utilities Commission to become the first chief of staff for Daugaard as governor, and Secretary of State Shantel Krebs.

Johnson in a statement said: “I have real concerns with EB-5 as a program, and couldn't support its continuation ‘as is.’ EB-5 has strayed from its original purpose. As I understand it, the intent of the program was to attract people who wanted to bring their business to America, for example, a dairy farmer from the Netherlands who sells his operation, moves to South Dakota, and invests the proceeds in a dairy operation here.

“At some point, EB-5 evolved into a program that bundled the money of dozens of foreign investors. Unlike the Dutch farmer, these investors weren't investing to build a business or earn a return. Instead, they were investing to secure a green card, and saw the $500,000 as the price of admission. As a result, quite a number of them invested in projects that were too risky to attract other financing, which led to high-profile bankruptcies of some EB-5 projects.

“I'm not at all convinced that today's EB-5 program is good for our country. I'm interested in reforms that would return EB-5 to its roots, perhaps by limiting the number of EB-5 investments in a particular project, or by requiring that an EB-5 investor be actively involved in the management or operation of the enterprise.”

He added: “Increasing the minimum investment amount makes a great deal of sense. My preference would be to make that change along with other, more substantial, reforms to the program.”

Krebs in a statement said: “While I certainly support investment in our state and economic development, I have serious concerns about the possibility for abuse of the program as it stands and the potential that foreign investors would be able to buy entry into America. Entry into America is a privilege that must be earned.”

She added: “I fundamentally don't agree with the program.”

Tim Bjorkman, a retired state judge from Canistota, has announced his candidacy for the U.S. House seat as a Democrat. He didn’t respond to the email request seeking comment.

The reform letter came from Rep. Bob Goodlatte, R-Virginia, chairman for the House Judiciary Committee; Rep. John Conyers, Jr., of Michigan, the committee’s ranking Democratic member; Senate Judiciary Chairman Chuck Grassley, R-Iowa; and Sen. Patrick Leahy, D-Vermont, the Senate Appropriations Committee’s vice chairman.


Litigation Cases


  • 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.