Feds Say South Dakota Too Corrupt to Use EB-5

Feds Say South Dakota Too Corrupt to Use EB-5

Remember how House Majority Leader Rep. Brian Gosch (R-32/Rapid City) said this week that South Dakota doesn’t need an ethics commission because the Legislature had thoroughly investigated the EB-5 visa investment scandal? Remember how Senator Deb Peters (R-9/Hartford) said this week that we shouldn’t spend money on anti-corruption measures because South Dakota just doesn’t have scandals like other states?

You want to talk money, scandal, and cost to the state? South Dakota’s failure to curtail the corruption wrought by Joop Bollen, Richard Benda, and Mike Rounds in the EB-5 program has caused U.S. Citizenship and Immigration Services to decide to terminate our state’s access to this lucrative economic development tool.

So reports Bob Mercer, who says USCIS has found “bigger and stranger” problems in South Dakota’s EB-5 program:

  • Three payments totaling $1.7 million inexplicably went to a holding company in Cyprus that owns Russian railway companies.
  • More than $5.1 million was used to purchase a Hong Kong-based lender.
  • That lender had previously provided $2.85 million as bridge financing at 29 percent interest for Northern Beef Packers in Aberdeen. The loan cost nearly $7.5 million before the purchase of the lender.
    Some $5 million can’t be found.
  • Approximately $3.3 million was improperly spent on expenses.
  • Money was loaned between projects.
  • Incomplete and inaccurate reports were filed for five consecutive years to the federal agency, including after state government took back control of South Dakota’s program on Sept. 24, 2013;
  • The outside contractor who previously managed the program for state government has continued to run a website identified as South Dakota Regional Center Inc.
  • Investor agreements sometimes appeared to have been altered.
  • Investors sometimes complained they couldn’t get their money back after their visa applications were refused.
  • Four South Dakota dairies involved with the program filed Chapter 11 bankruptcy.
  • The federal government received 1,002 immigrant petitions by foreign entrepreneurs associated with 32 projects in South Dakota, with 705 approved to date [Bob Mercer, “Feds to Kick SD from EB-5 Program,” Aberdeen American News, 2015.10.18].

The final item isn’t necessarily a problem, just an indication of the scope of what Bollen and Benda were up to. 705 approved EB-5 investments: that’s 705 foreigners each buying their green cards for $500,000 pumped into South Dakota business projects, plus an additional $50,000 in fees into the pockets of Bollen and his associates in the crazy corporate scam he constructed to keep money out of the state’s hands. That’s $352,500,000 in economic development (some of it, like Northern Beef Packers and Dakota Provisions, controlled by friends of Bollen and Rounds), plus possibly $35,250,000 in fees going to Bollen and his insiders for pushing papers.

In January 2014, then-Senate candidate Mike Rounds  said South Dakota is too poor to do without EB-5 visa investment. According to the Governor’s Office of Economic Development, the South Dakota Future Fund has pumped $80.4 million into economic development projects over the last four years. To lose access to a federal program that provided $352 million for similar purposes seems a radical loss for the state. To incur that loss by rank corruption and willful blindness thereto should cause heads to roll in Pierre.

Mercer reports that the feds sent notice to South Dakota of its intent to terminate our access to EB-5 on September 28. Funny we got no press release on that matter.

Mercer also notes that the state filed a lawsuit on Friday that “seeks financial records and money from Joop Bollen of Aberdeen.” Remember, this is the same Joop Bollen whose work then-Senate candidate Mike Rounds defended, who Rounds’s brother Dennis somehow didn’t notice was illegally playing lawyer on behalf of the state to hide a lawsuit his EB-5 wheeling and dealing had incurred, who Rounds’s appointed Attorney General Marty Jackley never interrogated during his investigation of the EB-5 scandal, who Rounds’s friends in the Legislature refused to subpoena, despite copious evidence that Bollen had evaded bank franchise tax, stolen state documents, and signed a contract with himself in violation of state conflict-of-interest law.

When the FBI closed its investigation of South Dakota’s EB-5 program last June and the U.S. Attorney announced no charges, it looked like South Dakota’s EB-5 scammers may have slipped the noose. USCIS may be bringing that noose back.

*     *     *

Then again, who wants a flawed immigration program that lets rich foreigners buy their way onto the country?

“We have a broken immigration system,” [Senator Chuck Grassley of Iowa] continued, citing EB-5 as an example. “This law was supposed to allow foreign entrepreneurs to come into areas of high unemployment and rural areas to help fight unemployment. But now, 65 percent of EB-5 immigrants go to Manhattan. We should allow engineers to immigrate because there is a shortage in the workforce,” he added [Chip Hubert, “Senator Grassley Talks Immigration, Iran Nukes,” Storm Lake Pilot Tribune, 2015.10.13].

EB-5 is supposed to pump money into rural areas and poor neighborhoods that struggle to draw investment, but a New York developer is using EB-5 dollars to build a 900-foot-tall, 1.7-billion-dollar tower overlooking Central Park where condos would sell for $13,000 per square foot.




  • South Dakota

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