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A Scandal Unfolds

Nov 13, 2013



On October 30, Governor Dennis Daugaard stopped the presses by announcing that state and federal investigators are looking into "financial misconduct" in the Governor's Office of Economic Development.

The presses have fired up and churned out all sorts of background and discussion and speculation on GOED, EB-5 visas, Northern Beef Packers, and other angles of this very complicated story.

U.S. Marshals haven't perp-walked any South Dakota suits down Phillips Avenue to the federal courthouse in Sioux Falls. But whether the ongoing investigations drag anyone before a judge, South Dakotans need to pay attention to the GOED/EB-5 scandal, on multiple levels:

Misguided Agricultural Economic Development. Throughout the Mike Rounds and Dennis Daugaard administrations, South Dakota has followed the Earl Butz ag philosophy of "Get big or get out." South Dakota has favored mega-dairies, in part with EB-5 visa investments, at the expense of small local dairies. One of the largest dairies supported by EB-5 money, the Veblen mega-dairy, went bankrupt in 2009. The Rounds Administration ignored local investors interested in starting a manageably-sized beef packing plant in northeastern South Dakota and instead favored the gigantic Northern Beef Packers plant with $80 million of EB-5 visa money, plus millions more in other forms of assistance. That money all went poof: the plant never reached the production levels necessary to pay the bills and went bankrupt after less than a year.

A local entrepreneur responds to the investigation of the GOED's EB-5 program and suggests we could get better bang for our economic development buck focusing on smaller local start-up businesses. South Dakotans should spend the coming legislative session discussing that redirection of economic development policy with lawmakers.

Accountability. In the Veblen and NBP bankruptcies, we perhaps see the pitfalls of recruiting investors who are more interested in buying their green cards than in keeping an eye on how the businesses in which they invest use their money. But we also see the state making it hard for us to keep an eye out for foxes in our henhouse. After a review by a legislative committee in 2008, the state contracted its EB-5 program to a private company created by program coordinator Joop Bollen. The Rounds and Daugaard administration exerted little oversight, and Bollen used his private status to resist inquiries about EB-5 recruitment and investment. The Daugaard Administration tightened the financial reins in 2012 and finally got fed up and cancelled Bollen's contract in 2013, but for years, the state let this program fly without sufficient public accountability. The EB-5 program epitomizes the difficulty South Dakotans have in finding out what their government is doing.

Richard Benda. The former commissioner of Governor Rounds's Office of Economic Development was found dead in a grove of trees last month near a brother-in-law's home outside Lake Andes.

Governor Daugaard himself announced Benda's death on October 22. The day after Benda's funeral, the Governor announced the GOED investigation, which the Governor said he'd known about since spring. Three weeks later, the state has released no information on preliminary autopsy results. This official silence is deafening, especially when confirming one of the obvious explanations, suicide or hunting accident, would quash rampant speculation.

Anyone who thinks these events are not somehow connected has an unhealthy commitment to agnosticism.

Marion Michael Rounds. At the bottom of an already overwhelming newspile, we have the fact that Mike Rounds is running for U.S. Senate. Rounds was Governor when South Dakota's EB-5 program really got going. Rounds promoted EB-5 beneficiary Northern Beef Packers as an integral part of his failed South Dakota Certified Beef initiative. Rounds hired Richard Benda and sent him and Joop Bollen and others to China to get more EB-5 investors.

And now the feds are investigating his office's use of the EB-5 program.

There's no way that comes out good for Team Rounds. The question for him, his challengers, his donors, and the voters is how bad it comes out, and how bad it still sounds on June 3, 2014, and maybe (a maybe distinctly louder than it was last month) on November 4.

The campaign implications may be the least of our concerns. But this is a big story with a lot of players and a lot of connections to a lot of issues in our state. South Dakotans, please, keep paying attention.

 

Editor's Note: Cory Heidelberger is our political columnist from the left. For a right-wing perspective on politics, please look for columns by Dr. Ken Blanchard every other Monday on this site.

Cory Allen Heidelberger writes the Madville Times political blog. He grew up on the shores of Lake Herman. He studied math and history at SDSU and information systems at DSU, and has taught math, English, speech, and French at high schools East and West River.


Comments

09:53 am - Sun, November 17 2013
Bob J said:
Quash rampant speculation?

Like the gossip rag run by the author?

"A local entrepreneur"? Faceless, nameless...real?

"Marion Michael Rounds" Why the lame attempt to denigrate the former governor and current senate candidate?


Big story? Sure it's a big story for those who hate "the other side" and find [Republican] conspiracies around every corner.

Can't SD Magazine find a columnist who actually lives in SD?
11:56 am - Sun, November 17 2013
dave tunge said:
Can't SD Magazine find a columnist who actually lives in SD?

I'm sure they can Bob...........but Cory is so much fun to mess with :-)
05:48 pm - Sun, November 17 2013
Ron Wieczorek said:
Left or right wing (which is a stupid concept anyway) this is a very important story It would be most useful to find out where the paid off "investors" were from. This should be in the public record. I call for a public investigation with teeth
12:44 pm - Mon, November 18 2013
Web Editor said:
Dave - Yes, we could if we wanted, but whether you agree with him or not, you have to admit that Cory has a passion for goings on in our state.

Besides, his temporary exile to the wilds of the northwest is only physical — he's always got South Dakota on his mind.
01:10 pm - Mon, November 18 2013
As the story continues to evolve, Attorney General Marty Jackley is rejecting suggestions that he's too close to Mike Rounds to investigate fairly. Jackley says Rounds has nothing to do with the alleged misconduct under investigation: http://madvilletimes.com/2013/11/dems-ask-rounds-ag-appointee-to-recuse-self-from-investigation-jackley-rebuffs/

Ron explains the situation well. My location is irrelevant to the importance of the GOED/EB-5 story. Commenters with personal vendettas should take them up with me offline, and let readers focus on the issues that matter. My stories (usually!) aren't about me. They are (always!) about South Dakota. I am grateful to South Dakota Magazine for including this challenging story in its pages and encouraging readers to learn more about it.

Editor, thank you! You know my heart well.
09:27 am - Wed, November 20 2013
E.T. said:
Richard Benda was a friend of mine for 35 years, although distant for much of that time until recently. I have no interest in the why's of what caused his untimely demise, only that he's no longer here. However, I am not single minded in one direction (wing) or the other to ignore the facts. I believe that the writer of this story does not make any attempt to bias the reader's one way or the other. I"ve read only facts as they've been reported from every news publication or station since Daugaard made his announcement. (Now that was timing huh? And was there an underlying motive there?) Governor Daugaard, although making an announcement that appears to be as a champion for the State, needs to take responsibility for his role in the EB-5 program and allowing any presumed questionable practices to continue into his administration, don't you think?

Somewhere in the comments to this story, the story itself got lost and it became a pissing contest. Stay focused people. I don't care about any of your personal views. I only care about the FACTS as they develop.

Richard was my friend and I respect that friendship. There are no "buts" forthcoming for those who are waiting. I, like so many others, still want to know what is really happening and whther or not the management of the economic development at the State level needs reviewing and revamping. We want to know regardless of how my friend passed or what his involvement, if any, may have been in all of this.

I do have a question though regarding some of the comments. Why is it that Republicans always jump to the conclusion that they are being singled out and picked on as an entire party, whenever they have a chance to take a turn on the soap box? I don't give a )&* one way or the other what your political affiliation is if you've done something wrong. I only expect you to take responsibility when you're caught at it.
07:05 pm - Tue, November 26 2013
E.T., please accept my sympathies.

Also, please accept my assurance that, while I recognize the partisan political implications of this story, I am most keenly interested in helping the public understand the truth. The public is entitled to a very sober analysis of the effectiveness of our state's economic programs, a full accounting of the use of our public dollars, and accountability of the actions of all public officials.
10:16 am - Sat, May 10 2014
Jim Schmitendorf said:
Can we have an update on this story. Is anyone been fined or in jail?

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