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EB-5 Scandal Still a Tangled Web

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On Friday, Governor Dennis Daugaard addressed concerns regarding the possible misappropriation of funds through the Governor’s Office of Economic Development.  In a letter, he explained that three separate audits are being conducted to get to the bottom of the matter and in the best of all worlds some money could be recovered.

As you recall, Attorney General Marty Jackley issued a report after investigating the death of former state official Richard Benda.  In that report, it became known that $550,000 was improperly diverted to pay immigration loan monitoring fees.

The whereabouts of that money is still unknown.  However, Governor Daugaard explained in a letter the current process being taken to find it.  To read the full text of the letter click here.

What is interesting is that in the January 2014 letter, Daugaard mentions the sending of a letter to all state legislators of the three independent audits to be taken.  You may also recall that Representative Kathy Tyler of Big Stone City took a petition to her colleagues when the Governor gave his budget address.  The petition was to call for a special legislative session to conduct an investigation into the EB-5 program.  Tyler suspected that something wasn’t right even though the Governor expressed that independent audits were being done.  There was no special session as most legislators would concede time during the regular run to address the matter.

In addition, the diverted money mentioned above in Jackley’s report went to South Dakota Regional Corporation, which handled the EB-5 program for the State of South Dakota.  The state has since cut ties with SDRC.  A problem has arisen with the record keeping methods of SDRC.  It was once under the auspices of Northern State University in Aberdeen.  The man who founded SDRC, Joop Bollen allegedly “took all his records in his office relating to his EB-5 activities with no permission to do so” according to a letter from the President of the University James Smith sent to the Madville Times.  Read that thread here.

Thus when the Governor says:  “This review has taken longer than anticipated because of the need to obtain bank records to verify some older payments.”  We have seen the beginnings of an ah-ha moment.  If it gets tied together in the end, we shall see.

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