Benda arranged his own salary before departing state office
PIERRE – Richard Benda arranged to pay himself $225,000 annually from state funds for the next two years when he left state government in January 2011, it was learned Thursday.
Sources said Benda routed $550,000 from a $1 million state grant that was paid in January 2011 from the Governor’s Office of Economic Development to Northern Beef Packers in Aberdeen. Benda died from a gunshot wound Oct. 20 at a farm near Lake Andes. The attorney general ruled the death a suicide. Benda was secretary of tourism and state development from 2006 through the first week of 2011 in Gov. Mike Rounds’ administration. Benda oversaw GOED and a variety of other agencies. Benda personally delivered the $1 million check to Northern Beef. In turn, Northern Beef paid $550,000 to SDRC Inc., the Aberdeen-based company that oversaw all EB-5 immigrant investments in South Dakota. Benda had signed a contract in 2009 with SDRC president Joop Bollen that placed administration and management of EB-5 programs with SDRC. SDRC then hired Benda in January 2011 to become its EB-5 loan monitor for Northern Beef. Northern Beef was the recipient of two large loans totaling some $59 million from the EB-5 program. SDRC handled recruitment of the foreign investors and managed the loans. The loans of $500,000 per investor in South Dakota EB-5 projects qualified them in most instances to receive permanent visas, allowing them and their families to live anywhere in the United States. The two loan funds for Northern Beef involved groups of Korean and Chinese investors. In December 2010, when Benda knew he wouldn’t be retained by Gov.-elect Dennis Daugaard in the new administration, Benda received approval from Rounds for a $1 million Future Fund grant to Northern Beef. The Future Fund is under the exclusive control of the governor. It is funded through money paid by all businesses that participate in South Dakota’s unemployment insurance program. The agreement letter signed by Rounds and Northern Beef CEO David Palmer became effective Dec. 8, 2010. The letter said the grant would be reimbursement for construction and equipment expenses. Palmer sent an email to Benda on Jan. 5, 2011, requesting payment. The email was accompanied by bank statements, canceled checks and evidence of wire transfers totaling more than $1 million for construction and equipment. The next day, Benda submitted the paperwork for the payment to be made, according to Tony Venhuizen, a spokesman for Gov. Daugaard.“At that time, Benda requested that the state auditor issue a paper check and deliver it to him at GOED,” Venhuizen said. Daugaard took office on Saturday, Jan. 8, 2011. Benda picked up the check at GOED on or about Thursday, Jan. 13, 2011, for hand-delivery to Northern Beef, according to Venhuizen. Northern Beef subsequently endorsed the check and deposited the money. Last month, state Attorney General Marty Jackley, in a letter to Daugaard, reported that an investigation discovered $550,000 had been re-directed from Northern Beef to pre-pay EB-5 loan monitoring fees for SDRC. Rory King, a lawyer for Northern Beef, confirmed Thursday that $550,000 was paid to SDRC. He said the $1 million grant was to reimburse Northern Beef for construction and equipment. That condition was met, he said, and there weren’t any restrictions on Northern Beef’s use of the $1 million. “NBP decided to expend a portion of those funds to discharge a contractual obligation NBP had to its lender to reimburse the lender for the expense of a loan monitor to supervise the expenditure of loan proceeds from the lender,” King said in an email response to a reporter’s questions Thursday. King said the agreement between Northern Beef and its lender, South Dakota Investment Fund (SDIF) Limited Partnership 6, which was managed by Bollen at SDRC, required Northern Beef to pay for its cost in paying the salary of a loan monitor to monitor the SDIF loan proceeds. The monitor, which was Benda, was to remain on site at the Northern Beef project and to make sure the loan funds were spent according to the draw requests, according to King. “This is a very common loan provision in a construction project of this magnitude and a loan of this size — which eventually got up to about $59,000,000. Those loan proceeds were coming to NBP in incremental payments, triggered by draw requests,” King said. He said Northern Beef was advised that SDIF was demanding that Northern Beef deposit, in escrow, funds sufficient to pay the salary of a loan monitor for two years in advance, in the amount of $225,000 per year. Because the reimbursement for the salary of a loan monitor was a contractual obligation of Northern Beef, and because Northern Beef had to comply with its contractual obligations to obtain further loan disbursements from SDIF, the company paid SDIF the sum of $550,000, according to King. King confirmed Benda was the loan monitor and the $225,000 “presumably” was the annual salary. King emphasized Benda was an employee of the loan fund and wasn’t an employee of Northern Beef. Benda’s annual salary as a member of Rounds’ cabinet was $134,698.10 at the time he left state government. The attorney general’s criminal investigation found that Benda double-billed state government for three airline tickets – two to China and one to Las Vegas – in 2009 and 2010. In his Nov. 21 letter to the governor, the attorney general didn’t name Benda in connection with the re-directed $550,000. The governor’s office requested Jackley investigate various matters after receiving a subpoena from a federal grand jury in March. The Benda travel records were one of the eight different items sought from state government by the grand jury. It is publicly unknown what the other seven items are. Jackley said he turned over his findings on the $550,000 to U.S. Attorney Brendan Johnson. The EB-5 program is a creation of federal law and administered by the U.S. Citizenship and Immigration Services agency as part of the federal Department of Homeland Security. Benda, for unknown reasons, appears to have altered the grant-termination date in the letter to March 31, 2011, from the original date of Dec. 31, 2011. The hand-written change carries the initials “RB” next to it.