Benda's sister doubts suicide ruling, wrongdoing
By Dirk Lammers
SIOUX FALLS (AP) — More than half of a $1 million state grant for a South Dakota beef plant was improperly diverted to a private corporation that handled foreign investment funds, state officials said Friday.
The $550,000 was redirected in early 2011, just after Richard Benda left Pierre as the state's top economic development official to take a private sector job with SDRC Inc., the company contracted by the state to solicit foreign investors for South Dakota projects.
The full amount was supposed to reimburse the beef plant's construction and equipment costs, not be split to prepay loan monitoring fees to SDRC, Attorney General Marty Jackley said Friday.
"I can't disclose further where it went," Jackley said Friday.
Jackley's report didn't name Benda in connection with the grant. But former Gov. Mike Rounds, who was interviewed by Jackley as part of the investigation, told The Associated Press that Benda demanded prepayment of fees as he delivered a state check to Northern Beef.
The state's investigation also found that Benda, while serving as secretary of the Department of Tourism and State Development, double-billed the state for three flights, valued at about $5,500, Jackley said.
Benda was found dead Oct. 22 with a 12-gauge shotgun wound to his abdomen, and officials on Thursday ruled his death a suicide.
Jackley's report is the latest development in the unraveling of the failed Northern Beef Packers plant, an ambitious economic development project that was nurtured by the state. Federal investigations are underway into the complex financing of the plant, which included wooing capital from foreign investors in exchange for an easier path to citizenship.
No state or federal charges have been filed.
Benda, as economic development director under Rounds, actively promoted South Dakota opportunities to those investors through what's known as the federal EB-5 program.
Sister doubts findings
Benda's sister, Dorothy Hallman, of Kimball, said she doesn't believe Jackley's findings, and also doubts the ruling of suicide in her brother's death.
"I don't believe he did anything wrong in his affairs," Hallman said. "He was always an honest guy, upright."
In January 2011, Benda had just left his state cabinet position to become loan monitor for SDRC Inc., a private company contracted to handle EB-5 investments in South Dakota. The foreign investment helped fund Northern Beef Packers and other large projects.
Rounds, who was Benda's boss from 2006-2010, offered some additional detail. The former governor told AP that Benda went to Northern Beef to deliver the check but demanded that plant officials prepay $550,000 to SDRC for loan monitoring fees.
"In delivering the check, he also expected to get an advance payment on the loan fees rather than getting them on a monthly basis," Rounds said.
Jackley said his office would continue to assist the U.S. Attorney's Office and the Department of Justice in their investigation of the EB-5 program. He added that no further action would be taken on the vouchers because of Benda's death.
Lawmaker wants forensic audit
Rep. Kathy Tyler, D-Big Stone City, said Friday that the double-billed vouchers and diverted funds are just the "tip of the iceberg," and every dollar that went through the EB-5 program needs to be tracked.
Tyler said she's working with the Legislative Research Council to draft a petition to call a special session of the South Dakota Legislature to authorize an independent forensic audit of the EB-5 program in South Dakota.
"South Dakota taxpayers have invested heavily in these projects only to lose millions of dollars," she said. "We need to know where the taxpayers' money went and how SDRC interacted with state government."
Daugaard said Friday that federal investigators contacted the Governor's Office of Economic Development last spring and requested certain travel vouchers filed by Benda during his time as a state official.
"I was not aware of this federal investigation until their request was received, and I still do not know the nature or extent of the federal investigation," Daugaard said in a statement. "I am aware, however, of numerous media reports indicating that there may be an ongoing federal investigation involving Northern Beef Packers and the EB-5 program."
The South Dakota Governor's Office of Economic Development for years contracted with SDRC Inc. to administer the federal EB-5 program, in which foreign investors can secure permanent residency for as little as $500,000. The economic development office canceled its contract with SDRC in September "for cause."
Northern Beef filed for Chapter 11 bankruptcy protection in July and is idled pending a Dec. 5 auction.
Daugaard said Benda's death leaves questions that may never be answered.
Tyler said published reports are asking way more questions than the attorney general and governor's office are providing.
"We deserve the answers," she said.