Democratic lawmaker pushes for forensic audit of EB-5
By Dirk Lammers
SIOUX FALLS (AP) — A Democratic state lawmaker wants the Legislature to schedule a special session to authorize an independent forensic audit of South Dakota's participation in a federal investment-for-green-cards immigration program.
Rep. Kathy Tyler of Big Stone City said her House and Senate colleagues will find a copy of the petition on their chamber desks when they arrive in Pierre on Tuesday for Gov. Dennis Daugaard's budget speech.
Tyler said Monday that state investigations into alleged misconduct and the death of a former economic development official have failed to examine South Dakota's participation in the federal EB-5 program and the extent of its oversight of SDRC Inc., a private company contracted to solicit foreign investors.
The South Dakota Governor's Office of Economic has asked the Department of Legislative Audit to conduct a complete audit of the agency from 2009 through 2013, but Tyler said that effort will do little to answer questions about how money flowed through the EB-5 program.
"These audits are not forensic audits," she said during a news conference Monday. "They do not follow the money."
GOED for years contracted with the privately held SDRC Inc. to administer the federal EB-5 program, in which foreign investors can secure permanent residency for as little as $500,000. The program helped fund several large projects in the state, including the idled Northern Beef Packers plant in Aberdeen.
Late last month, Attorney General Marty Jackley issued a report in response to Daugaard's request to look into possible financial misconduct before his administration.
The attorney general found that $550,000 of a $1 million state grant given to Northern Beef for construction and equipment costs was improperly diverted to SDRC Inc. to pay EB-5 immigration loan monitoring fees. Jackley also found that former economic development director Richard Benda, who became a loan monitor for SDRC Inc., double-billed the state for three flights.
Benda was found dead Oct. 22 with a 12-gauge shotgun wound to his abdomen. Officials have ruled his death a suicide.
Tony Venhuizen, Daugaard's spokesman, said Monday that state officials don't have the authority to audit the complete records of a private company and they have no jurisdiction over a federal program. That's why Jackley has turned over all information to the U.S. attorney and is cooperating with federal investigators, Venhuizen said.
"They have jurisdiction over the EB-5 program, which the state doesn't," Venhuizen said. "They're completely independent of the state. That's who's looking into this at this point."
Tyler's proposal must have backing from two-thirds of lawmakers for the Dec. 30 session to be scheduled. She said she's asking for a special session because the issue is too important to wait for the regular session that begins in January, when it could get lost in the pile of bills.
"Let's find the problem and let's fix it," she said. "Let's get it taken care of."