Former economic development head was to be charged
PIERRE (AP) — South Dakota's attorney general told lawmakers Tuesday he was ready to file felony theft charges and seek an indictment against the state's former economic development director days before he committed suicide last fall.
The state's top prosecutor, Marty Jackley, briefed members of the Government Operations and Audit Committee of the Legislature in Pierre on his investigation into potential financial misconduct at the Governor's Office of Economic Development.
That probe stemmed from allegations that former GOED commissioner Richard Benda double-billed the state $5,559.80 for three flights and redirected $550,000 in economic development money for his own use.
Lawmakers on the committee rejected a motion by member Democratic Rep. Susan Wismer to subpoena Joop Bollen, who had been handling the state's role in the federal EB-5 program, which allows people to seek U.S. residency if they invest at least $500,000 in approved projects. The failed Northern Beef Packers plant in Aberdeen was funded in part through that program and was also the project through which Benda arranged the transfer.
GOED in September ended its contract with Bollen's private corporation, SDRC Inc., and now administers the EB-5 program.
Jackley said the state investigation began when he received an April 8, 2013, letter from the governor's office seeking an investigation in response to a federal grand jury subpoena over the alleged financial misconduct in GOED.
Jackley said investigators probed thousands of bank records, emails and other documents, and interviewed numerous witnesses. His office drafted a criminal complaint against Benda on Oct. 8 and scheduled a grand jury to meet Oct. 28.
Benda's body was found Oct. 22 near Lake Andes with a fatal shotgun wound. Investigators concluded it was suicide.
The draft complaint, which Jackley provided to reporters, would have charged Benda with three alternate felony counts alleging he illegally obtained $550,000 in economic development money intended for the Northern Beef Packers plant: aggravated grand theft by embezzlement, aggravated theft by deception and aggravated theft by threat. The second felony count would have charged him with grand theft for double-billing the state $5,559.80 for three flights to China and Las Vegas.
A state audit found that just before Benda left the economic development office in December 2012, he tacked on the extra $550,000 to a grant agreement to help the struggling plant. Benda also hand-delivered a $1 million check to the Aberdeen plant, and $550,000 of that was improperly diverted to SDRC Inc. — Benda's new employer as of January 2011 — to pay loan monitoring fees for the EB-5 program, Jackley determined.
Bollen could not be reached for comment. Benda's attorney at the time of his death had not seen the draft complaint and was not immediately available for comment.
Jackley told lawmakers their subpoena power would be limited because EB-5 is a federal program. He also pointed out an earlier audit concluded that no state money was lost and that it was an issue between private parties.
Wismer, a Democrat from Britton and the party's nominee for governor, was the only member of the committee to oppose going into executive session for a discussion and the only one to call for a subpoena of Bollen.
"I wanted to get them on the record for refusing to ask the one person who is still alive how this program was administered," she said afterward.
Wismer said she's also unsatisfied that lawmakers won't seek records from Northern State University, where the state's EB-5 projects were administered until GOED began contracting with SDRC in 2009.
The committee's chairman, Sen. Larry Tidemann, R-Brookings, said the state has put in place several mechanisms to avoid future misconduct. Those include criminal background checks of senior GOED staff, new whistleblower rules that make it easier to report misconduct and better oversight of travel reimbursement.
"We have done our due diligence," he said after the hearing. "We can go searching for something that's missing, but tell me what it is."
Tidemann said the one remaining element to put in place is a conflict of interest rule being drafted for the next legislative session that would prevent state employees from seeking employment at a business they deal with in their state position.