MERCER: Four investigations and a funeral
PIERRE — Nearly each day lately brings revelations regarding something few people followed before: The EB-5 visas for foreign investors program in South Dakota.
There’s Aberdeen-based investment recruiter SDRC Inc., the Governor’s Office of Economic Development, some recent South Dakota projects partially funded using EB-5, and one of the men in the middle, Richard Benda.
There are at least four separate investigations under way and maybe five or six.
According some sources, the FBI began asking questions in 2012. The focus reportedly was EB-5’s use in South Dakota and the flow of funds within several specific projects.
The EB-5 program is federally authorized and is under the Department of Homeland Security. It can lead to permanent residency status for immigrants who invest at least $500,000 in rural areas.
Then there is the state investigation. In April of 2013, Gov. Dennis Daugaard reportedly became aware of something amiss in the Governor’s Office of Economic Development. It reportedly was from before he took office in 2011.
The governor hasn’t disclosed the nature of that matter. But evidently it didn’t initially involve the EB-5 program.
That’s because in July, GOED commissioner Pat Costello gave Aberdeen-based SDRC approval to recruit EB-5 investors for another project. (It is a pork-butchering plant proposed for South Dakota by three people from Flushing, N.Y.)
Yet by September, something changed. Costello canceled the business contract between GOED and recruiter SDRC.
The contract was developed in 2009 between Benda, in his role as tourism and state development secretary for Gov. Mike Rounds, and SDRC president Joop Bollen. The contract ran through June 30, 2014.
What was discovered between July and September hasn’t been disclosed by the Daugaard administration. The governor said he turned the original matter involving GOED over to state Attorney General Marty Jackley for investigation. The governor also said federal authorities were informed. We don’t know if federal agents are looking into it.
The governor further said he ordered an internal review of GOED regarding the matter. So that makes at least three investigations. The fourth investigation is the state probe of Benda’s death. His body was found with a gunshot wound on Oct. 22 at a farm near Lake Andes.
We also understand someone from the FBI went to the death scene. If the FBI is formally looking into how Benda died, that would be at least the fifth investigation.
The intrigue is deeper because there is limited oversight of EB-5 investments. They are private placements and weren’t subject to state security regulators or the state banking commission.
SDRC’s Bollen created “investment funds” for each project offering. Essentially they are loan pools. There are 20 registered. Each also has a limited partnership that SDRC controls as general partner.
Under the state contract, GOED periodically received unaudited reports from SDRC about each fund. The other overseer of SDRC is the U.S. Citizenship and Immigration Services. USCIS runs the EB-5 program and determines if a project created sufficient jobs for visas to be granted to investors.
We don’t know for certain what activities are under investigation beyond Benda’s death. But this promises to get much more complex and much more intriguing.