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SD cancels contract with EB-5 center

SIOUX FALLS — The South Dakota Governor’s Office of Economic Development has terminated its contract with a regional center that handled a U.S. immigration foreign investment program, according to documents obtained by The Associated Press on Saturday.

Pat Costello  Costello, the office’s commissioner, sent a letter to South Dakota Regional Center president Joop Bollen on Sept. 19 terminating the 2009 amended contract “for cause, effective immediately.”

“Demand is hereby made that SDRC turn over to GOED all books, records and reports required to be kept by it under the Contract within ten business days,” Costello wrote. The letter also demanded that the regional center turn over balances of the expense fund and an indemnification fund to the state treasurer.

Construction of the idled Northern Beef Packers plant in Aberdeen was spurred by funds from the EB-5 program, in which foreign investors can secure permanent residency for as little as $500,000. Former plant officials say federal investigators have been asking questions about the plant’s finances and EB-5.

Tony Venhuizen, Gov. Dennis Daugaard’s spokesman, said Saturday the economic development office will, for the time being, handle what the regional center did. He declined comment on details of the “for cause” in the termination letter.

Daugaard acknowledged Wednesday an investigation was underway into GOED involving possible financial misconduct prior to his administration. Daugaard said there has also been a federal investigation, but declined to provide details of either.

Northern Beef Packers’ former loan monitor, Richard Benda, was found dead with a gunshot wound on Oct. 22 near Lake Andes, and his funeral happened a day before Daugaard put out his statement. Benda had also served as secretary of the department that handles tourism and economic development from 2006 to 2010 under former Gov. Michael Rounds.

The death remains under investigation, according to the South Dakota attorney general’s office.

Northern Beef Packers opened its $109 million stateof-the-art facility on a limited basis in 2012 after years of delays. Its owners filed for Chapter 11 bankruptcy protection in July, saying they did not have enough money to buy cattle for slaughter.

Once a locally owned project, Northern Beef Packers is 41 percent owned by businessman Oshik Song with 69 Korean investors who each gave at least $500,000 under EB-5.

Dennis Hellwig, who stepped down as Northern Beef Packers’ general partner more than four years ago, and Bob Breukelman, the plant’s former construction engineer, told the AP on Thursday they’ve been questioned by federal investigators about the plant’s finances and how the EB-5 funds were used.

The EB-5 government program allows foreigners to get visas if they invest $500,000 to $1 million in projects or businesses that create jobs for U.S. citizens. The amount of the investment required depends on the type of project. Investors who are approved for the program can become legal permanent residents after two years and can later be eligible to become citizens.