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SD legislator wants audit of EB-5 program

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Mitchell South Dakota 120 South Lawler 57301

By Dirk Lammers

A Democratic state legislator is calling for an independent fiscal audit of South Dakota’s participation in a federal investment-forgreen-cards immigration program.

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The South Dakota Governor’s Office of Economic Development 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 the failed Northern Beef Packers in Aberdeen and other large projects in the state.

The economic development office canceled its contract with SDRC in September “for cause.”

Rep. Kathy Tyler, of Big Stone City, said she tried to put the issue on this week’s legislative Executive Board meeting agenda, but her request was voted down. Tyler said she’d like to see a forensic audit done by an independent accounting firm that provides details on all offshore wire transfers, identifies the secret investors who provided a bridge loan to Northern Beef and accounts for all payments made by SDRC to attorneys.

“There are foreign investments and there are foreign loans, and there’s money going back and forth to the Cayman Islands,” Tyler said Wednesday. “There are a lot of things that aren’t being answered.”

Executive Board chairman Sen. Ryan Maher, R-Isabel, said the board already had a full agenda for its Monday and Tuesday sessions. He said legislators would not be able to get any answers while the EB-5 remains the subject of a state investigation by U.S. Attorney Brendan Johnson and South Dakota Attorney General Marty Jackley.

“You’ve got a Democrat with the feds and you’ve got a Republican with the state, so they’re hammering all that out,” Maher said. “All we’re going to do is jump in the middle of it all, and what are we going to accomplish? Probably not much.”

Maher said the issue could be considered by a legislative committee in December.

Gov. Dennis Daugaard acknowledged last month that an investigation was underway into the economic development office involving possible financial misconduct prior to his administration.

Richard Benda, who served as secretary of the department that handles tourism and economic development from 2006 to 2010 under former Gov. Michael Rounds, was found dead with a gunshot wound on Oct. 22 near Lake Andes. Autopsy results have still not been released nearly a month after the death of Benda, who also served as loan monitor for Northern Beef Packers.

State officials have said that the EB-5 program is a federal immigration program run and controlled by federal immigration authorities.

But Tyler said that many of the projects funded through EB-5 also received state funds, and residents have a right to details about South Dakota’s economic development efforts.

She said she asked the governor’s office last week to order an independent audit, but she was told that it doesn’t have the jurisdiction to do so.

“We deserve to see where all this money has gone and has come from,” Tyler said.

Tony Venhuizen, Daugaard’s spokesman, said SDRC is a private company that had a contract with the state, and the contract did not give the Governor’s Office of Economic Development the authority to audit all of SDRC records.

He said the office in 2012 required SDRC to sign a deposit control agreement to give the state access to SDRC’s accounts, but the agreement “does not authorize or provide a vehicle for GOED to conduct a complete audit of SDRC’s books.”

Venhuizen said GOED is initiating a thorough audit and review, at the governor’s request.

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