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Legislative leaders agree: Review EB5

PIERRE — Republican and Democratic leaders agreed Wednesday the Legislature will review state government’s involvement in the EB5 immigrant-investor program.

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“You have my word,” Sen. Corey Brown, RGettysburg, said during a discussion on the topic by House and Senate members on the Legislative Procedure Committee.

“Your word is more than good enough for me,” Rep. Bernie Hunhoff, DYankton, responded.

Hunhoff, the House minority leader, proposed to the committee that a new joint rule be adopted setting forth the requirements for hearings, with a deadline of Dec. 1, 2014.

House majority leader David Lust, R-Rapid City, and House Speaker Brian Gosch, R-Rapid City, however, questioned whether the specific date in Hunhoff’s language was appropriate in the permanent rules.

They suggested that a resolution approved by both bodies would be a better fit. Hunhoff agreed with their comments and withdrew his plan.

Brown, the Senate president pro tem, said it’s been his intention since late November that the Legislature’s joint committee on government operations and audit would look at the reports from the reviews of the Governor’s Office of Economic Development under way.

Those include reviews by two accounting firms and by the state Department of Legislative Audit. GOED Commissioner Pat Costello contracted for the reviews.

Hunhoff’s proposal followed the same line. Hunhoff said Gov. Dennis Daugaard has been “very forthright” in his handling of the matter.

Hunhoff said after the meeting that he would begin working on language for the resolution and pass it around. He said its chances for approval would be better if Republicans are the main sponsors.

Last March, the Daugaard administration received a subpoena from a federal grand jury for government records and information on eight topics.

One was the travel vouchers for Richard Benda, who was secretary of tourism and state development from 2006 through early 2011 in Gov. Mike Rounds’ administration.

Daugaard’s office requested an official investigation by state Attorney General Marty Jackley, who confirmed two instances of doublepayments received by Benda for airline tickets to China and a third double-payment for a Las Vegas plane trip.

Jackley also found that $550,000 was redirected from a $1 million state grant approved by Rounds in December 2010 for the Northern Beef project at Aberdeen.

It was subsequently learned that Benda hand-delivered the $1 million check and the $550,000 was placed in an escrow account for SDRC Inc.

SDRC held a state contract, signed by Benda, to administer the EB5 immigrant investor program for South Dakota.

SDRC coordinated recruitment of foreign investors who loaned $500,000 apiece and paid management fees in order to qualify for permanent U.S. visas for them and their families.

The loan pools managed by SDRC were used to help finance a variety of large projects including Northern Beef throughout South Dakota since 2008.

Benda was hired by SDRC in 2011, after he wasn’t retained by the Daugaard administration, and worked as the EB5 loan monitor on the Northern Beef project.

The $550,000 placed in escrow was reportedly to pay Benda at an annual salary of $225,000.

The plant opened in 2012 and closed last summer as it fell into bankruptcy.

Benda died Oct. 20 and his body was found two days later with a shotgun wound to the abdomen. Jackley’s separate investigation determined it was a suicide.

Few details about the state government’s EB5 program were known before late November, when the governor and the attorney general released information about the investigations and Benda’s death.

No criminal charges have been brought to this point.