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State paid thousands to Benda without proof

PIERRE -- The former state official that pioneered recruitment of Asian investors for a handful of South Dakota projects received many tens of thousands of dollars in reimbursements for expenses in a two-year period that weren't backed up by receipts or other proof, a special audit has found.

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State government paid approximately $89,000 to the official, former secretary of tourism and state development Richard Benda, for expenses that a private business should have paid under its state contract with Benda's state agency, according to the audit. Benda committed suicide Oct. 20 in rural Lake Andes.

The contract meant the state audit could inspect some of the contracting company's financial records. While Benda was still a state employee, the contractor paid him approximately $62,000 for expenses that didn't have any supporting documents.

"We don't know what those were for," state Auditor General Martin Guindon said Friday. His office conducted the financial inspection.

"We don't know there was a problem," he said. "There's no evidence for us to show they were paid for legitimate purposes."

In some instances, travel vouchers reimbursed by state government to Benda showed event-hosting expenses without any supporting documents such as the purpose and the attendees. State government didn't have a policy on allowable costs for hosting, according to the audit.

Guindon said Friday some receipts were in Mandarin Chinese language and listed Chinese currency amounts. Among the reimbursements were payments totaling $14,700 for translation services reportedly performed by people in China and Philippines that lacked formal receipts and were supported by notations written in English.

The final expense payment from the contractor to Benda of $35,539.41 came in January 2011 as he was exiting state government to work for the contractor.

While secretary, Benda had signed the contract in November 2009 with SDRC Inc. president Joop Bollen, a former state employee at Northern State University, to manage South Dakota's participation in the federal EB-5 visa program for the Governor's Office of Economic Development.

Bollen had previously done extensive work for state government recruiting foreign investors under EB-5 while at NSU. Bollen incorporated SDRC in January 2009. The contract with SDRC was negotiated that year between a lawyer for GOED and an Aberdeen lawyer, Jeff Sveen, representing SDRC.

Foreign citizens who invest or loan money to U.S. projects under EB-5 gain eligibility for permanent U.S. visas. SDRC arranged pools of $500,000 loans from participants and charged additional fees to them.

The Aberdeen-based SDRC hired Benda in January 2011, after incoming Gov. Dennis Daugaard didn't retain him.