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Lawmakers consider subpoena in foreign-investor inquiry

PIERRE — A legislative panel will consider issuing a subpoena in an attempt to force a witness to testify, its leader said Friday.

Sen. Larry Tidemann said the committee members would decide whether to pursue a subpoena against Joop Bollen of Aberdeen.

Bollen is president of SDRC Inc., a company he created in 2008 while he was still the director for the South Dakota International Business Institute at Northern State University.

After Bollen left the university, SDRC held a state contract from fall 2009 through fall 2013 to oversee and operate the regional center for South Dakota's activities in the federal EB-5 immigrant investor visa program.

Hundreds of millions of dollars flowed from foreign investors to SDRC-run loan pools that provided money to various South Dakota projects, including the now-bankrupt Northern Beef Packers plant at Aberdeen.

The investors paid $500,000 apiece plus a variety of fees to SDRC.

Tidemann, R-Brookings, said he met Tuesday with state Attorney General Marty Jackley.

Tidemann said he has asked Jackley to present a subpoena template to the Legislature's committee on government operations and audit. That could happen at the committee's next meeting July 29. Tidemann is the committee's chairman.

Tidemann said the Legislative Research Council staff doesn't have a lawyer with subpoena experience. He said another legislator, Rep. Timothy Johns, would sit as special legal counsel for the committee. Johns, R-Lead, previously was a state circuit judge.

The GOAC panel met Wednesday.

The Legislature approved a resolution during the 2014 session requesting that GOAC hold hearings on the Governor's Office of Economic Development including three audits and reviews that were specially commissioned by GOED.

Tidemann said the goal of a briefing by Jackley will be to explain to the committee whether Bollen would provide any useful testimony if a subpoena is issued.

Tidemann maintains the committee can't look at SDRC's private financial records. The state contract called for SDRC to pay specific fees to state government based on business activity.

State Auditor General Marty Guindon has said several times that his office's inspection of the SDRC records showed the proper amounts were paid or placed in a special account that will eventually be transferred to state government.

Tidemann said he believes a federal investigation is still under way and the U.S. attorney for South Dakota, Brendan Johnson, hasn't publicly delivered a report that the legislative committee could consider.

Jackley meanwhile has said he didn't investigate the EB-5 management because it is a program established by federal law. He has also said he didn't investigate former Gov. Mike Rounds as part of his probe of Richard Benda, the state official who gave SDRC the contract during the Rounds administration.

Rounds appointed Jackley as attorney general in 2009. Bollen and Benda, who was then secretary of tourism and state development in Rounds' administration, arranged and signed the SDRC contract using two private lawyers, Timothy Engel of Pierre and Jeff Sveen of Aberdeen.

Benda later went to work for SDRC in 2011, after new Gov. Dennis Daugaard didn't retain him in his administration.

Rounds, during his last full month in office, signed an agreement in December 2010 to provide $1 million from the state's Future Fund grant program to Northern Beef.

Benda hand-delivered the check in January 2011 to the company. According to one of Northern Beef's lawyers, a pre-existing agreement called for Northern Beef to put $550,00 in escrow to pay for SDRC loan-monitoring services.

Benda went to work that same month for SDRC to be the loan monitor for the Northern Beef financing from EB-5 investors.

Daugaard's office received a subpoena from a federal grand jury in March 2013. The subpoena was kept secret for more than eight months. Among the points of inquiry were Benda's travel records while he was in the Cabinet.

Daugaard asked the attorney general to investigate matters involved in the subpoena including regarding Benda's expenses.

After receiving the attorney general's report, Daugaard's commissioner of economic development, Pat Costello, terminated SDRC's state contract in September, 10 months before its scheduled conclusion, and contracted in October for an independent auditing firm to look at records in the economic development office.

Benda was found dead on Oct. 22 last year. The subsequent investigation by the attorney general concluded Benda killed himself on Oct. 20 with a shotgun blast to the abdomen while at a farm near Lake Andes.