Required reading: Ross on EB-5 meeting at Capitol

Every newspaper reader and broadcast listener or viewer in South Dakota deserves the kind of journalism that reporter Denise Ross delivered to the The Mitchell Daily Republic in her story Oct. 17 about a meeting at the state Capitol regarding Northern Beef, EB-5, foreign investors, Joop Bollen, Richard Benda, then-Gov. Mike Rounds and others. The story can be seen here. Here’s is an excerpt that summarizes the story’s mood and tone:

“Gov. Rounds has no recollection of this meeting ever taking place,” wrote campaign spokesman Mitch Krebs in an email to The Daily Republic.

This is symptomatic of what led Katie Zerr of the Mobridge Tribune newspaper to recently write a hard-hitting commentary about Rounds here.

Some Rounds supporters are dismissing news reports about EB-5 as attempts by reporters to “get” Rounds. Reporters working on EB-5 stories are out to get the truth, or at least more of the truth, about the secretive immigrant investor program that was operated for profit during the Rounds’ administration with his blessing. EB-5 activity was discontinued by the Daugaard administration in September 2013.

Read the Ross piece in the Daily Republic. It will tell you things no other reporter previously knew about Northern Beef and EB-5.

Pressler’s independence defended by magazine

Bloomberg Businessweek magazine came to the aid of former Republican U.S. Sen. Larry Pressler of South Dakota and Greg Orman of Kansas in their candidates as independents for the U.S. Senate. The magazine, in an editorial headlined “Let Independents Be Independents,” said it is “ludicrous” there are demands they identify which political caucus they would join — Democratic or Republican — if elected to the Senate on Nov. 4. Here’s the closing excerpt from the Oct. 20 issue:

“Orman and Pressler have nothing to gain and everything to lose by announcing a party affiliation now. Doing so would undermine part of their campaigns’ raison d’^etre: rejecting the partisan war in Washington.”

(That’s “reason for existing” for those like me who don’t speak a sentence of French.)

Libertarians take positions on ballot measures

Emmett Reistroffer, chairman for the South Dakota Libertarian Party and the party’s candidate for South Dakota secretary of state, issued a statement in his role as chairman regarding the three statewide ballot measures on the Nov. 4 ballot. The statement urges voters to consider yes votes on two and a no vote on the other. Reistroffer spoke in support of Amendment Q, which would allow Deadwood casinos to offer roulette, keno and craps, and Initiated Measure 17, which would require health insurers to include all qualified health care providers who want to be on their provider lists. He spoke against Initiated Measure 18, which would raise the minimum wage from $7.25 to $8.50 per hour and provide automatic cost-of-living increases. The South Dakota Democratic Party worked to get the minimum-wage measure on the ballot.

A Mike Rounds birthday party will be held on the one-year anniversary of Richard Benda’s death

I swear I am not making that up. A flyer arrived in today’s mail letting us know that a birthday party will be held Monday, Oct. 20, for Mike Rounds at Oahe Marina, the concession operated below Oahe Dam by one of Mike’s brothers, Steve Rounds. The get-together runs 5:30 to 7 p.m. and there will be barbecues, chips, cake and beverages. Monday, Oct. 20, also is the one-year anniversary of the death of Richard Benda, who was secretary of tourism and state development in the Rounds administration.

Benda’s death came, we now know, as he was facing possible arrest and criminal prosecution for theft related to the immigrant investor program known as EB-5 in the Rounds administration.

Rounds has repeatedly denied he approved the extra $550,000 that found its way from the state Future Fund to Northern Beef, an EB-5 project, and then to SDRC Inc.. The Aberdeen-based SDRC Inc., run by Joop Bollen, was given the EB-5 management contract for state government in 2009 by Benda. The extra $550,000 was to pay SDRC Inc. for a loan monitor on the Northern Beef project. The loan monitor was Benda, after he wasn’t retained in the new Daugaard administration that took office in January 2011. All of the money arrangements and the job arrangement came after Benda knew he wouldn’t be in the Daugaard cabinet.

Benda’s death resulted from a shotgun wound to the abdomen, using a stick to fire the gun, and was ruled a suicide. For a few minutes today, after seeing the flyer, I thought Benda had killed himself on Rounds’ birthday. And then I wondered, coincidence or intent? So I I checked the Legislative Research Council historical register and found that Rounds’ birthday actually is Oct. 24. He was born in 1954. He is about to turn 60. Benda was 59 as well when he died.

UPDATE: The South Dakota Republican Party paid for the birthday flyer, according to the statement on the flyer.

Who might fill Dusty’s shoes?

Let me say five things.

First, I always liked (and still like) Jim Burg as a public official and as a person, so I was disappointed when he lost his re-election run in 2004 for the state Public Utilities Commission. At the same time, he acknowledged the fire to campaign wasn’t as strong as it once had been, and his Republican challenger, Dusty Johnson, certainly had that fire. Jim Burg’s defeat marked one more state government post lost by a dwindling number of Democrats and one more step away from the benefits of two-party government.

Second, I was impressed with the effort and the ethics of Dusty Johnson while he served on the PUC. It is a demanding and grinding job, and to do it well, you must demand much of yourself. He did. He was part of a trend toward an even higher level of professionalism by the commission.

Third, I was disappointed when Dusty — everybody just calls him Dusty — accepted an offer to be the governor’s chief of staff after he had just won re-election to the PUC in 2010. I understand the allure of the governor’s office, including the opportunity to try to make South Dakota a better place, and I understood why he would want to test himself in the job. I just didn’t like that he was walking away immediately from a job the voters had just entrusted to him again at the PUC.

Fourth, Dusty Johnson performed beyond anyone’s expectations as chief of staff. I received an email from him at 2:33 a.m. today. I don’t know if he was working late or working early, but he was working at 2:33 a.m. The personal attention he paid to difficult situations throughout state government helped ensure the right things were done and the right people were in place to see that things would be done right in the future. Almost all of this happened outside the view of the general public. He helped spearhead some special projects that truly will make a difference in the long run for South Dakota. One that immediately comes to mind is the judicial sentencing reforms that were a joint effort between the executive and judicial branches with the support of the Legislature. Dusty’s boss, Gov. Dennis Daugaard, has accomplished a lot in his first term, and probably more than he promised. People such as Dusty Johnson played big parts in that.

Fifth, it is too bad for South Dakota that Dusty Johnson is stepping aside as chief of staff effective Nov. 7, just days after the general election. There isn’t any guarantee that Daugaard, the Republican candidate, will win a second term against the Democratic nominee, Rep. Susan Wismer, or independent candidate Mike Myers, but survey after survey indicates Daugaard looks to be in strong shape. Johnson is heading back to Mitchell, and ending the two-city two-household life of a job in Pierre and a family in Mitchell, to work for Vantage Point Solutions. His regulatory experiences from the PUC and the governor’s office will serve him well in working on Vantage Point’s consulting services to clients. He will be difficult to replace on the Capitol’s second floor.

There are others in the Daugaard administration who served in the role of chief of staff in previous times, such as Jim Hagen and Jim Soyer, who held the post during different points in the late Gov. Bill Janklow’s administrations. There are some highly capable people in senior positions on Daugaard’s staff and in his Cabinet. It takes a special person to be a chief of staff. Selflessness and stamina and creative simplicity are three important traits. Knowledge of the legislative and budget processes is important too. So is a personality that is simultaneously level-headed and upbeat. Jim Hagen, Jim Soyer and Dusty Johnson, to name just three, had all of those characteristics.

Dusty Johnson gave a lot to South Dakota. It’s probably only fair now that South Dakota gives him back to his family.

If I don’t see you before Nov. 7, let me say here: Good luck! and thanks.

Dan Baker represented citizens

The decision by Gov. Dennis Daugaard to appoint Jeff Burket of Spearfish to the state Railroad Board wasn’t a surprise. Burket, manager of AMCOL International’s bentonite operation at Belle Fourche, already was serving on the state advisory panel for South Dakota’s new rail plan. Burket succeeds Dan Baker of Rapid City, who wraps up two terms and eight years on the board. Baker was the citizens representative on the board. He sometimes was a bit of a thorn in the side of the board, because he asked important questions and wanted processes correctly followed. At times he was the only nay vote. Other board members with long experience in the rail-shipping industry understood the business and generally arrived at sound decisions. Baker wanted a solid return on the state-owned rail lines and he tried to hold rail users to the standard appropriate for a public resource. Sometimes those perspectives didn’t always mesh cleanly or quickly. The rail board is heading forward into the next chapter of what’s become an expansion era under Daugaard, with money flowing from state, federal, local and producer sources. Baker was a cautious force whose voice was one of prudence. He was appointed to the board on April 6, 2006, by then-Gov. Mike Rounds and was reappointed by Rounds in 2010. The Railroad Board canceled its October meeting and Baker’s term expires Oct. 30. The terms are now three years on the board.

Poll: Most South Dakotans think nation on wrong track

The source of funding for the Harper Polling survey conducted Oct. 9-11 in South Dakota isn’t identified in the company’s report of its results. The company describes itself as a Republican firm. What it found was Republican candidate Mike Rounds ahead of Democratic candidate Rick Weiland by 37 percent to 33 percent — essentially the margin of possible error — in the U.S. Senate contest with independent / former Republican Larry Pressler in third at 23 percent and independent / former Republican Gordon Howie fourth at 5 percent. That is a flip of the second- and third-place spots from the Survey South Dakota results released a week ago, but what’s consistent is Rounds was below 40 percent again.

There were two big surprises in the Harper results. One was the pessimistic mood of South Dakota voters. Asked about the nation’s status, 30 percent in the Rapid City media market said right direction while 65 percent said wrong track; the same was generally true in the Sioux Falls media market, where 27 percent said right direction and 67 percent said wrong track.

The other set of findings that stood out were favorable/unfavorable ratings for the four U.S. Senate candidates. Rounds should be careful of where he parks. In the Rapid City market, 58 percent had a somewhat or very unfavorable opinion of him; in the Sioux Falls market, 49 percent has a somewhat or very unfavorable opinion of him. His somewhat or very favorables were only 39 percent in the Rapid City market and 48 percent in Sioux Falls market. He is in danger of tipping over, at least in this poll.

Weiland was 43 percent somewhat or very unfavorable in both markets. He was 45 percent somewhat or very favorable in the Rapid City market and 48 percent somewhat or very favorable in the Sioux Falls market. Weiland still had his head above water in this measure.

Pressler is the most well-liked of the main three in the contest. He was viewed somewhat or very unfavorably by 30 percent in the Rapid City market and 41 percent in the Sioux Falls market. His somewhat or very favorable ratings were the best, with 64 percent in the Rapid City market and 52 percent in the Sioux Falls market.

Howie’s unfavorables totaled 60 percent Rapid City and 58 percent Sioux Falls. His favorables totaled 24 percent Rapid City and 20 Sioux Falls.

I put the unfavorables first for each of the candidates because this contest seems increasingly about the man or men that a voter doesn’t want elected. The blasting now under way by supporters of Rounds and Weiland against Pressler is an attempt to drive up his unfavorables.

If Rounds can hang on at 37 percent support through election day, Rounds likely will be the winner. Rounds hasn’t trailed in any of these polls yet. But he definitely is sinking. And the dirtiest fighting has just started.

Republican candidates faring best among youngest

Give South Dakota Republicans credit. They seem to be doing much better among the state’s youngest voters than Democrats are. That’s shown month after month in the voter registration numbers, with independents and Republicans increasing at a much, much faster rate than Democrats. Where it’s showing up as well this fall is the public opinion surveys on the major statewide election races.

Consider these results from the Survey South Dakota results released in the past week by the Aberdeen American News, KOTA TV in Rapid City and KSFY TV in Sioux Falls:

For governor, Republican incumbent Dennis Daugaard led Democratic challenger Susan Wismer 59 percent to 30 percent, with independent Michael Myers at 7 percent and just 5 percent remaining undecided. Inside those numbers are patterns by age group. Daugaard had support from 68 percent — that’s not a misprint — of the 18 to 34 year olds in the polling sample while Wismer had 18 percent. In the 35-49 group, the results were Daugaard 56 percent Wismer 29 percent. Among those 50 to 64 years old, Daugaard led Wismer 55 percent to 34. And the 65-plus group broke 59 percent for Daugaard and 34 percent for Wismer. Daugaard is 61 years old. Wismer is 58.

For U.S. Senate the Republican candidate, former Gov. Mike Rounds, led in three of the four age groups. This is a four-candidate contest. Independent Larry Pressler, who held the U.S. Senate seat from 1979 through 1996 when he lost to Democrat Tim Johnson, was second in two of the age groups in the poll and led among the 50-to-64 year olds. Democratic candidate Rick Weiland didn’t lead in any groups. However, they were closely bunched, so perhaps too much shouldn’t be made of each candidate’s share. But again, the overall pattern wasn’t promising for Democrats.

Among 18-to-34s, the results were Rounds 39 percent, Pressler 28 percent, Weiland 25 percent, independent Gordon Howie (a former Republican legislator) 6 percent and undecided 1 percent. (Who says younger voters can’t make up their minds?)

Among 35-to-49s, Rounds had 37 percent, Weiland 29 percent, Pressler 27 percent, Howie 5 percent and undecided 2 percent.

Among 50-to-64s, Pressler led with 37 percent, followed by Weiland at 30 percent and Rounds at 29 percent, with Howie at 2 percent and undecided 2 percent.

Among the 65-plus group, Rounds had 37 percent, Pressler 32 percent, Weiland 27 percent, Howie 1 percent and undecided 2 percent.

The U.S. House contest again has the Republican incumbent, Kristi Noem, strongest among the youngest voters and Democratic challenger Corinna Robinson weakest there. Overall Noem led 55 percent to 37 percent for Robinson.

Among the 18-to-34s, Noem led 59-28. Among 35-to-49s, Noem led 56-35. Among 50-to-64s, Noem led 51-44. And among 65-plus voters, Noem led 57-38.

What could the Rounds campaign have done?

For months I have asked Republican legislators the same question in conversation after conversation: Why doesn’t Mike Rounds simply take responsibility for the EB-5 program that took off like a brush fire during his administration? I never got a meaningful response. Since Richard Benda’s body was found Oct. 22, the focus has been on Benda, who was former Gov. Rounds’ secretary of tourism and economic development from 2006 through early 2011, and then Joop Bollen, who was the point man on EB-5 for South Dakota, and then of late, the South Dakota Board of Regents, for whom Bollen worked more than a decade as director for the South Dakota International Business Institute at Northern State University in Aberdeen until 2009. Rounds meanwhile didn’t answer this reporter’s written questions regarding EB-5 for more than four months. The theme in his answers that stuck out was that he was aware the program was being privatized but he wasn’t aware of the transactional details.

One of the things I looked for Wednesday during the regents meeting at NSU was tire tracks on the backs of any regents, NSU President Jim Smith or regents executive director Jack Warner. They clearly were thrown under the bus regarding Bollen. Smith took the helm at NSU in 2009. He succeed Laurie Stenberg Nichols, the interim president from Aug. 1, 2008, through June 22, 2009. She was on loan to NSU from South Dakota State University. While NSU was going through a series of leadership changes starting in 2008, Bollen had formed his own company for EB-5 purposes called SDRC Inc. By this time Bollen was working primarily for the Governor’s Office of Economic Development arm in arm with Benda in pursuing foreign investors for South Dakota projects. Shortly after Smith became president, he looked at Bollen’s activities and told Benda that Bollen didn’t belong on campus because university officials didn’t know enough about EB-5 to adequately supervise Bollen. Benda arranged for Bollen to move off-campus and to move officially into the private sector. In late 2009, Benda signed a state contract with Bollen giving SDRC Inc. the administrative and management responsibilities over EB-5 for state government. The contract provided a sliver of revenue to state government, via a special set of funds in a bank, from the fees collected by SDRC Inc. from the investors being recruited, primarily from South Korea and China. Bollen in 2008 had already signed a state contract in his role as SDIBI director with his company SDRC Inc. but didn’t disclose at the time that SDRC was his company. That 2008 contract has some legislators in both political parties unhappy for two reasons: The action itself and that they weren’t made aware of it until recent months.

Testimony from a recent arbitration hearing in California shows that Bollen decided in 2007 to create SDRC Inc. as a new mechanism for recruiting investors. He had been using James Park from the Hanul law firm of Los Angeles and Seoul, South Korea. Park’s testimony in the lawsuit shows that Bollen listed Park as the director for SDRC Inc. during the 2008 start-up. Bollen wanted to move into recruitment of investors from China and needed to hire agents in China. SDRC Inc. became the means to do that. In late 2007, according to Park’s testimony, Bollen already was preparing a recruitment drive for Dakota Provisions, the turkey processing operation at Huron. One of the turkey company’s top officials was Jeff Sveen, the Aberdeen attorney with whom Bollen worked closely on EB-5 matters for years to come. Sveen is the lawyer for many Hutterite colonies that supply turkeys for the processing plant. Sveen represented Bollen in the 2009 state-contract negotiations.

As photographs show, all of these men including Rounds spent time together. The connection was business recruitment via EB-5. A 2007 document on state letterhead was signed by Benda and Bollen to be distributed to potential investors in China. According to Park’s testimony, Park met Bollen during a failed attempt by Bollen to recruit in South Korea. Park said he helped get a NSU faculty member (who isn’t named) and a friend of the faculty member out of prison for a violation during their recruiting trip to South Korea. That led to Park and the Hanul firm becoming the prime recruiter worldwide for Bollen, except in China. The lawsuit developed after a California businessman named Robert Stratmore offered his company to be the recruiter in China. For a few months in 2007 it seemed Stratmore’s company had a contract with Hanul to recruit for South Dakota. But that seemed to evaporate when a deal involving a tilapia farm went sour and Park found that Stratmore’s company didn’t have the level of expertise Park thought was necessary in China. Bollen’s decision to form SDRC Inc. and list Park as director in January 2008 sealed the end of the Stratmore deal.

The Stratmore deal was the topic of the arbitration hearing in California. Park no longer works for Hanul. The retired judge’s decision became public a few days ago. He found that no one in the matter — the regents on behalf of Bollen, Hanul or Stratmore’s company — had liability to a degree that money should change hands for damages. The regents and Rounds proclaimed victory. Rounds is now running a TV ad for  his U.S. Senate campaign declaring the arbitrator’s decision proves all of the information from opponents regarding EB-5 was essentially a lie. That’s not the case at all, however. The retired judge wrote a highly readable decision that makes clear Bollen was responsible to both the regents and the Governor’s Office of Economic Development at the time of the Hanul-Stratmore dispute. Other lawsuits regarding Northern Beef and the loan pools that Bollen arranged for it through SDRC Inc. have brought other facts to light. What we still don’t definitively know is how involved or uninvolved in EB-5 Mike Rounds was during his time as governor. What we do know is that it was kept secret from the Legislature and the general public until after Benda’s death last October. (The arbitrator’s decision is available here.)