California arbitrator’s decision explains early EB-5 wrangling by South Dakota w/updates

A California arbitrator’s decision was released Tuesday involving the South Dakota Board of Regents in a legal battle over a 2007 business arrangement regarding the EB-5 program. The arbitrator’s decision deserves to be read because it explains very well what was transpiring in the EB-5 program then run by Joop Bollen at the South Dakota International Business Institute at Northern State University in Aberdeen. The decision explains the period when Bollen started his own private business, SDRC Inc., and arranged a contract between SDIBI, where he was director, and SDRC Inc. The regents have posted the arbitrator’s decision here. The arbitrator denied all of the claims and counter-claims by all parties in the case and suggests that all sides let the matter rest rather than battle next over attorney fees.

UPDATE: One reporter calls the decision an embarrassment for Democrats, and a Republican spokesman proclaims victory for Republicans. SDIBI and the regents appear to have avoided paying damages, and that’s certainly a victory, but the details of what was secretly happening in South Dakota’s EB-5 program at a key turning point are laid bare in language that is easy to understand. This will be fresh information for many people. Coming four weeks before election day, this information doesn’t seem likely to inspire confidence or increase support for how EB-5 was conducted from 2006 until the Daugaard administration in September 2013 terminated the state contract with Bollen and SDRC. Since the termination, the EB-5 program has been taken in-house at the Governor’s Office of Economic Development; GOED Commissioner Pat Costello has said publicly several times that GOED isn’t recruiting EB-5 projects or investors.

SECOND UPDATE: The arbitrator notes that Bollen didn’t disclose to the federal regulatory agency in November 2007 that SDRC Inc. was to be  his own corporation. Bollen as SDIBI director contracted with SDRC Inc. in January 2008. Bollen instead said the Hanul Professional Law Corporation would control SDRC Inc. The arbitrator also notes that Bollen didn’t wait for federal approval and instead went ahead in January 2008 in registering SDRC Inc. as a South Dakota corporation headed by James Park of Hanul. The arbitrator also notes that Bollen in January 2008 began establishing the loan pool partnerships that would be used by SDRC Inc. for attracting foreign investors whose money would be borrowed to business projects. The first such project identified in the arbitrator’s decision was Dakota Provisions; it is a turkey-processing operation at Huron.

Benda and Bollen pursued China investors in 2007

We become more confused each day about the facts in the EB-5 matter during the administration of then-Gov. Mike Rounds’ administration. Of late Rounds has portrayed Joop Bollen as an employee of the state Board of Regents at Northern State University. The above letter was given to EB-5 recruiters for South Dakota in August 2007 (Correction: October 2007) to be used in pursuing investors in China, Hong Kong and Taiwan. The letter is on state government letterhead, specifically the Governor’s Office of Economic Development, and bears the signatures of Richard Benda, who was secretary of tourism and state development in the Rounds administration from 2006 through the end of Rounds’ second term in early 2011, and of Bollen, who at the time worked at the South Dakota International Business Institute at NSU in Aberdeen.

Just months after this letter was written and signed, Bollen in January 2008 formed his own company, SDRC Inc., to manage EB-5 investments in South Dakota. In late 2009, Bollen and Benda signed a state contract making SDRC Inc. the manager for state government’s EB-5 activities. The contract was terminated in September 2013 by the Daugaard administration. GOED had been paying much of the cost for SDIBI while Bollen was running SDIBI and the payment contract outlined specific duties Bollen was to perform for GOED.

The above letter seems to make clear that Bollen/SDIBI and Benda/GOED were working openly together on EB-5. The letter doesn’t refer to the Board of Regents. It talks about the State of South Dakota and refers to “loans/guarantees from the State” instead.

The regents are in a lawsuit brought by Darley International in California because Bollen/SDIBI didn’t carry through in 2008 on arrangements to use Darley to recruit EB-5 investors in China.

This letter seems to indicate GOED and the Rounds administration were at least 50 percent involved — especially with the letter carrying Benda’s signature, and GOED’s letterhead bearing the marketing for Rounds’ 2010 initiative, and Benda identifying himself as “Cabinet Secretary to the Governor.”

Napoli smacks Kooiker hard

We hadn’t heard much in the way of public commentary from Bill Napoli since he chose to retire from the Legislature rather than seek re-election in 2008. Napoli, R-Rapid City, spent eight years in the House and six years in the Senate. He had seen some highs, such as repeal of the state inheritance tax by voters in 2000 and his term as Republican assistant leader in 2001-2002, and some difficulty, such as when former Rep. Ted Klaudt, R-Walker, was convicted of four counts of second-degree rape in 2007. Behind the scenes in Pennington County politics Napoli remained active in recent years. On Saturday, he took center stage again with an opinion piece in the Rapid City Journal blistering Rapid City Mayor Sam Kooiker.

You can read it here. From what I can gather, Sam Kooiker was something of a Bill Napoli prodigy. Kooiker won election to the Rapid City municipal council in 2002 and kept winning. Then he ran for mayor in 2011 and won, defeating two-term incumbent mayor Alan Hanks by some 400 votes. An interesting article showed Kooiker’s innovative use of Facebook to reach voters in that contest. Kooiker won re-election as mayor in 2013. What Napoli suggests in his opinion piece Saturday is that Kooiker lost his way and now supports higher spending and higher taxes, both of which Napoli criticizes. It’s worth reading. This is a situation to watch in the months ahead.

State agencies set their record retention schedules

This is another eye-opener for a reporter who discovers each week how little he knows about state government and learns something new through this EB-5 matter. I looked through state laws this morning trying to determine how long a state record needs to be kept. I can’t find such a law. Instead there is a record-destruction board that receives petitions from state officials. What I did learn by asking the members of the record-destruction board is a state manual exists in the state Bureau of Administration here.

To understand the variances in place, consider the governor’s office as an example (chosen solely because it’s at the top of the list). Scroll through it here. The retention periods are in some cases discretionary and others have definite periods such as one, two or three years — or in the case of contracts, six years.

To better grasp the scope of variances, consider the Board of Regents as another example (chosen solely because BOR is at the bottom of the list). Scroll through it here. Collective bargaining agreements are kept for 15 years; alcohol licenses four year; promotion and fundraising brochures five years; and so on.


GFP Commission sets 2015 meeting schedule

The South Dakota Game, Fish and Parks Commission approved its 2015 meeting schedule this afternoon:

(Meeting times are first day 1 – 5 pm local and continues second day 8 am – noon local)

January 15-16, 2015 Pierre – RedRossa Convention Room
Thursday-Friday 808 W Sioux Avenue, Pierre, SD 57501

February 2015 – No meeting

March 5-6, 2015 Pierre – RedRossa Convention Room
Thursday-Friday 808 W Sioux Avenue, Pierre, SD 57501

April 1-2, 2015 Brookings – Days lnn
Wednesday-Thursday 2500 East 6″‘ Street, Brookings, SD 57006

May 7-8, 2015 Custer State Park – Creekside Lodge
Thursday-Friday US Hwy 16A, Custer, SD 57730

June 4-5,2015 Fort Pierre – Holiday lnn Express
Thursday-Friday 110 E Stanley Road, Fort Pierre, SD 57532

July 1-2, 2015 Pierre – RedRossa Convention Room
Wednesday-Thursday 808 W Sioux Avenue, Pierre, SD 57501

July 23-24, 2015 Reserved for possible contested case hearing – Pierre

August 6-7, 2015 Aberdeen – Americlnn
Thursday-Friday 301 Centennial Street, Aberdeen, SD 57532

September 2015 – No meeting

October 1-2, 2015 Spearfish – Holiday lnn Convention Center
Thursday-Friday 305 North 27′n St, Spearfish, 57783

Nov. 5-6, 2015 Mitchell – Ramada lnn
Thursday-Friday 1525 West Havens St., Mitchell, SD 57301

Dec. 10-11 , 2015 Pierre – RedRossa Convention Room
Thursday-Friday 808 W Sioux Avenue, Pierre, SD 57501

Will GFP outlaw turkey-baiting?

The state Game, Fish and Parks Commission meets today and Friday at Sturgis. One of the rule proposals recommended to the commission by the state Wildlife Division would expand the ban against baiting big game. Wild turkey are designated as big game in South Dakota. The current baiting ban runs Aug. 15 to Feb. 1. The expansion would extend the ban to cover March 15 through May 31. If the expanded ban is eventually adopted by the commission, there would remain two periods when baiting remain legal. They would be the six weeks covering February and the first 14 days of March; and the months of June, July and the first half of August. The Wildlife Division wants to prohibit hunters from shooting wild turkeys over bait stations. Currently hunters can’t use baited areas for the fall wild-turkey season but there’s no ban against using bait stations during the spring hunting season for turkeys. Here’s the division’s explanation to the commission regarding the rule-change proposal:

Conservation officers have identified numerous situations in the last two spring turkey seasons where baiting actlvities have taken place. Bait stations tend to alter the natural movement patterns of big game animals.

They can also cause a delay in the dispersal from wintering grounds,
concentrate flocks on the property of those maintaining a bait station, and create refuges that
can hamper population control efforts. Bait stations are not necessary to sustain healthy big
game populations and can create vulnerability for opportunistic poaching of big game

The commissioners, if they agree that the rule should be changed, would hold a public hearing Nov. 6 at 2 p.m. during the panel’s next meeting to be held in Sioux Falls. The commissioners could reject the proposal altogether this week, which would make the public hearing unnecessary. The commissioners also could modify the biologists’ recommendation in some way and proceed to the public hearing.

Voter registration wasn’t all that hot in September

South Dakota voter registration rose in September but not as much as the Septembers of 2012 and 2010. The latest statistics from the Secretary of State’s office show registration was 515,379 on Sept. 2 and climbed to 517,003 as of today (Oct. 1). And I bet you can guess where the gains came, right?

Republican registration increased to 239,355 from 238,791. That wasn’t much different than the month to month gains for Republicans starting in March. The significance is in that trend: Republicans have added more than 4,000 registered voters since March.

Democratic registration went up slightly to 175,186 today from 175,168 on Sept. 2. Democrats are still below their March count of 176,081.

The news for both of South Dakota’s major political camps is Democrats are down by more than 13,000 registered voters since October 2013, while Republicans are down by less than 4,000.

In the past month Constitutionalists slipped by five members to 695 registered while Libertarians grew by nine to 1,356.

So we leave the bigger story for last. The independents/not-affiliated column rocketed back into six figures again, growing to 100,547 as of today from 99,509 on Sept. 2. An increase of more than 1,000 in one month surpassed the growth of Republicans, Democrats and Libertarians combined.

Since March, independents/not-affiliated voters have climbed by more than 5,100, exceeding the pace of Republicans’ gains.

‘Blind school’ advisory group offered

Marjorie Kaiser, superintendent for the South Dakota School for the Blind and Visually Impaired at Aberdeen, is asking the state Board of Regents to approve the following people for the SDSBVI Advisory Council for the 2014-2015 school year:

1. Parent (on campus student): Sarah Ossanna, Aberdeen
2. Parent (outreach student): Vacant
3. SDSBVI On-Campus Faculty: Lorri Peterson
4. SDSBVI Outreach Faculty: Julie VanDover
5. SD Association for the Blind: Dawn Brush
6. SD Federation for the Blind: Jackie Campbell
7. Northern State University Education Department: Doris Stusiak
8. Service to the Blind and Visually Impaired: Twyla Eggers
9. SD Braille and Talking Book Library: Colleen Kirby
10. SD Public Schools: Kristin Hamman
11. SD Pubic Schools: Marie Ivers
12. Community Leader: Dean North
13. Community Leader: John Emmett, Aberdeen Lions Club
14. SD Board of Regents: Regent Kathryn Johnson (ex-officio)
15. SDSBVI Superintendent: Dr. Marjorie Kaiser (ex-officio)

Regents will consider school principals training

You can page through the document to see the new approach for generating more school principals that the state Board of Regents will be mulling next week. Four of South Dakota’s public universities at Aberdeen, Spearfish, Vermillion and Brookings are asking permission to move forward in planning a joint delivery system for a master in education degree in principal preparation. They would use university classrooms, on-line and video technology for the program, with an initial enrollment of 20 to 25. The students typically would be teachers already working in schools. Three of the universities — Northern State, USD and South Dakota State — already offer master degrees in education but the proposed program would be focused tightly on preparing principals for K-12 public, private and tribal schools in South Dakota. This is an important development for K-12 education.The regents, who govern the public higher education system, will consider the proposal at their meeting next week in Aberdeen. The proposal is on a committee agenda Wednesday afternoon and the full board would consider on Thursday morning the committee’s recommendation.

Regarding Ron Gardenhire

Here’s a look at some simple statistics for the Minnesota Twins during the 13 years while Ron Gardenhire was manager. He was fired Monday. The batting statistics are average and on-base percentage. The pitching statistic is earned-runs average. I pieced together the numbers and rankings season by season from

2014: Batting .254 (7th), OBP .324 (2nd). Pitching ERA 4.58 (15th). Record 70-92.

2013: Batting .242 (12th), OBP .312 (11th). Pitching ERA 4.55 (14th). Record 66-96.

2012: Batting .260 (6th), OBP .325 (5th). Pitching ERA 4.77 (13th). Record 66-96.

2011: Batting .247 (11th), OBP .306 (13th). Pitching ERA 4.58 (13th). Record 63-99.

2010: Batting .273 (3rd), OBP .341 (2nd). Pitching ERA 3.95 (5th). Record 94-68.

2009: Batting .274 (3rd), OBP .345 (4th). Pitching ERA 4.50 (11th). Record 87-76.

2008: Batting .279 (3rd), OBP .340 (4th). Pitching ERA 4.16 (7th). Record 88-75.

2007: Batting .264 (9th), OBP .330 (10th). Pitching ERA 4.15 (4th). Record 79-83.

2006: Batting .287 (1st), OBP .347 (5th). Pitching ERA 3.95 (2nd). Record 96-66.

2005: Batting .259 (13th), OBP .323 (10th). Pitching ERA 3.71 (5th). Record 83-79.

2004: Batting .266 (10th), OBP .332 (9th). Pitching ERA 4.03 (1st). Record 92-70.

2003: Batting .277 (3rd), OBP .341 (5th). Pitching ERA 4.41 (7th). Record 90-72.

2002: Batting .272 (5th), OBP .332 (8th). Pitching ERA 4.12 (6th). Record 94=67.

The lesson seems to have been four weak seasons in a row and you’re out. 2010 marked the Twins’ first year in Target Field. The losing began in year two and hasn’t stopped.

It’s worth looking at the 2010 roster when the Twins last posted a winning record. The regulars in the batting order were Joe Mauer, Michael Cuddyer, Orlando Hudson, J.J. Hardy, Danny Valencia, Delmon Young, Denard Span, Jason Kubel, Jim Thome, Justin Morneau and Nick Punto. The regulars on the mound were Carl Pavano, Francisco Liriano, Scott Baker, Nick Blackburn, Kevin Slowey, Brian Duensing, Matt Guerrier, Jesse Crain and closers Matt Capps and Jon Rauch.

The only player from that 2010 group still on the Twins’ major league roster in 2014 was Mauer. Now Gardenhire and his coaching staff are gone too.