As a reporter most of my life’s work has been spent in places other than federal and state courtrooms. With the federal and state investigations of various matters involving South Dakota and the EB-5 immigrant investment program, however, I’m hearing references time and again to Rule 6(e). It’s something we all need to learn. It is part of the federal rules of criminal procedure and basically covers the rules for grand jury secrecy. Our state legal code embraces the same concept. What happens in a grand jury room stays in the grand jury room — until the criminal charges are made.
Why does this matter regarding EB-5? Much of the information that has been gathered by state Attorney General Marty Jackley and his staff, and by U.S. Attorney Brendan Johnson and federal investigators, falls under these secrecy requirements. If and when matters move into open court, we likely will learn a lot more.
There have been some careful, limited disclosures by Jackley, Gov. Dennis Daugaard, and various other state officials. These have led to some important news stories. As a reporter I’ve used public-records laws when possible to obtain state government documents and records. Generally I have met cooperation unless Rule 6(e) comes up. We’ve also been able to get statements from some lawyers and business people. Generally, however, everyone is being cautious, because this is the kind of scandal we don’t see very often. No lawyer wants to knowingly and willfully run afoul of Rule 6(e) and face contempt of court.
As for legislators and others who are demanding investigations, there have been state and federal investigations under way. We know that. There’s also been a federal grand jury at work. We don’t fully know where the money trails lead. A state audit will show some of that, but once the money moves into private bank accounts, the trails become more difficult. We need to rely on government criminal investigators who have the legal authority to look into personal and business financial records.
I am convinced we will learn a lot more as the months pass. In the meantime this reporter and others will keep looking and reading and poking and asking and writing about what we learn.
UPDATE: This afternoon (Friday) the attorney general issued a statement explaining why he can’t say more about some of the matters including the $550,000 diversion that his recent investigation uncovered. Here it is: AGresponseEB513 12-13-13
Today, state Attorney General Marty Jackley ruled against my amended request that he declare as public records the reports and other materials he received in the investigation of the cause of death for Richard Benda Oct. 20.
The attorney general’s office distributed Jackley’s latest response but didn’t distribute my amended request, which I filed last week Friday (Dec. 6, 2013), and my supplement to that amended request, which I filed last Saturday (Dec. 7, 2013).
I filed my amended request and supplement after Cathy Benda, the ex-wife of Richard Benda, refused to sign a release that the attorney general wanted from a member of the immediate family, and after she subsequently informed the attorney general and me by e-mail that she wanted notice in case I obtained a signed release from another family member. She told us in that e-mail she would seek injunctive relief. I subsequently spoke to the attorney general by telephone last week Thursday (Dec. 5, 2013). He told me he wouldn’t contest an injunction sought against him by Cathy Benda. That meant he would consent to allowing her to block the release of the records. Cathy Benda’s stated interest in the records matter is that she wants to protect her 16-year-old daughter from news reports about the records.
Seeing the waiver now blocked, I filed an amended request, asking that the waiver requirement be dropped and that state law be followed. State law provides that items can be redacted (removed or blacked-out) from a public record in certain circumstances. Redaction was the centerpiece of my original request to the attorney general. He had offered instead a pool arrangement, where two reporters would be allowed limited access to view certain parts of the investigation reports, but they wouldn’t be allowed to take copies. He conditioned the pool arrangement on three requirements, one of which was the waiver.
Such investigation reports are generally classified as confidential by state law, but there is a specific provision in state law allowing for their release, with redaction as the method to keep certain types of information confidential. My plan was to make my pool report available to all news organizations who are members of the South Dakota Newspaper Association and the South Dakota Broadcasters Association, and also to post the pool report on an Internet site for any member of the public to read. As the second reporter, I had selected one from KELO television, Ben Dunsmoor, because I wanted a video aspect to the pool report and because KELO has the widest coverage north, south, east and west in South Dakota.
I will be filing an appeal, following the steps outlined in state law, to the state office of hearing examiners. This process was established by the previous attorney general, Larry Long, who is now a state circuit judge. Should either side choose to appeal the hearing examiner’s decision, the next step would be circuit court. Should either side choose to appeal the circuit judge’s decision, the final step would be the South Dakota Supreme Court.
For your fuller understanding, I have posted links below to the five documents:
1) My initial letter of request. Attorney General Letter Requesting Public Record 11-26-13 (Signature Copy)
2) The attorney general’s initial letter of response. Jackley Letter Allowing Benda Records Inspection
3) My letter making an amended request. Attorney General Letter Amending Request for Public Records 12-6-13
4) My supplement to the amended request. Attorney General Letter Supplementing Amended Request 12-7-13
5) The attorney general’s second letter of response, denying the amended request and supplement. BendaPublic-Record_RequestAGresponse1211
For reasons I can’t fathom, playing Elvis Presley songs seems frowned upon when more than just one person in present in our household. However, Christmas always provides a reason to find — what else — “Elvis’ Christmas Album.” It’s in the CD player this morning (I wish I had a version on vinyl, he hinted…) and here’s the song list: Blue Christmas; Silent Night; White Christmas; Santa Claus Is Back In Town; I’ll Be Home For Christmas; If Every Day Was Like Christmas; Here Comes Santa Claus; Oh Little Town of Bethlehem; Santa Bring My Baby; and Mama Liked The Roses. Not a cut longer than 2:52. I found the Dwight Yoakam Christmas album too. That’s for this afternoon.
The purges that county auditors routinely conduct to weed out registered voters who have stopped voting took a big toll in November. Republicans lost more than 5,000. Democrats lost nearly 6,000. Independents lost more than 3,000. That’s more than 14,000 people who aren’t registered to vote any longer in South Dakota.
The Dec. 2 statewide totals shown by the Secretary of State Office are 238,628 Republicans; 181,511 Democrats; 97,357 independents; and the usual smattering of about 1,700 Libertarian, Constitution and “Americans Elect” party members.
Even with the purges, the theme of recent years holds true. Democrats lost the most ground.
Here’s the question: What beside death could have happened to those 14,000 people?
The year-to-date sales are running a tad better so far this budget year for the two of the three main products of the South Dakota Lottery, according to materials distributed for the state Lottery Commission’s meeting Tuesday.
Net machine revenue from video lottery was a shade more than $76 million through Nov. 30, which was 1.16 percent better than last year. (The fiscal year runs July 1, 2013, through June 30, 2014)
Sales of instant tickets aka scratch-offs through 22 weeks totaled $9.96 million before prizes and expenses. That was up 1.49 percent from one year ago.
What’s been missing is a giant jackpot in lotto. That’s hurt sales of lotto tickets. For all lotto games the sales total was $12.7 million through 22 weeks. That’s 13.36 percent down from last year.
Based on sales so far, lottery officials estimate the fiscal year’s net revenues at nearly $106.5 million, with approximately $92.5 million from video lottery; $5.5 million from instant tickets; and $8.5 million from lotto sales.
The main topic on the meeting agenda for Tuesday is setting the strategic plan for video lottery. The meeting starts at 10 a.m. at the state Capitol in room 412. The meeting comes in the wake of a planning session held last month between commissioners, lottery administrators and a cross-section of business people involved in video lottery.
Here’s the latest rumor about why the Daugaard administration still hasn’t appointed an eighth member to the state Game, Fish and Parks Commission. The difficulties finding a West River Democratic landowner — state law has precise rules balancing the commission’s geographic, political and landowner statuses — led the governor’s folks to put their search on a semi-hold. Now they’re busy on it again because they’ll have a second seat to fill as Susie Knippling’s second and final term ends next month. Knippling, from Gann Valley, is the current chairwoman. With two seats available, the rumor goes, there will be more opportunities to mix and match in order to reach the legal requirements. The long-term vacancy has been for the seat previously held by Bill Cerny, a Democratic landowner who lived in the Burke area at the time. The conscientious Cerny stepped down 13 months ago after he and his wife, Pat, left the farm and moved to Yankton.
After server problems the past two days, the talented tech crews of the Aberdeen American News and Schurz Communications have PPP aka Pierre Review back up and running. Thanks to them and thanks to you for your patience.
The representatives and senators who serve on the joint committee for retirement laws sit down this morning with the board of trustees, administrators, actuaries and investment office leadership to discuss the financial status of the South Dakota Retirement System. When the talk turns to 2014 legislation, there will be a new topic: Folding the old state cement-plant retirement fund into SDRS. In his budget speech Tuesday, the governor proposed using more than $5 million of one-time funding to fill the gap in the cement-plant fund. Once it’s whole, then it could be combined with SDRS, which at last look was back above 100 percent funding again. The cement-plant fund fell behind and, because it’s a dead system without any revenue coming in aside from investment earnings, it hasn’t been able to catch up without the Legislature’s funding help. These two moves proposed by Gov. Dennis Daugaard would take care of both issues. SDRS administrators already oversee the cement-plant system, so this isn’t a reach.
The state Council of Juvenile Services won’t meet Wednesday, Dec. 4, after all. Spokesman Michael Winder said this morning that weather conditions led to the decision to cancel. The meeting was set for Oacoma. The council’s next regular meeting will be in March.
Meanwhile the South Dakota Lottery Commission will fit in one final meeting for 2013. The lottery office said this morning the commission will meet next Tuesday, Dec. 10, starting at 10 a.m. in room 412 of the state Capitol. This promises to be an important gathering in the wake of the planning and strategy meeting held last month regarding video lottery.
NEW: The state Banking Commission will meet by teleconference Wednesday, Dec. 4, also because of weather. The teleconference will start at 10:30 a.m. and will be open to the public at two locations: The Division of Banking conference room at 1601 N. Harrison; and the Sioux Falls office at 5100 W. 51st St.
The call by state Rep. Kathy Tyler, D-Big Stone City, for an independent financial investigation of the EB-5 immigrant investor program in South Dakota raises some important questions. First, she wants the Legislature to declare a special session for Dec. 30-31 to authorize the investigation. That is 27 days from today. The Legislature is scheduled to open its 2014 regular session on Jan. 14. Can the investigation vote wait 16 more days until legislators are in regular session?
Second, the Legislature already has the power to conduct a financial investigation through its own agency, the Department of Legislative Audit. By calling for an independent investigation, she is essentially saying Legislative Audit isn’t sufficiently capable. Third, there are the costs of a two-day special session and hiring an independent investigation team. That team likely would need to come from outside South Dakota and be without any ties to South Dakota. If state government’s RFP process is followed, months could pass before the firm is selected and work begins. Legislative Audit on the other hand could start work as soon as the word was sent.
Fourth, what is the independent investigation supposed to find? The state contract with SDRC Inc. of Aberdeen specified that certain splits of revenue be placed in three state accounts. The state commissioner of economic development, Pat Costello, demanded the money in those accounts be turned over to state government when he terminated the contract with SDRC in September. State government should have received in excess of $2 million, based on the balances in the three accounts at the time. A state audit reaching back to 2009 could determine whether SDRC was placing the correct amounts at the proper times into those accounts and whether money spent from any of the accounts was appropriate. The Governor’s Office of Economic Development was supposed to receive reports from SDRC on a regular basis.
Knowing the past work of the Department of Legislative Audit, that level of work is certainly within the agency’s capability. On the same point, South Dakota legislators and the general public would learn how much money was being collected by SDRC in fees charged to immigrant investors. We also would learn what SDRC was paying in expenses to others involved in the EB-5 business and what SDRC was paying to its own personnel each year and to any others involved in its operations. That information would become available if auditors looked specifically at the expense fund, one of the three accounts established under the state contract.
The Legislature by state law has subpoena and summons powers, with witnesses facing Class 2 misdemeanor penalties for failure to appear. Further, the Department of Legislative Audit has subpoena and summons powers and refusal is treated under state law the same as contempt of court. In other words, the Department of Legislative Audit likely has more authority in an investigation than would an independent outside firm hired under a consulting contract.
The Legislature has a very big and very powerful set of weapons if lawmakers choose to use it, and there’s no need for a special session to move those weapons into place for an EB-5 probe. All it takes is a vote by the Legislature’s Executive Board. State law gives that board the authority to direct the activities of the state auditor general, who is in charge of the Department of Legislative Audit. It’s easy to call a news conference and issue a news release and make headlines. It’s also easy to read state law and see how much power the Legislature already has — and to also see there’s no need for a special independent investigation or a special session. If the Executive Board refuses, then a vote by the full Legislature would be the next step.
GOED meanwhile has already requested that Legislative Audit look at its books, with Costello expecting a report by Jan. 24, 2014. If that report doesn’t go far enough, the Executive Board or the full Legislature would have the opportunity to direct Legislative Audit to go back in and look deeper at GOED, SDRC and the three accounts established by legal contract. The audit contract, signed by Auditor General Marty Guindon on Nov. 27, is specific but also acknowledges there won’t be an examination of all transactions and therefore “there is a risk that material misstatements or noncompliance may exist and not be detected by us…” Depending upon what’s found in this first round, a second round might or might not be necessary to satisfy legislators.