Can A Scandal In South Dakota Save The Senate For DC Democrats... Who Are Ignoring It?

Control of the U.S. Senate will come down to a race none of the powers inside the Beltway are even talking about. Democrat Tim Johnson is retiring from his South Dakota Senate seat and Johnson is strongly backing prairie populist Rick Weiland, who is also being strongly backed by former Democratic Majority Leader Tom Daschle. Harry Reid has a bug up his ass about Daschle and is letting that get in the way of supporting Weiland. Almost every other Democratic senator has endorsed him or contributed to his campaign but Reid refuses to allow the DSCC to back him. DSCC Executive Director Guy Cecil wanted a defeated Blue Dog hack to run, Stephanie Herseth Sandlin, so he's not eager to help Weiland anyway. Cecil's figurehead DSCC chairman, Michael Bennet, a dull third-rate centrist, doesn't even know there's a race in South Dakota.

Polling shows that Weiland has nearly caught up to Republican hack Mike Rounds, who is currently enmeshed in am EB-5 visa-selling scandal, which the DSCC refuses to publicize but which is roiling South Dakota politics. The 15 second spot above is from the Weiland campaign. Blue America has a song about it that we're turning into a radio spot. Here's the full song:



If you'd like to help us get it up on the air, please contribute what you can to the Blue America IE committee here. One statewide ad costs exactly $225 to run in morning drive. Everyone loves the song and the issue is all over the South Dakota media right now. This week there was finally a legislative hearing: "After questionnaires to Gov. Dennis Daugaard and former Gov. Mike Rounds shed little new light on South Dakota's EB-5 program, the South Dakota Legislature is turning its focus to the state's former EB-5 chief, Joop Bollen." Remember, "Joop" as in dupe or dope, depending, and "Bollen," certainly as in "stolen." The Republicans in control of the legislature have pushed Joop's testimony back until after the election so voters will have to decide without knowing the extent of Rounds' criminal behavior.

Democrats have been criticizing Daugaard and especially Rounds for their handling of EB-5, a federal program where foreigners can earn green cards for investing $500,000 in South Dakota projects. Even as lawmakers on the Legislature's Government Operations and Audit Committee met Wednesday in Pierre to discuss EB-5, Democratic U.S. Senate nominee Rick Weiland released a new commercial attacking Rounds for embracing the program as governor.

Wednesday's meeting was dominated by written answers provided by Rounds and Daugaard to questions asked by the committee. Almost all of them came from the South Dakota Democratic Party.

Those answers shed little new light on the complicated saga of EB-5, which involves multiple independent state agencies, private companies, criminal investigations, audits, lawsuits and bankruptcies. The exchanges took on a sharply political tone, with Democrats criticizing the two men's responses as inadequate and Republicans on the committee defending them.

But there was more bipartisan agreement about seeking answers from Bollen, who led the EB-5 program as a state employee until resigning in 2009 to continue recruiting EB-5 investment as a private contractor.

Unlike Rounds and Daugaard, whose questions came almost entirely from Democrats, two Republican lawmakers have submitted more than 20 questions for Bollen. Democratic Sen. Larry Lucas submitted 71 more, though a committee motion asked him to work with the committee chair to pare them down.

"There are two things I think bother us," said Rep. Mark Mickelson, R-Sioux Falls. "The first is the appearance that (former Cabinet secretary Richard) Benda would have used his state position to procure employment. ... The other thing that happened is this contract ... that Joop Bollen may have signed with himself."

In January 2008, Bollen signed a memorandum of understanding with a private company, SDRC Inc., to help Bollen's agency with the EB-5 program. Bollen didn't disclose that he had founded SDRC Inc. himself days earlier, and also apparently didn't get permission to enter into the contract.

Bollen declined an invitation from committee chairman Sen. Larry Tidemann, R-Brookings, to answer questions at GOAC's Wednesday meeting. But he offered, through his lawyer, to answer written questions.

Democrats have said that's insufficient and called to use GOAC's subpoena power to compel Bollen's appearance. Republicans on the committee rejected a motion to do that earlier this summer.

On Wednesday, however, a small group of Republican lawmakers endorsed subpoenaing Bollen.

"Politics has totally engulfed this thing, but there is a legitimate issue with this guy," said Rep. Steve Hickey, R-Sioux Falls. "I don't appreciate him not being there in person."

Neither Hickey nor any of the other five Republican lawmakers calling to subpoena Bollen are on GOAC. Republican members of that committee, who were briefed behind closed doors by Attorney General Marty Jackley about its subpoena power, continued to dismiss the subpoena option.

"I've never believed that the subpoena would have gotten us much information," said Sen. Phyllis Heineman, R-Sioux Falls. "If there was any possibility of a federal investigation ongoing, why would anyone come in and not plead the fifth?"

It's unclear whether a federal investigation is ongoing. U.S. Attorney Brendan Johnson, a Democrat, declined an invitation to speak to the committee Wednesday and has refused to confirm or deny whether a federal investigation is still ongoing. He's been criticized for that by Republicans, who say Johnson's silence is political and serves to keep discussion of EB-5 alive.

Tidemann has said a subpoena remains an option if the committee isn't satisfied with Bollen's responses.

Meanwhile, Rounds is hiding under his bed, blaming everyone on God's earth but himself and his cronies and bagmen. Senator Larry Lucas' report on the scandal, released this week, leaves no doubt where culpability rests:

The information from this report, along with the attached exhibits, will show that Governor Mike Rounds, Governor Dennis Daugaard, and other state leaders knew about Joop Bollen’s contract with a company he owned to manage the EB5 program. Any competent public official briefed on the basic facts about the Darley litigation would have understood that the core controversy of the litigation is Joop Bollen’s creation of SDRC, Inc.

State employee Joop Bollen set up SDRC, Inc. to deceive anyone following his work, willfully concealed the Darley litigation from the state, and repeatedly violated South Dakota law in the process. Yet Governor Mike Rounds and the Board of Regents protected Bollen in court instead of firing him for his unethical and potentially illegal behavior.

The state is liable for $4 million in potential liability claimed-- not including attorney fees and pre-judgment interest-- from the Darley litigation. This is 4 times more than reported by the Auditor General’s report in 2010 and 2011, and this ongoing liability hasn’t been reported since even though South Dakota taxpayers have already spent over $500,000 defending the state in the Darley arbitration. In fact, this liability was not disclosed in the 2009 Auditor General’s report, and was no longer disclosed after the 2011 Auditor General’s report-- even though the Darley litigation remains open today.

In addition, this report estimates that South Dakota taxpayers spent nearly $500,000 for Joop Bollen’s office over the nearly two years that he had already privatized the EB5 program on January 15, 2008. Since the privatization of the program, Joop Bollen and his associates have harvested over $100 million in EB5 franchise fees.

The conclusions of this report reinforce a few simple unanswered questions:

• Who authorized Rounds employee Joop Bollen to sign a contract with himself to administer the EB5 program?


• If Bollen didn’t have authority, why isn’t anyone pursuing legal action against Joop Bollen to recover the EB5 franchise fees he and his associates have harvested?


• Why didn’t Governor Mike Rounds and the Board of Regents fire Joop Bollen after he dragged South Dakota into this lawsuit?


• Why did the Board of Regents continue to protect Joop Bollen from depositions and the production of documents in an August 2013 legal brief long after his unethical and illegal behavior was well known?

If the DSCC wash't so busy wasting millions of dollars in Georgia and Kentucky to try to elect conservatives in red states, they would be all over this. But they're not. That's why we're asking you to seriously consider helping out. Even $5 or $10 will help us get more ads on the radio.