Bollen Admits SDRC Inc. Needs Lending License: Will State Finally Pursue EB-5 Tax Fraud?

On November 20, 2013, I reported that Joop Bollen had run an unlicensed bank and dodged the bank franchise tax in the course of South Dakota’s EB-5 visa investment program.

On September 9, 2014, Brown County Commissioner Tom Fischbach persuaded his fellow commissioners to formally request that the South Dakota Division of Banking investigate the possibility that Bollen’s SDRC Inc. had committed exactly those crimes, defrauding Brown County of $1.76 million.

Today, AP reports that, after an unusually lengthy investigation, the South Dakota Division of Banking received a lending license application from Joop Bollen and agreed that SDRC Inc. needs to carry such a license and pay such bank franchise tax.

But the Division of Banking has kicked the question of what Bollen owes for his SDRC Inc. activities from 2008 to the middle of this month up to the Department of Revenue:

The Revenue Department received notice of the license last week and will collect the tax moving forward. It will also determine whether it can assess and collect taxes from before the license was issued, Jason Evans, property and special taxes deputy director, told The Associated Press.

“From a department perspective, we’re interested in collecting all those taxes that are duly owed to the state and the department,” Evans said, noting that no taxes have been collected yet.

It’s unclear what the firm’s tax burden is moving forward. It’s also not certain how much money is at stake if the department decides to collect potential back taxes, but it will begin examining the issue very soon, he said.

“It’s not something that happens very often,” Evans said. “We don’t very regularly have to collect taxes from prior years” [James Nord, “State Regulators Determine EB-5 Loan Firm Must Pay Bank Tax,” AP, 2015.03.29].

I would love to learn what lending activities Bollen is engaging in now via SDRC Inc. that warrant his finally applying for a lending license. But his activities prior to obtaining a license were clearly lending. SDRC Inc. acted as a bank without a license and collected interest on loans without paying bank franchise tax. Those are two clear, non-trivial crimes committed by a live suspect, right here in Aberdeen, that our state is strangely hesitant to prosecute.


22 Responses to Bollen Admits SDRC Inc. Needs Lending License: Will State Finally Pursue EB-5 Tax Fraud?

  1. Shameful! What a disgrace that this comes out long after it’s too late for the Legislature. What a disgrace that this pivotal AP story is available in other states’ newspaper websites, but only on the Watertown Public Opinion website where you must pay a subscription to access an important AP story written in Sioux Falls, South Dakota.

    There is nothing worse in a democratic society than a press that shoves the government’s gag in its own mouth.

  2. larry kurtz

    South Dakota: Land of Infinite Vacuum.

  3. 96, I agree: this story is huge. KELO better be dragging Ben Dunsmoor away from his Sunday cookout to burn up some phone lines.

    Of course, I’d hate for the press to go big on this verification of EB-5 crime and crowd out the big referendum story. ;-) SD press needs more bandwidth!

  4. It’s on the Kelo website and the Yankton Press & Dakotan’s. I’m not sure how Jackley can still ignore this unless the media continues to play dead. Anybody who’s been harassed or prosecuted for tax evasion by the state should be raising hell. This makes me wonder if Bollen has been straight with the feds on his taxes.

    Of course, this is a sideshow to the entire racketeering scam which involves Rounds at the top.

    Oh wait, what’s that sound? Tapping? Can that be Jackley tapdancing again?

  5. It seems to me that the CEO of the state of South Dakota at that time was pretty well versed in financial matters and had the many of the banking commission in his service raising funds

    Shouldn’t he have known this?

    Oh that’s right, he did. But true to his South Dakota Republican privilege, he knew that this was not something that the ruling party need not concern itself with.

    Marty Jackley, if taxpayer money was lost due to this ‘little’ oversight, who will you hold responsible. Go ahead and take a break from prosecuting the kid who took a five finger discount on a candy bar and show some courage.

    Marty, justice is one word…not Just Us.

  6. Marty, all the campaign thank you notes have been sent and I sure hope it generated a lot of $’s for the elected office you have been posturing for.

    Now get back to work, the election isn’t for another couple of years.

  7. mike from iowa

    Oh hell,Benda did it.

  8. Just more proof positive regarding the corruption of our state. 96 tears is spot on when he says about those who have been jailed or ruined because of tax issues in South Dakota. Bollen gets a do over and it looks like he will not have to pay penalties like the rest of the folks do, nor will be have to go to court for his punishment. The wealthy take care of their own here as well as their brethren all across the country http://www.bloomberg.com/news/articles/2013-12-27/moguls-rent-south-dakota-addresses-to-dodge-taxes-forever Notice how Daugaars claims to visit those moguls to tell them how much he appreciates their corruption here, while he backs up to have his pockets filled.

  9. mike from iowa

    When you build a house of cards make sure you control the glue.

  10. Hi Mike. How are things down there in Sioux City?

  11. mike from iowa

    I wuz in Soo City Friday for some medical tests,Grudz. Other than that,I haven’t been there for a number of years. Aim two counties up from Woodbury and another one to the east and then say high. (Obrien Co is my current home)

  12. You should go to Sioux Falls for your medical test, Mike. We have superior facilities and staff here in South Dakota. Plus, as you know Sioux Falls is full of South Dakota libbies and has plenty of amenities.

  13. Grudz, there’s good taters and gravy in Sioux Falls as well. Just tell them to hold the kale and hummus. And with two heart hospitals close by, they can take care of any blockages.

  14. So, apply for the licenses – pay the taxes, no harm no foul? Sounds like Bollen was tipped off that there was some wrong-doing, and there is now some damage control taking place. Perhaps I should try that with my next speeding ticket? Tell the officer I will turn around, and drive through the area at the correct speed – and the officer will then not give me a speeding ticket?

  15. 1%per annum on $600,000,000?

  16. didn’t a banking commission member tell sveen or somebody, “that’s a pretty good deal, exempt from banking regulation per unanimous decision, can’t get much better than that [for the SDGOP]!!” or words to that effect?

  17. mike from iowa

    Is there a wingnut party imposed statute of limitations on charges against Benda? If Bollen feels threatened he may talk and lord knows the Keystone Kluster Kerfkuffle of wingnuts in South Dakota don’t want to have that happen to their up and coming pols.

    Grudz,I go to Sioux City Mercy Hospital because it is affiliated with the medical clinics near me and I grow the best taters in the world. Gravy is optional.

  18. Jana, let’s think through this: Friends of Mike (e.g., Jeff Sveen) and maybe Mike himself know that SDRC Inc. is shorting the state over $2 million. Do friends of Mike let that money go just for kicks? Just to give Joop gravy? That seems unlikely. It seems we need a little more motivation to let bank franchise tax fraud take place. Suggestions for motivation there?

  19. Sure, Joe K: that makes perfect sense… in the Bollen/Jackley interpretation of law and EB-5.

    Statute of limitations, Mike? Good question. With respect to Citibank’s claim that the state owes it a $30M refund on bank franchise tax from past years, South Dakota has invoked a three-year statute of limitations. But that’s a situation where the state is trying to keep money in its pocket. The state may have the chutzpah to argue on a different standard to get the money coming to it from SDRC Inc.

    But if Joop has the goods on anyone else involved, and if he says, “Try taking my money, and I squeal,” we will see no effort to recoup past bank franchise tax, at least not from Pierre.

  20. Nick Nemec

    You hit the nail on the head there Cory. There will be little or no effort to collect bank franchise money from The Bank of Joop because of the fear of what and whose secrets he will tell.

  21. A class action suit by those that were forced to pay penalties for not paying sales tax or contractors excise taxes might be in order. If the state is willing to look the other way on this to avoid complications of involvement then why should others have to pay?

  22. from a previous ch post:

    Sioux Falls lawyer Steve Sanford represented Epoch before the Banking Commission. He explained that Epoch sought the declaratory ruling because the participants wanted assurance that a state lending license wasn’t necessary.

    The request for a declaratory ruling from the commission was received June 11 by the state Division of Banking. Asked why a decision by division director Roger Novotny wasn’t sufficient, Sanford replied: “Because so much was at stake.”

    He said the commission has clear authority under state law that supersedes the director’s power to make administrative decisions. “I don’t think I’m paranoid. In this instance, I’m trying to be extremely careful,” Sanford said

    Aberdeen lawyer Rory King represented Northern Beef at the hearing. “This is the last condition of an imposing checklist to be fulfilled,” he told the commissioners. He said nearly all lien-holders have consented to payment-schedule agreements.

    The Rounds administration was represented by one of the governor’s Cabinet members, Secretary of Tourism and State Development Richard Benda. “We look forward to a favorable decision today so we can move the project forward,” he testified.

    The commission’s vote was 4-0 finding that a state license was unnecessary. “That’s as firm as we can get, Steve,” Commissioner John Lillibridge of Burke said.

    Replied Sanford, “I think we need to be grateful we live in a state where we can get this kind of thing done with dispatch.”

    WAS THIS BANKING DECISION ERRONIOUS BASED ON WHAT WE KNOW NOW, POST-POST-ELECTION?