The Dakota Free Press Guerrilla Legal Department offers the following pointers to the South Dakota Department of Revenue and South Dakota Attorney General to help them figure out under exactly which statutes they may investigate and prosecute Joop Bollen, EB-5 czar and admitted renegade banker.
SDCL 54-4-52: “No person may engage in the business of lending money without a license. A violation of this section is a Class 1 misdemeanor.”
Joop Bollen formed SDRC Inc. in January 2008. He engaged in the business of lending money through SDRC Inc. without a license. He committed a Class 1 misdemeanor.
SDCL 51A-1-9: “Concealment of bank transactions as misdemeanor. It is a Class 1 misdemeanor for an officer, director, employee or agent of a bank to conceal or endeavor to conceal any transaction of the bank from any officer, director or employee of the bank or any official or employee of the division to whom it should properly be disclosed.”
SDRC Inc. made loans to Dakota Provisions, Northern Beef Packers, and other projects from 2009 to 2013. It paid no bank franchise tax on those loans, which logically means it concealed those bank transactions from the Division of Banking.
SDCL 10-43-51: “Time for determination of tax on failure to file return or list income–Time of payment. If the secretary of revenue discovers from the examination of the return or otherwise that the income of the taxpayer, or any portion of the income, has not been listed in the return, or that no return was filed when one was due, the secretary may at any time within five years after the time when the return was due, determine the correct amount of the tax together with interest and penalty as provided in § 10-59-6. The tax, interest, and penalty shall be paid within ten days after the secretary of revenue has given notice of the tax, interest, and penalty to the taxpayer by registered or certified mail.”
The South Dakota Department of Revenue has said it needs to determine whether it can claim back taxes from SDRC Inc. SDCL 10-43-51 says clearly that it can, but the state needs to act now. The bank franchise tax is an annual tax. If it is due at the same time as federal income tax, then taxes for 2009 (a big enchilada year for SDRC Inc.) would have been due April 15, 2010.
Today is April 8, 2015. Banking Division, you’d better file your claim now.
SDCL 10-43-46: “False or fraudulent return or information with intent to evade legal requirements as misdemeanor–Civil penalty. Any person, corporation, or any officer or employee of a corporation, or member or employee of any partnership, who, with intent to evade any of the requirements of this chapter or any lawful requirements of the secretary of revenue pursuant to this chapter, makes a false or fraudulent return or statement or supplies false or fraudulent information is guilty of a Class 1 misdemeanor. In addition, the person, corporation, officer, employee, or member is liable for a civil penalty of not more than five thousand dollars, to be recovered by the attorney general, in the name of the state. The civil penalty is in addition to all other penalties in this chapter.”
The DFPGLD is not as sure about the application of this statute to Bollen’s situation. SDRC Inc. clearly evaded the requirements of the bank franchise tax chapter. However, it did not file a false or fraudulent return or information; it filed no return, no information. For the moment, we are willing to contend that in this case, providing no information constitutes an active falsehood and attempt to defraud the state.
SDCL 54-4-57: “Examination of records–Costs–Information–Forms–Application of other provisions. The division may annually, or as often as the director considers necessary, conduct an examination of business records and accounts of any licensee licensed under this chapter. The director may charge back to the licensee any cost associated with an on-site examination. The director may waive an on-site examination and only require an annual self-examination. If a licensee conducts a self-examination, the licensee shall provide any information requested under oath and on forms provided by the division by order or rule. The provisions of § 51A-2-35 apply to records and examination reports required under this chapter.”
During the state’s “investigation” of the EB-5 scandal, Bollen hid behind the pretense that the state cannot look at private business documents. The State of South Dakota far too casually acceded to that argument, even though Bollen clearly formed SDRC Inc. to skirt public oversight of the EB-5 activities he was charged as a public employee to conduct. Now that SDRC Inc. has a banking license, its records are subject to inspection by the banking division.
There’s likely much more in state law that we can apply to SDRC Inc’s shady banking and other practices. But if the State of South Dakota wants the money SDRC Inc. defrauded from the state in its EB-5 activities, these statutes make clear the first (and urgent!) points of legal action.