The federal government is sticking with its assessment that South Dakota state government is too corrupt to be trusted with the EB-5 visa investment program. Seth Tupper gets hold of the latest from USCIS, a July 7 Notice of Certified Termination that says the Daugaard Administration’s claims of ignorance and innocence are incredible. USCIS maintains its intent to terminate the Regional Center authorization that South Dakota received in 2004 to recruit foreign investors for economic development projects in exchange for green cards.
USCIS says South Dakota’s response to USCIS’s September 28, 2015, Notice of Intent to Terminate South Dakota’s Regional Center status “did not sufficiently address the grounds alleged in the NOIT.” In fact, USCIS says South Dakota’s response to the Notice of Intent to Terminate bolsters the case for South Dakota’s unworthiness of access to the EB-5 program. When the Governor’s Office of Economic Development claims that it can’t provide the records USCIS demands due to disputes with its former EB-5 czar Joop Bollen and his EB-5 management company SDRC Inc., USCIS sees all the more proof that the state “has not maintained records, data and information on Regional Center activities sufficient to manage the center and satisfy the reporting requirements….” When GOED includes a letter from Bollen blaming participating dairies for not filing the proper forms on their EB-5 investors, USCIS concludes the state “has failed to monitor all investment activities under its sponsorship, and continues to fail, under the management of GOED” to meet Regional Center obligations.
When GOED professes ignorance of the wild offshore financial transactions SDRC Inc. conducted with EB-5 money, USCIS says “this information was public knowledge disseminated in online news sources” and explicitly cites “annotated snippets of bank statements showing the transfers” in my November 14, 2013, Madville Times blog post on the topic:
In other words, USCIS trusts my blog more than they trust GOED.
USCIS dismisses Bollen’s contention that EB-5 funds don’t all have to be used for job-creating activities. USCIS says that neither the diversion of funds to a Cyprus-based Russian rail subsidiary or the convoluted dealings with and purchase of Hong Kong/British Virgin Islands-based and tax-dodging Epoch Star had anything to do with creating jobs in America. USCIS says the creation of jobs with other EB-5 funds in other South Dakota projects does not excuse diverting these funds.
USCIS rejects the state’s effort to shift blame to Bollen: “even where a regional center has hired an outside party to provide management services, the ultimate responsibility for compliance with the relevant statutes and regulations, remains with the regional center entity and cannot be transferred.” Translation: if Bollen screwed up, the state screwed up.
USCIS concludes that GOED did not properly oversee EB-5 activities when Bollen ran them, has not exercised due diligence since canning Bollen in 2013, and “has no plans for due diligence, monitoring, and oversight in the future.”
Governor Daugaard’s office has 30 days from receipt of this notice (around August 7 or 8, I would assume) to respond. Given the lack or persuasive power of its previous response, the state should perhaps just admit it screwed up and let EB-5 go.