EB-5 and GEAR UP have some things in common. Both programs began during then-Gov. Mike Rounds’ administration. Both stories came to light after tragic deaths.
And both show tangled messes that might have been avoided with more oversight. Where lawmakers could have pushed for greater transparency in how South Dakota does business, or better checks and balances for those who handle our money, nothing was ever done [editorial, “EB-5, GEAR UP Messes Demand Action,” Aberdeen American News, 2015.10.22].
Time for a different type of accountability: an oversight effort focused on making sure taxpayer money is spent, not just legally and in accord with correct procedure, but wisely and ethically.
Last year, District 3 Rep. Dan Kaiser broke with his Republican colleagues and supported the South Dakota Ethics Commission bill proposed by House Democrats. “I like the idea of more government oversight,” said Rep. Kaiser.
So should the rest of us [Art Marmorstein, “Accounting for Ethical Lapses in South Dakota,” Aberdeen American News, 2015.10.22].
Marmorstein also agrees that one of the big problems with federal grants like GEAR UP is the opportunity for “consultants” to divert cash meant to help the underprivileged into their own pockets:
KELO-TV news reported that Mid Central paid [former Education Secretary turned consultant Rock] Melmer $185,000 in fiscal year 2013-14 and $233,000 in 2014-15, using (in part) GEAR UP funds. Perfectly legal, but hardly an ethical way to spend funds intended to help the underprivileged.
Mid Central is just an extreme example of standard procedure in administering federal grants. When faced with a tough problem (in this case, trying to increase the number of American Indian students going on to college), punt. Hire overpriced consultants. Purchase an expensive software package. Host posh conferences and workshops. And, since you’re spending federal money, be extra careful with the i-dotting and t-crossing. Do that and your program sails right along whether it’s effective or not [Marmorstein, 2015.10.22].
Did you catch that? Legal but not ethical?
SDGOP crony Rick Melmer wasn’t the only consultant raking slurping up six figures from Mid-Central Educational Cooperative’s federal feeding trough. Joining Mitchell’s Joe Graves in the superintendents’ cash cage is Wessington Springs superintendent Lance Witte. In addition to his duties for the Wessington Springs school district, Witte is an associate at The Cambrian Group, CEO of Lance L. Witte Consulting LLC, and associate at the American Indian Institute for Innovation. MCEC board minutes show that on August 14, 2012, MCEC issued Witte’s employer the Cambrian Group a $97,500 GEAR UP stipend. Over the following six months, Cambrian received another $4,363.78 in GEAR UP stipend payments and for travel, dues, and services. Cambrian appears to have received no checks from MCEC after February 2014, but since March 6, 2014, Witte either personally or through his personal consulting LLC, receiving $13,872.78 for GEAR UP services. Witte’s last GEAR UP check, #146701, issued June 3, 2015, included $1,250.00 for “strategic planning” and $163.80 for travel.
(Witte’s ex-wife, Gwyneth Dean-Witte, also works for MCEC as a Title III coordinator. MCEC hired Dean-Witte in May 2014 for $50,000.)
Marmorstein may have hit the nail on the head. Enterprising superintendents like Witte, Graves, and Melmer, have been able to leverage their public positions into lucrative private middleman or sideline-man contracts where they don’t deliver value directly to students but, as is the case with consulting, tell other people how to deliver value. They know where the federal grants are, they know the paperwork those grants will require, and they know how to create all sorts of impressive looking documentable administrivial busy-ness that allows them to stick their buckets in the money stream.
Maybe the Board of Regents, to whom the South Dakota Department of Education is moving administration of the GEAR UP grant, can do better than Mid-Central at minimizing the overhead spent on consultants and cronies. The EB-5 scandal got rolling on a Regental campus, when Joop Bollen, the state employee handed EB-5 by the Rounds Administration, got creative and privatized his own job to increase the windfall he and his private associates could get from peddling EB-5 visas. Maybe the fallout from EB-5 (including the blame Bollen tried to place on the Regents and the fact that the feds are declaring us too corrupt to get money from the program) will encourage the Regents not to farm out GEAR UP activities to moonlighters and instead keep as many of GEAR UP’s operations in house, where we can account for every penny spent by civil servants who work for the public, not for profit.
Update 11:55 CDT: I initially identified Gwyneth Dean-Witte as Lance Witte’s wife. A correspondent informs me and Lance Witte’s Face It Together profile confirm that the couple split a few years ago. I have corrected the text and regret the error.