When South Dakota’s scandal-dogged EB-5 czar Joop Bollen goes to court, he usually turns to Aberdeen attorney Jeff Sveen for his lawyering. But will Sveen be able to represent Bollen in the fraud lawsuit filed yesterday by 35 Chinese EB-5 investors trying to get back the $18.55 million of their money that Bollen made go poof in Northern Beef Packers?
Consider these messy details:
- The Chinese plaintiffs are suing Bollen and his corporate entities SDRC Inc. and SDIF LP6, as well as the Governor’s Office of Economic Development, to reclaim investments they made in the second round of EB-5 funding for Northern Beef Packers in 2010.
- During that period, Bollen hired California firm Maverick Spade to help secure additional financing for NBP.
- According to Maverick Spade principal David Kang, securing that financing required coming to Aberdeen and cleaning up the utter mess that Joop Bollen and his partners had made of the finances and management of NBP.
- David Kang told reporter Denise Ross that Jeff Sveen was “one of Joop’s partners” during this time.
- Four weeks after running Ross’s interview with Kang, the Mitchell Daily Republic curiously retracted that statement at the behest of Sveen, who said he was not one of Bollen’s partners. (Ross quit the paper over this retraction of her accurate reporting of a statement made by interviewee.)
Jeff Sveen clearly assisted SDRC Inc. in its EB-5 activities in a capacity beyond legal counsel. This Chinese website documents Sveen’s presence in China with Bollen, SDRC Inc. partner James Park, and recruiter Joe Kim on April 23, 2008.
If Kang’s observation was correct—if Jeff Sveen was partnering in the business operations of SDRC Inc. at Northern Beef Packers and acting beyond the parameters of his attorney-client relationship with Bollen, his knowledge of business affairs at NBP would not be shielded by attorney-client privilege. And if Sveen could be called as a witness in this lawsuit, he would not be able to serve as Bollen’s attorney.
That possible conflict and loss of attorney-client privilege could explain why Sveen was so adamant about beating back Kang’s claim that Sveen was Bollen’s partner at Northern Beef Packers.
In related litigation, recall that Sveen is already representing Bollen in his defamation and breach-of-contract countersuit against the State of South Dakota, which is suing SDRC Inc. to obtain EB-5 documents and payment for legal expenses incurred by Bollen’s EB-5 activities. That battle could make their presence as co-defendants in the Chinese investors’ lawsuit prickly.
But note that Sveen’s Aberdeen law firm, Siegel Barnett & Schutz LLP, has enjoyed legal service contracts with the state. A quick check of the state’s contract database produces two contracts between Siegel Barnett & Schutz and the state: one to represent the state executive branch throughout Fiscal Year 2015 (capped at $50,000, the maximum for no-bid contracts), and another with the Department of Social Services to represent the South Dakota Board of Addiction and Prevention Professionals from January 26 to May 31, 2015 (capped at $19,000). The contract database shows no current contracts between Siegel Barnett & Schutz and the state, but the two contracts listed here were in effect while the state and SDRC Inc. were engaged in their initial legal wranglings over obtaining some compensation from SDRC Inc. for the costs of the Darley litigation. So last winter and spring, Sveen appears to have been defending his client Joop Bollen against the state even as his firm enjoyed contracts to represent the state in other matters. Hmmm… perhaps that’s why we don’t see any contracts for Siegel Barnett & Schutz active now.