Last updated on 2018-10-12
I’d love to write a novelization of the South Dakota EB-5 scandal, but I feel like I have to wait until every single strand of this sordid scheme unravels and is laid bare.
The latest strand wrenched from this corruption-soaked crony tapestry is the Deadwood Mountain Grand Casino. The conversion of the old Deadwood gold-mining slime plant (file under “Can’t Make This Up”) into a gambling and concert hall was the only West River project and the only tourism project funded by foreign investors (in this case, 65 Chinese investors buying their green cards for $500,000 a pop) in South Dakota. The casino, which opened in 2012 and whose ownership includes Mike Rounds crony Ron Wheeler, is cited by Rounds and Republicans as one of the great successes of the EB-5 program.
Apparently the Deadwood Mountain Grand Casino’s success now depends on getting out of paying back its EB-5 loans. According to AP’s James Nord, former EB-5 czar Joop Bollen, who still owns the shell corporations that issued hundreds of millions of dollars of loans to EB-5 projects on behalf of the state of South Dakota, is suing casino ownership group Tentexkota LLC and its members for reneging on their $32.5-million loan. Reading the federal civil complaint, Nord learns that the casino owners were supposed to pay back their loan by April 2015. Bollen extended their deadline to May 2016, when Tentexkota defaulted.
Tentexkota, which still includes Wheeler along with country singer W. Kenneth “Big Kenny” Alphin, are suing back, saying Bollen forced them to sign illegal personal guarantees of the EB-5 loans:
…A Deadwood Mountain Grand investment group known as Tentexkota LLC began seeking an EB-5 loan in 2009. The lawsuit alleges that Bollen “represented to Tentexkota that personal guarantees were required to receive and secure EB-5 funds.”
Members of Tentexkota subsequently signed personal guarantees, apparently unaware that EB-5 regulations require money invested in the program to be “at risk.” If a foreign investor is guaranteed a return, the money is not at risk and is not a qualifying EB-5 investment, the lawsuit says [Seth Tupper, “Deadwood Mountain Grand Investors Sue Former EB-5 Director Bollen,” Rapid City Journal, 2016.11.11].
Tupper reminds us that the Deadwood Mountain Grand also received a $1.7-million grant from the City of Deadwood Historic Preservation Commission in 2007 to begin construction.
The Deadwood Mountain Grand last month announced a plan to expand by building a 103-condo hotel on McGovern Hill. The new private hillside chalets, all with one-car garages, are supposed to attract (in the words of casino managing partner Marc Oswald) “a certain caliber of people… international people who can bring a lot of energy to this town.” Perhaps the original international EB-5 investors can get special discount rates.
McGovern Hill—that reminds me: both sides are being represented by prominent Democratic lawyers. Tentexkota has enlisted former legislator and 2010 gubernatorial candidate Scott Heidepriem to represent them. Representing Bollen is unsuccessful District 33 Legislative candidate Haven Stuck. (Ah ha! Now I get it—GOP corruption keeps Democrats from winning elections, because Democratic leading lights are too busy writing briefs for those corruption cases!)
Permit me one bit of wild speculation, a preview of how the Deadwood chapter figures into the great South Dakota EB-5 novelization:
- Like the Veblen Dairies and Northern Beef Packers, the Deadwood Mountain Grand Casino is an unsustainable project propped up by easy EB-5 money.
- The casino owners need to save money for expansion, so they decide to squeeze the most squeezable of their creditors, the scandal-hamstrung and friendless-in-Pierre Joop Bollen.
- The state encourages old pal Ron Wheeler and associates in this lawsuit, hoping to turn up the heat on Bollen.
- Bollen, now facing state criminal charges, civil lawsuit, and more lawyer bills, decides to squeeze back by suing the state’s pals in Deadwood (and Tennessee—sorry, Big Kenny!).
- The state gets the casino owners to respond by alleging EB-5 misconduct by Bollen in their countersuit, thus maybe reinforcing their case to USCIS that all the problems in EB-5 were Bollen’s fault and showing that the state had no part of the corruption (although that’s a weak line, serving more to reinforce USCIS’s contention that the folks in Pierre who should have been supervising EB-5 weren’t supervising and can’t be trusted to play with EB-5 money ever again).
EB-5 didn’t win us Democrats a single seat in 2014 or 2016, so I won’t predict that EB-5 will finally come a cropper for the Republican regime and allow Democrats to wrest power from the Friends of Mike. But three years after the suicide of Mike Rounds’s former economic development chief launched this scandal into popular awareness, EB-5 continues to reveal the depth of scummery in South Dakota’s economic development schemes.
You’d think people who are so worried about immigration reform would have more to say about this? #Hypocritical
*this fast track to citizenship
Reasonable point, Chip… but rich immigrants can make out political rhetoric turn on five million dimes.
You think Heidepriem and Stuck write their own briefs?
Benda was a whistleblower, that had enough and knew they were going to try to pin it on him. He was murdered, someone prove otherwise. Show us the autopsy and lets see the interviews of the US Marshalls that were on scene and on station. Until then, we only have a next to be appointed governor, who has a lot on the table, saying otherwise.
We elected a dead guy in South Dakota so why can’t an incarcerated guy like Joop win the case? Joop will win his case with the state as well. He knows all the nooks and crannies that would put the spotlight on the rest of the cockroaches. Everything is possible here. Rich guy pie fight, defended by moderate moderators. This should be televised as more reality tee vee. We eat this stuff up while knowing that the game is rigged while our taxpayer dollars have vaporized into the pockets of corrupted politicos.
Cory, do they not think that American citizens would like to invest? Why are we taking these opportunities away from American citizens? ;)
Chip, a lot of American investors wouldn’t come within a hundred miles of this kind of corruption, foreigners on the other hand are much easier marks.
Why are we taking these opportunities away from American citizens? ;)
Thanks to wingnut fiscal policies of the last 50 years, 99% of Americans can’t afford investments. Or food, clothing, housing, heat, children, insurance, etc.
It also underscores the abject complacency of the South Dakota voters, if indeed they possess any awareness of this scam. Which I doubt.
The cattle-like herd mentality is…uninspiring.
The beef plant provides a explanation about investors. It was such a poorly conceived and executed plan that no one would invest in it. The country could not even find buyers for the TIF bonds it issued for the plant. The status of the TIF bonds has never been revealed during the bankruptcy proceedings for Northern Beef Packers.
South Dakotan’s think the Democrats did it. They only think of those pesky colored guys coming after their white womens and Muslims and stuff. Keep them poor just surviving while blaming there plight on the Democrats works wonders. When this stuff fails now, it will be ______________ fault for obstructing. Tax and spend while you pay your tax to keep the corruption going, good gig.
I for one never understood why a casino would be a good place for EB-5 funds, or would even qualify. Is there any data that shows that the addition of another casino in an already saturated and mature gambling market would increase economic activity?
Or doesn’t that matter?
Yeah, as a matter of fact there is some data Mr. Nemec, it is the data of how a skilled manipulator beats the odds of a casino and collects all the money. http://www.usatoday.com/story/money/2016/10/10/trump-taj-mahal-closes-after-years-losses/91845566/
You don’t suppose do you that when Donald Trump talks abut ‘draining the swamp in Washington, D.C.’ he is talking about the corruption of Mike Rounds?
On the other hand Trump probably can’t even spell EB-5.
“On the other hand Trump probably can’t even spell EB-5.”
LOL RC, you win the internet today, funniest thing I’ve read all day.
Nick, all that mattered was that the project be able to create 10 jobs, including those magic indirect multipliers, per investor for two years. No EB-5 project has to submit a plan for long-term job creation and retention. Since the casino opened in 2012, their obligations to their EB-5 investors are long gone.
Don’t forget, Roger: Trump is trying to cash in on EB-5 right now in Texas:
http://www.dallasnews.com/news/2016-presidential-election/2016/10/21/proposed-austin-hotel-project-ties-donald-trump-contentious-immigrant-investor-program
…and back in March in New Jersey:
http://www.bloomberg.com/politics/articles/2016-03-07/trump-tower-financed-by-rich-chinese-who-invest-cash-for-visas
Trump will likely order A.G. Giuliani to shut down any investigation of EB-5… or better yet, he’ll turn the screws on other Regional Centers to ensure Chinese investors are funneled toward his own projects.
What happened to the 粘液 (Chinese word for slime)? When living in Central City we used to drive up to Lead and take the back road (next to the slime creek oozing from the plant) down to Deadwood, when traffic was bad. I remember Homestake, like Coors used to do in Golden, just paying the yearly federal fine instead of trying to clean it up. Nothing prettier then the trees changing colors next to a five foot wide creek of slime. :)
Mr. Lansing, I cannot speak Chinese like you nor do I have your experiences with slime, but are you thinking you were driving on that road that Santa takes?
I can’t remember…can someone help me figure out what the current total count of missing $$$ is in the whole EB-5 scandal?
I always thought the saga would best be portrayed as a campy Broadway musical, like “Best Little Whorehouse in Texas,” or a rock opera. Work in the fact that South Dakota has been a pawn of GOP establishment politics in D.C. since pre-statehood and cap it off with the coronation of the most corrupt SOB to become Governor and then a U.S. Senator while on the run from an obvious RICO case. The chorus would be sung by sycophant editors and political columnists at the Sanford Leader. How about a soliloquy from the Attorney General about whether it’s smarter to pursue evil or his political ambitions. Between scenery changes, go back to the shelterbelt in Charles Mix County with the different versions of what happened between Richard Benda, a 12-gauge shotgun, a tree and a twig and possible “others.” What a madcap enterprise this could be!
It couldn’t be more disrespectful and tasteless than the reality that the man at the middle of this racket and crazy pilfering was given permission to replace Tim Johnson as our U.S. Senator.
Just wondering, if the Republicans get their way and convert ObamaCare to state block grants, will SD let Joop run that program, too?
96 tears, good plot lines because you can read the script on this blog. Sure as hell won’t find much in the papers though. Yes, Richard Benda was hit because he was going to blow the whistle on this group of outlaws. Benda knew that the idea was to pin the whole thing on him and figured it out once he got the check from the governors office. He had been around this group long enough to know that he was the fall guy. The only way out for him was to talk to federal officials about what he knew. Senator Larry Pressler was correct, Richard Benda was murdered maybe in a shelter belt or maybe elsewhere. That is where the mystery deepens on your saga 96Tears. Richard Benda could have been murdered in many places and then taken to this spot. The players know the rest of the story.
Jerry, we agree 100% that Benda was killed to keep him quiet! I worked for 15 years in an Emergency room and Never even heard of anyone committing suicide by shooting themselves in the stomach!!!!! Why has the case been “Sealed”??? South Dakota sounds like a Pit of corrupt Low Life!!! Why do people keep re electing these kind of people to lead us??? Are we that Stupid? or, do we just Not Care as long as the $$$$ keeps coming in?
SweetPea, what makes this state so unique is our demographics. We are a state that about one half of the land is either Indian Reservations of Bureau of Land Management or State owned property. The status quo gets to keep control of the lands through lease agreements and the like by a few well placed individuals. The cost of the leases is minimal so even in down markets for commodities, there are still profits to be made.
In order to keep the status quo, you will see incidences of racial pressure and downright skulduggery against the Indians for a profit by corruption to get federal money. Big money is poured into races to keep the status quo as indicated by the few patrons that invested about a million bucks in a governors campaign that never left the ground. South Dakota’s media market is cheap so a few thousand bucks here and there, really gets the word out. On top of that, the small weekly papers are obliged to post the propaganda of the senators and the lone house member that are read completely to those without much other media outlets about the great things they have done against the tyranny of government. In other words, if not for them, the coloreds would be after all the womens.
So, regarding Richard Benda, the weak media parrots the talking points given to them by authorities and there you go, a murder changed to a suicide with no further proof than that of perhaps, a corrupt politician that had a lot to loose by saying otherwise. Simple stuff that just keeps going,
SWeetPea, I’ve been an EMT for 15 years, 3 suicide total calls, all shots to the head…. if our experience isn’t enough people could google it….I cannot fine stomach shots anywhere….there is an isolated case of stomach stabs but looks like drugs and alcohol were involved, Benda tested clean if I remember correctly
$600 million.
Shouting Murder and DEMOCRAT lawyers is just like screaming 4 bengahzi Murders & EMAILS. Conspiracy theories should best be left to fringe Groups Like Those Electing Trump.
I Prefer Unspun Facts
http://cis.org/north/south-dakota-loses-120-million-eb-5-funds
From 2014 Center for Immigration Studies
Former candidate for governor and GOP sweetheart says that GOAC was all over this to make sure no corruption happened. Seriously, no one in the GOP saw this as a potential for corruption.
What went wrong? How come no one from the GOP addresses this? Wait…what? Never mind.
I expect Mayor Heuther will explain much.
To me, one very troubling lack of action seems clear, where the hell was the United States Attorney for South Dakota, Brendan Johnson?