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Chinese Investors Cite Dakota Free Press in EB-5 Lawsuit; State Calls DFP “Shaky”

I’m going to court! Well, the blog is… sort of!

Seth Tupper notices that Dakota Free Press coverage of South Dakota’s EB-5 scandal figures in an appeal to the South Dakota Supreme Court. On July 18, Sixth Circuit Judge John L. Brown dropped the state as a defendant from the lawsuit 35 Chinese investors have filed against our fair state and EB-5 czar Joop Bollen for allegedly luring them into investing in the doomed Aberdeen Northern Beef Packers project in 2010. Judge Brown said the investors can’t sue the state due to sovereign immunity and other considerations. The Chinese investors (known in the suit as “LP6 Claimants, LLC”) want the state Supreme Court to put the state back in the hotseat next to Bollen.

In his July 28 petition to the court, LP6 Claimants attorney Steven Sandven cites a May 21 DFP post to summarize the argument the Chinese investors make about the state’s responsibility for their dupage:

One of the advantages South Dakota’s EB-5 visa investment recruitment efforts enjoyed was that recruiters could tell investors in projects like Northern Beef Packers and the Iberdrola Buffalo Ridge II wind farm that our EB-5 Regional Center could claim the imprimatur of South Dakota state government. South Dakota’s EB-5 program wasn’t just another private profiteer; it was a reliable public agency, using the official state logo in its offering memoranda. Our EB-5 projects enjoyed loans and guarantees from the state. Foreign investors could be assured that the state government would actively monitor the EB-5 program and keep everything on the up and up. Our EB-5 recruiters could entice investors into Northern Beef Packers by touting the backing of Governor M. Michael Rounds via his overhyped and ill-fated South Dakota Certified Beef program. Governor M. Michael Rounds himself signed a letter to investors on his official stationery, under the state seal, inviting foreigners to invest in our EB-5 projects [C.A. Heidelberger, “Taking Notes from South Dakota, Chinese Recruiter Uses Trump to Recruit EB-5 Investors,” Dakota Free Press, 2017.05.21; cited in LP6 Claimants LLC/Sandven, Petition for Leave to Appeal Intermediate OrderLP6 Claimants v. South Dakota, Bollen, et al., 2017.07.28].

Special Assistant Attorney General Paul Bachand responded for the state on August 10 by telling the South Dakota Supreme Court, essentially, that I’m full of crap:

Plaintiff’s Petition alleges the State engaged in fraudulent inducement with no proof save citations to the Dakota Free Press online blog. The Dakota Free Press blog is neither a disinterested party nor is it a credible authority. It is most certainly a shaky foundation on which to attribute the type of scienter Plaintiff ascribes in its brief. More to the point, this Court should send a clear message that no online blog can impugn the wisdom of the Circuit Court’s decision which rests on clear legal authority [State of South Dakota/Bachand, State’s Response, LP6 v SD/Bollen, 2017.08.10].

Wow! And this was two weeks before I started picking apart Bachand’s defense of Melody Schopp and the state in the GEAR UP scandal!

There is far more to the LP6 Claimants’ appeal and the state’s counterargument than my little blog post. But check out Bachand’s modus operandi: he provides no evidence that Dakota Free Press is not a credible authority. (I will certainly admit to his claim that my blog is not a disinterested party: I’m as interested as the lawyers writing briefs here!) More specifically, Bachand does not refute a single claim made in the blog passage Sandven quotes nor any of the documented sources in my hyperlinks (which, alas, don’t show up in the written brief and which Chief Justice Gilbertson and his colleagues really ought to read). He just indicts the source and hopes no one asks about the underlying facts.

That’s the same M.O. Bachand uses on LuAnn Werdel in his GOAC/GEAR UP responses: cast Werdel as emotional and unreliable and hope that no one notices that he and the state haven’t refuted any of the claims Werdel has made about warning the state about unethical management of the GEAR UP program back in 2011.

I’m not going to court (though maybe an amicus curiae is in order?). But I do look forward to seeing if the South Dakota Supreme Court issues a formal opinion on the reliability of Dakota Free Press and whether that opinion has any bearing on the disposition of the state as a defendant in this EB-5 lawsuit. Either way, I’ll post any such decision in full here on the very interested and interesting Dakota Free Press!

Grammatical Postscript: I’m also interested in seeing whether the Supreme Court notices that “online blog” is an entirely redundant term… and whether anyone can refute that grammatical claim by showing me an example of an “offline blog.”


  1. o 2017-09-01 08:18

    “More to the point, this Court should send a clear message that no online blog can impugn the wisdom of the Circuit Court’s decision which rests on clear legal authority [State of South Dakota/Bachand, State’s Response, LP6 v SD/Bollen, 2017.08.10].”

    Maybe I’m a little too sensitive (Orwell’s 1984 is being discussed next door), but that is starting to feel a bit censor-ish/Big Brother-ish. I can understand, even respect an argument where they dispute the fact of what you reported (then offer counter evidence to dispute your point), but this language seems to deny even the ability to dispute.

  2. grudznick 2017-09-01 08:28

    Thou may not dispute!

  3. Porter Lansing 2017-09-01 08:49

    definition: imprimatur = Official Approval
    ~ Just because attorney Bachand says there’s no proof that the Chinese investors were sold on the investment through assurances that the great state of South Dakota was fully accrediting the deal and promising oversight means little.
    ~ It’s highly probable, observing past international dealings with Chinese nationals, that there are written documents to back up the syrupy sales pitch tossed by shady SoDak recruiters. Who in the real world takes a couple honyockers from the prairie at their word, without documentation? Not at $500,000 a shot.

  4. Donald Pay 2017-09-01 11:23

    Look, that legal response lacks any credibility. Your blog actually has a correct understanding of Chinese culture. Further, it is clear that Rounds, Bollen, et al., had a clear understanding of how to market this scheme to the Chinese.

    My daughter has spent about almost 12 years in China, and knows the culture well. Any investment project with a government imprimatur, especially the Governor’s explicit backing, is going to be given considerable weight by the highly educated Chinese who are wealthy enough to invest in an EB-5 project. That would likely be the clincher, if someone was on the fence about investing. It would seem to the Chinese like a very safe investment if a government was backing the project.

    This was state-sponsored fraud, and Rounds, Bollen, et al., should be in jail. The least they could do is to make the Chinese investors whole. Rounds had no problem paying off Lonetree investors, probably because his sister was involved in marketing that scheme. South Dakota taxpayers should pay up.

  5. Porter Lansing 2017-09-01 12:01

    Hear, hear Mr. Pay. Chinese investors live in a Communist country. They’re ultra-wary of every aspect of capitalism, don’t trust capitalists and verify above all else. Imprimatur was no doubt put in writing.

  6. mike from iowa 2017-09-01 12:38

    What the AG is saying is, it is basically China’s fault for not realizing how crooked South Dakota’s government was?

    I realize the investments were “at risk, but please, the only way these investments could’ve been more at risk is having the state officials hold the investors up with guns and just take the money. IMHO!

  7. Mr. Lansing 2017-09-01 13:13

    ~ Lawyer Bachand can always defer to the “useful idiot” defense when referencing Governor Rounds. After all, he’s the one that went to China to sell SoDak cheese without knowing that Chinese people can’t drink or eat milk products.
    i.e…. Lactose intolerance in adulthood is most prevalent in people of East Asian descent, affecting more than 90 percent of adults in some of these communities.
    The principal symptom of lactose intolerance is an adverse reaction to products containing lactose (primarily milk), including abdominal bloating and cramps, flatulence, diarrhea, nausea, borborygmi, and vomiting (particularly in adolescents).

  8. mike from iowa 2017-09-01 13:40

    an adverse reaction to products containing lactose (primarily milk), including abdominal bloating and cramps, flatulence, diarrhea, nausea, borborygmi, and vomiting (particularly in adolescents).

    Dangit, Porter, I thought you was listing adolescent Drumpf’s good points.

  9. Porter Lansing 2017-09-01 14:01

    Good one, Mike. :) As Don Pay’s daughter would probably say, trying to sell something that’s harmful to 90% of Chinese citizens is looked upon as more than a business pitch. It’s an insult and a loss of face (which idiomatically refers to Mike Round’s own portrayal of personal dignity and prestige). Insults such as these aren’t soon dismissed.

  10. mike from iowa 2017-09-01 16:45

    South Dakota’s wingnuts don’t care if they insult Chinese. The Chinese don’t vote in South Dakota.

  11. Rorschach 2017-09-01 18:34

    Bollen even brought Chinese to have their picture taken with Governor Mike Rounds. Of course they were selling the fact that this is the only EB-5 program run out of a state government office. Of course that was a primary selling point and the clincher to get people to cough up their money despite such high fees. There is the SD certified beef program that will be run through NBP, which the state itself has pumped money into. It’s all so well put together … you can’t lose. (right). Come meet the governor of South Dakota.

  12. 96Tears 2017-09-01 19:05

    Corey, you really should be a serious contender for the Pulitzer Prize for your peerless reporting on Mike Rounds’ corrupt administration, particularly with the EB-5 racketeering scam. Think about the trail of headlines starting with these three back in late October 2013:

    Mitchell Daily Republic – Brother-in-law describes finding Benda’s body
    October 25, 2014

    Pure Pierre Politics – Mystery enveloping Benda’s death
    October 24, 2013

    Sioux Falls Argus Leader – Former secretary of tourism Richard Benda found dead with gunshot wound
    October 23, 2013

    Here we are, four years later and the only person to get a mild slap on the hands is Joop Bollen.

    There has been some gutsy reporting from Bob Mercer and a few others, but nobody has kept citizens better informed about this shameful episode in South Dakota political history than you. The most disappointing voice in all of this has been the Sioux Falls Argus Leader which certainly had the reporting talent and the money to have kept this lawlessness front and center in the minds of its readers, and ended up pooh-poohing the entire scandal. I blame the Argus for rewarding Mike Rounds with a seat in the U.S. Senate instead of a Federal penitentiary along with his pals who were part of the gravy train.

    Oh, yes. The Argus’ gutless editorial board didn’t endorse Rounds. But then, even the editorial board knows its statements are infamously toothless and immediately forgotten.

    Someday, somebody is going to write a book about Rounds and his fleecing team. Recent revelations from the GEAR Up scam shows there is a pile of information in state offices that has yet to surface on the criminality in plain view that was apparently routine for Rounds’ circle of friends. When that book is written, folks will wonder how any state could be so stupid as to keep rewarding these crooks with their trust in the voting booth.

  13. grudznick 2017-09-01 20:07

    Mr. Lansing, are you informing me that there are like a billion people that can’t breast feed their babies like a normal human would?

  14. Tara Volesky 2017-09-01 20:57

    Cory, truce……you have done amazing investigating on EB-5 and Gear-up. I am not afraid to give credit where credit is due.

  15. Porter Lansing 2017-09-01 21:20

    No, Grudzie … Lactose intolerance is an adulthood onset. About the only ethnic group that doesn’t suffer from it are Germans Russians and Northern European countries. That’s why most of the world raises goats.

  16. grudznick 2017-09-01 22:04

    That’s amazing, Mr. Lansing. And good for the Chinese babies too, I guess. Do you know why I like all the goats I’ve gotten from you and others? Because goats are one of Satan’s favorite animals.

  17. Donald Pay 2017-09-01 22:12

    Porter, It’s not so much that there China has a “communist” government, or that “face” has been lost. China is ruled by the Communist Party, but there are precious few old-style communists in the party anymore. The Communist Party in China is more or less like the Republican Party in South Dakota. If you remember South Dakota had state-owned enterprises (cement plant and railroads), and this beef plant probably sounded a lot like many enterprises in China, which can be state-owned and controlled enterprises with investors from the private sector. The marketing of Northern Beef seems to me to be particularly aimed at those with experience in the upper middle and upper classes in China, who are very familiar with and may work for Chinese state-owned enterprises.

    China regularly executes people who engage in this sort of corruption. I’d advise Rounds not to be making any junkets to China.

  18. grudznick 2017-09-01 22:26

    Mr. Pay, did you know that the cement plant was rumored to be among the most corrupt enterprises ever in the South Dakota borders? Do you know why it was corrupt? I bet you do. Enlighten us, please, sir.

  19. Donald Pay 2017-09-01 22:30

    By the way, Cory’s article references the recent Kushner/Trump effort to use EB-5 in their projects. My daughter actually tipped off the NY Times and Walls Street Journal to an earlier Trump EB-5 marketing effort that happened last October, I believe, and several stories were written just before the election.

  20. grudznick 2017-09-01 22:43

    Your daughter and my granddaughter likely have much in common, Mr. Pay.

  21. 96Tears 2017-09-01 23:44

    Well, Donald, that brings us forward to today’s reality. Vlad Putin and the Russians clearly did quite a lot to help their pal Trump in destroying Hillary’s reputation and to suppress Clinton votes in many states, according to the newest information. This new reality puts new light on the alleged suicide of Richard Benda and the entire Rounds racketeering scam.

    I think foreign operatives have been much more active in our nation than what our government wants us to know. So if a punk state like South Dakota screws $19 million off of Chinese oligarchs, what makes you think the oligarchs wouldn’t do something about it?

    Or if a punk like Joop Bollen or some of his professional associates get nervous about Chinese oligarchs who got screwed out of $19 million might want to silence a weak link, maybe someone would pay the ultimate price as a sacrificial lamb, right?

    Or if someone on the Mike Rounds gravy train wants to silence someone who could be indicted for graft that would also implicate others, would they not have a motive to silence the lynch pin?

    So, considering the very, very odd method that our state’s officials declared Richard Benda’s death a suicide, does that not give you reason to wonder?

    This is the Pulitzer that the rag Argus Leader threw away out of cowardice.

  22. mike from iowa 2017-09-02 08:17

    Keep a close eye on wingnuts. They have been altering the narrative as the evidence grows toward conclusion. First it was no one in the campaign had contacts with Russian agents. Then it was HRC did it, too. Now they demand proof of collusion as the gold standard of criminal activity. Once collusion is proven the goalposts will surely be moved again. It is the wingnut way.

  23. grudznick 2017-09-02 08:23

    The officer of the court didn’t say you were “shaky”, Mr. H. He said you were “not credible.”

  24. Cory Allen Heidelberger Post author | 2017-09-02 08:27

    Grudz, unlike Pat, I have some sense of restraint in my headlines. I can only fit so much in one line.

  25. mike from iowa 2017-09-02 09:26

    Didn’t nearly 60 Koreans lose money on the beef plant? Or at least green cards?

  26. Donald Pay 2017-09-02 10:01

    Grudz, I had some run ins with the Cement Plant when I lived in Rapid City over air quality and tire burning issues, but I didn’t spend a lot of time digging into the cement plant’s governing structure, budget, etc. I never attended a meeting of the governing board. II’m not sure the public could sit in. ‘m not sure how open they were on open records requests because I never tried.

    But on environmental permitting, they asked DENR to withhold a lot of information as “confidential” due to trade secrets or some other reason. I always felt DENR and the Pennington County Air Quality Board bent over backwards for the cement plant. For example, the cement plant had a permanent seat on the Air Quality Board. Then you had the problem of the revolving door, which happened between DENR regulators and the cement plant.

    I expect that since the road builders and limestone operators controlled the Republican Party and were on various environmental boards, and probably on the cement plant board, there was little oversight.

  27. Cory Allen Heidelberger Post author | 2017-09-02 18:32

    O, that’s a fair read of the text as submitted. The state seems to be going beyond defending itself from a lawsuit and unnecessarily contending that the judiciary should never listen to any citizen’s statement posted online if it questions a decision of the circuit court.

    Of course, I haven’t been down to the courthouse to get Judge Brown’s ruling yet, so I haven’t had the chance to impugn the Circuit Court’s wisdom yet. I do recall, though, that I supported Judge Brown’s wisdom when he sentenced Annette Bosworth for her petition felonies.

  28. Anne Beal 2017-09-02 23:02

    The imprimatur of the state isn’t the same as surety. The state wasn’t backing or insuring the investments.
    Was any such guarantee stated or implied?
    As for snarky comments about Republicans and EB5, don’t forget that the Democrats were running the State Dept, for 8 years and then they trotted out that EB5 broker onto the stage of their national convention for a prime time speech. They’re really proud of EB5 at the DNC.

  29. Cory Allen Heidelberger Post author | 2017-09-03 07:29

    Anne goes for the what-aboutism red herring, but Anne, I have said on the record that South Dakota’s Congressional delegation, including Democrats, and a former SDDP chair were complicit in promoting EB-5. But they and the Obama Administration aren’t named co-defendants in the LP6 Claimants’ lawsuit. If the lawyers decide to add them, bring it on… but it will be hard to tie them directly and prosecutorially to the marketing efforts carried out by former state official turned private contractor Joop Bollen working with the full authorization of the Rounds Administration.

  30. happy camper 2017-09-04 19:05

    When you’ve given up all sense of impartiality you can’t call yourself a journalist and expect to be taken seriously.

  31. Cory Allen Heidelberger Post author | 2017-09-05 05:12

    I’m no more partial than the lawyers making the arguments. And Bachand has not shown that my open partiality equates to falsehood.

  32. grudznick 2017-09-23 18:44

    I think, Mr. camper, what Mr. H said at 19:05 is that he is not a journalist, he is a partisan representative. Journalists, the Argus aside, are impartial and not partisan hacks. Argus aside.

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