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SD Trusts Incur Less Building Overhead, Lack Local Economic Stimulus Power

Here’s another reason South Dakota’s trust industry is not the great economic development driver that the Republican lawyer/banker clique are pretending it is.

New businesses are good for the local economy because, among other benefits, they have overhead. A business usually needs a place to do business—a store, an office, a workshop, a studio. New businesses rent and fix up downtown storefronts, or they buy land and build new buildings. Self-employed contractors acquire more tools and trucks than their garages can hold, so they buy lots and put up steel barns. Even people doing doing business at home contribute to construction activity: our local lumberyards enjoyed a pandemic boom because lots of remote workers added office space to their houses or converted backyard sheds into remote work pods.

But many of the licensed trust companies on the Division of Banking’s list are mere paper tigers, taking up no real constructable, paintable, maintainable space. Going by the trusts’ listed addresses, those 102 licensed cash-concealers occupy only 39 distinct buildings. Here are the most popular locations with the number of trusts housed in various pigeonholes therein:

  • 212 South Main Avenue, Sioux Falls: 36
  • 401 East 8th Street, Sioux Falls: 11
  • 201 South Phillips Avenue, Sioux Falls: 5
  • 101 South Reid Street, Sioux Falls: 4
  • 140 North Phillips Avenue, Sioux Falls: 3
  • 300 North Dakota Avenue, Sioux Falls: 3

Those trusts aren’t building new buildings or even maintaining big busy offices with lots of people needing lots of desks and supply closets and break rooms and bubblers. They’re occupying mostly empty spaces providing little of the spillover economic boost we get from real businesses making real things and spending real money on real overhead. They are literal shells serving solely to help rich people continue to hoard their wealth, with a handful of tricky lawyers skimming some foam from the top.


  1. Porter Lansing 2021-10-07

    BostonGlobe – A trove of leaked documents confirmed that, for years, Lebanon’s politicians and bankers have stowed wealth in tax havens and used it to buy expensive properties — a galling revelation for masses of newly impoverished Lebanese, caught in one of the world’s worst economic meltdowns in decades.

    Schoenbeck says that if you didn’t help them hide stolen money, some other place would.

    Is that a satisfying reason to you in South Dakota for helping impoverish innocent victims around the world?

    Do you feel as innocent as when the Roman Catholic church was given amnesty in SD for child rape at Mount Marty Indian School?

  2. Donald Pay 2021-10-07

    Basically, you could have these trusts run by someone who lives in a van down by the river, but for the fact that the co-conspirators in the trust industry have to pretend they are upright citizens housed in an office building that the Legislators can drop by for their campaign donations. The various drug kingpins, authoritarian leaders, warlords and slimeball business tycoons who make up the bulk of the trade don’t want a lot of paperwork hanging around to trip them up, and that goes for the Legislators, too.

  3. Eve Fisher 2021-10-07

    The classic example is Paul Erickson (former Vermillion, SD Republican operative) and Maria Butina (the Russian spy who loved him and the NRA), who formed two LLCs which were obviously shelf corporations. Bridges LLC was set up in 2016, and Medora Consulting LLC in 2018 – both “located” in an apartment complex in Sioux Falls, both without any stated purpose or partners. And they certainly drove no economic development in Sioux Falls.

  4. Ryan 2021-10-07

    Cory it sounds like you rightly have a problem with folks owning ill-gotten assets, and apparently a problem with confidential and multi-generational wealth. I agree with you on the first issue. I disagree that confidentiality is problematic in personal finances. Finally, I believe there should be an estate tax with a high threshold of applicability, which you may or may not agree with, as a solution for the 1% “hoarding” their money from one generation to the next.

    Other than those distinct issues – what do you see as problematic with the trust industry, the trust laws, and your SD neighbors employed in the industry?

  5. O 2021-10-07

    Larry, thank you for the link. That is the closest I have come to an answer of how much does this trust industry add to the SD coffers. Even you link measures that potential income in a pool with some other very large contributors: the rest of the finance industry, insurance, real estate, rental, and leasing; in that light, I still have no real feel for what trusts put back in SD (except for the 500 jobs claimed by Sen Schoenbeck).

  6. O 2021-10-07

    If the trust locations are “phantom,” does that mean the 500 workers they employ are also not in SD?

  7. larry kurtz 2021-10-07

    South Dakota Republicans have their heads crammed so far into Frank Farrar’s colon they can all kiss Wall Drug’s Teddy Hustead on the lips in there.

    Bankster and former South Dakota Governor Frank Farrar has sat on Citibank and Wells Fargo boards. Elitism in South Dakota is Denny Sanford and Dana Dykhouse and careers in usury get your names on an underground lab, public buildings and a football stadium.

  8. larry kurtz 2021-10-07

    It’s not new that South Dakota banks have been laundering money for decades and a federal fix is moving beyond the drawing board.

    We all suffer high and hidden costs from this parallel legal system — paying more in taxes and getting less in government services. And by hyper-concentrating wealth, South Dakota locks away resources that could spark entrepreneurial innovation. Effectively, South Dakota is setting national policy. Ditch the existing estate tax and replace it with an inheritance tax on those who receive the wealth. Answer the GOP’s bogus “death tax” claims with a “silver spoon tax” — such as that proposed by Lily Batchelder, Biden’s nominee to oversee federal tax policy — that reins in windfalls to kids of super-wealthy family dynasties.

  9. bearcreekbat 2021-10-07

    A “trust” is merely a written agreement between the various parties to the trust, including the settlor, the trustee, and the beneficiary. The terms of the agreement are nothing more than paragraphs on paper until there is some sort of disagreement or controversy about the meanings of these words, in which case one or more of the parties will ask a court to decide the correct meaning of the contested words.

    In other words, a “trust” is nothing more than a written contract (although some trust relationships can be implied rather than written). The business of trusts, then, consists of people that advise, draft and enforce the trust provisions. Some folks merely draft “trust forms” and sell them to do-it-yourself consumers on line or by other means, in which case the consumer typically acts as the trustee and custodian of the trust. In other cases the parties might hire a business to carry out these functions. People that engage in this livelihood do need a physical space to work in, just as other financial or legal advisors do.

    The idea of “housing a trust” merely requires a drawer or file cabinet, or similar storage space that holds paperwork and enables interested parties to remove the papers and read them when necessary. The idea that a “trust” is some sort of independent entity that should be compared to physical businesses is based on a misconception of of the nature of “trusts.”

  10. O 2021-10-07

    bearcreekbat, first, thank you for taking time to help explain this over several posts. Am I wrong in how I see a trust also being like a bank in that it has terms for use, it has depositors, and it has holdings from those depositors? My interpretation is that the trust money is “held” in SD (but like any bank, that is a line on a spreadsheet — not physical cash on hand — and is invested in some way to grow the trust account). Trust assets are in SD.

  11. Mark Anderson 2021-10-07

    Well, maybe certain South Dakotans can bring down crime like Al Capone’s bookie brought him down. How secret can secret be? By the way, I always used to ask for the Al Capone room at the hotel in Miami Beach where he stayed, when we took our students there for Art Miami/Basel. I set that annual trip up, it was such hard work spending three days in Miami, gosh don’t know how I did it, but a jobs a job….However, they didn’t know which room it was.

  12. Cory Allen Heidelberger Post author | 2021-10-07

    Porter, if we didn’t make meth, someone else would. Might as well rake in the profits.

    Of course, meth labs play hell on property values, so I’m not sure that’s an industry we want to encourage for sustainable economic development.

  13. Cory Allen Heidelberger Post author | 2021-10-07

    Trust companies, then. The trust companies marketing South Dakota as a tax haven and writing these trust contracts aren’t generating a lot of economic development spillover, since they apparently don’t need a lot of independent office space. I wonder how many people actually work for these trust companies at the addresses listed above… or, in more local parlance, how many Sioux Falls Norwegians does it take to screw in perpetual wealth concentration?

  14. bearcreekbat 2021-10-07

    O, I would think a bank could certainly be used by the trustee to deposit or invest trust funds just as a bank could be used to do the same with funds not in trust. Likewise, a so-called “trust company” might be used by a trustee to invest and assist in administering the trust funds, which are usually referred as the “res” or “corpus.”

    A trust definitely has “terms of use” and a “depositor,’ who is usually called a “settlor.” The “holdings from depositors (i.e. settlors)” or trust “res,” whether cash, real estate, or personal property, is placed under the control of the “trustee,” who then can decide whether to hold it or deposit it in a bank, an investment firm, or something similar.

    Presumably, the contract or “trust document” sets forth the rules and agreements that are to be followed in handling the “res.” So regardless of where the “res” is actually physically located, my guess is that the law of the jurisidiction in which the trust agreement was entered into would govern whether to enforce claims of secrecy, distributions, and other matters. To the extent that there might be ambiguity about which jurisdiction’s law to apply, Absent some conflicting federal law I would also guess that depositing trust assests in SD, or using an administrator that has its principal place of business located in SD, would support applying SD law to a trust document executed in SD.

    Note that I have engaged in some speculation as I am not a trust expert, so I am open to being corrected by someone with more expertise if some of my comments are mistaken.

  15. bearcreekbat 2021-10-07

    Cory asks “I wonder how many people actually work for these trust companies at the addresses listed above.”

    Here is a link to information about the first address linked in Cory’s story.

    On its face this certainly doesn’t appear to be some sham business with little or no economic impact on SD. Under “Management Biographies” six individuals are identified with information about their backgrounds. To speculate that these individuals do not have assistants, secretaries, interns, janitors, suppliers, or other employee or community contracts, seems unrealistic. They also list branches of that company in several other cities and states.

  16. Porter Lansing 2021-10-07

    Should I relay anecdotal stories of the trust fund babies I became and still am close friends with?

    They’re typically a self conscious group that deal often with self esteem issues but not to the point that entertaining themselves is ever a problem.

    We found similar interests and common bonds.

  17. Ryan 2021-10-07

    bcb – correct again. to gain the benefits of south dakota being the “situs” or residence of the trust, there must be some trust property located in the state, there must be at least one trustee in the state with authority over that trust, and there must be some administration done in the state, such as preparing tax returns, making distributions to beneficiaries, or carrying on a business venture. as with most hot button issues, people read headlines and make assumptions that are nowhere near the reality.

  18. Ryan 2021-10-07

    yeah porter, your out of state anecdotal “evidence” is very valuable in this discussion. please generalize the lives of these totally real and not at all made up people you are close friends with. it will be instructive to the conversation and the public policy here in south dakota.

  19. RST Tribal Member 2021-10-07

    Well, well. The criminal wild Bill Janklow back in the early eighties was coming away from losing the attempt to sell Missouri River water to a private energy corporation to move Wyoming coal slurry 1,300 miles south to Gulf of Mexico ports. This was soon after chasing Indians all over the state from Wounded Knee, Wagner, Custer, and Sioux Falls. It was as if criminal wild Bill was writing the script for Dances with Wolves that came out a few years later.

    Criminal wild Bill had the beginnings of an inbred Republican’s legislation in his hands, he had the whole dumb Republicans state in his hand. If he wasn’t fighting tornados or Indians, he was looking for a quick dollar for his state. National attention was focused on the state and how it was well managed by its loose cannon governor. Of course, this attracted the attention of the credit card industry, which was hamstrung by-laws restricting how much interest they can charge. Criminal wild Bill got the new inbreeds Republicans in the legislator to do away with those pain in the arse restrictive interest laws.
    Next came a bug-eyed group wanting to park money in the state, lots of money. The friends and associates of criminal wild Bill saw opportunities abound for them, the hell with the rest of us. Since the 80s, the state’s trust laws have been tweeted, tucked, and molded by the inbred republicans to attract dollars otherwise not welcome anywhere in the world. Exposure would be too great anywhere except for good old South Dakota. Moral compasses are broken.

    Goodness, it’s painful just remembering and writing about this South Dakota history never to be taught, that brought the state to its current situation: Inbred Republicans. Inept governor. Mindless enablers in Washington.

  20. O 2021-10-07

    Although Cory, if we would go the meth production route, we have a ready-to-go ad campaign to pull out of mothballs. Did you factor that into your economic analysis?

  21. Yvonne 2021-10-07

    Oh Grudzy this is not the poor whom are coveting, here. Us commenters are, openly, exploiting those blind souls that will do whatever it takes to become and remain rich. It’s called mafia capitalism.
    Read on, brother.
    James 5:1-6 ESV

    Come now, you rich, weep and howl for the miseries that are coming upon you. Your riches have rotted and your garments are moth-eaten. Your gold and silver have corroded, and their corrosion will be evidence against you and will eat your flesh like fire. You have laid up treasure in the last days. Behold, the wages of the laborers who mowed your fields, which you kept back by fraud, are crying out against you, and the cries of the harvesters have reached the ears of the Lord of hosts. You have lived on the earth in luxury and in self-indulgence. You have fattened your hearts in a day of slaughter. ..
    The day of slaughter is a priohetuc term referring to the day of judgment.
    The corruptors’ heaped up material goods will indict them in the end based upon their self serving oppression of others.

  22. ArloBlundt 2021-10-07

    Yvonne…yep…James is quite a trip…He and Thomas are the apostles the Christ is recorded as calling “my brother” inferring a family relationship rather than a friendship bond….He’s the boss, or the most respected of the Proto Church leaders after the ascension..Paul reports to him, then hi jacks the church and sends the apostles off into the wilderness…Peter to certain death in Rome, Thomas to India, the others to places like the Crimea and Ethiopia..The book of James is a classic and unlike several other books credited to apostles….Martin Luther did not like it.

  23. Yvonne 2021-10-07

    Amen Arlo!

  24. RST Tribal Member 2021-10-08

    Yvonne, I have not picked up the Bible since I left the mission school in the early 70s but your comment about doing “whatever it takes” has me wondering if the leaders of the church have read something that said “ my children, for thee are here for me” giving them license to do what they did to thee children.

    Then the inbred Republicans provided cover with SD Codified Laws § 26-10-25 gives survivors three years to file suit from the time the abuse occurred or discovered their injuries resulted from the abuse. However, lawmakers changed the statute in 2010 to include a provision barring anyone over the age of 40 from recovering damages from anyone other than the perpetrator of the abuse. Survivors over 40 cannot seek damages from the church.

    Thanks for the Bible lesson. It brought to light how the inbred Republican enablers provide cover for the dirty deeds towards money, children, free speech and assembly. Maybe the SD jingle should be “hid our faces for what was done in too many places”.

  25. Yvonne 2021-10-08

    RST, hence, the purpose to bury the real history of the innocent so they can continue with the same injustice and if called on to be accountable, with the stroke of the pen, (laws enacted repealed or revised) as to their part in the injustice they arrogantly believe in their debased mind thus will remain hidden.
    For those god fearing believers amongst us, we know there’s a day of judgment when the omnificent one will no longer show mercy.
    Bless you, RST. All in God’s own timing for the Lord sayeth, vengeance is mine.

  26. Jackson 2021-10-08

    I have not been in the building to see if there is a physical Trust Company office or not. But when you Google 401 East 8th the only thing that comes up is a “Virtual Office” company. Do you happen to have a suite number on that on? I am only seeing #214.

  27. leslie 2021-11-01

    Bear, our thread has disappeared so I’ll use this one rather than search.

    Today SDPB2 TV aired a segment 3-3:15mst highlighting the difference between tax avoiders and crooks. Excellent. Looks like international news investigative reporters aren’t as concerned as you that SD Trust law may make either LOOK legitimate. The world laundromat in Sx Falls allows crooks to wash cash and deprive ALL the other nations not as rich as SD trust fat cats, from necessary tax income to provide for the needy etc. SD has likely become an accessory to these crimes.

    TX is about to get schooled on state sanctioned abortion loophole tom foolery. Unless Thune/McDonnell/Trump were successful in PACKING 3 political shysters on SCOTUS.

  28. bearcreekbat 2021-11-02

    leslie, that sounds like an interesting PBS story. I feel pretty dumb but I don’t really understand how someone can launder money by depositing it in a trust. If the trust is completely hidden then that would be no different than putting the cash in a storage unit like in Breaking Bad. The money isn’t made to look legitinate, it is simply hidden.

    And if illegal funds are put in a trust that actually invests the money and generates income and payouts to beneficiaries then laundering the payouts would still require actual paperwork, which no different than putting the funds in a bank and collecting interest. In both cases the principal invested still isn’t laundered. And if the income is reported as legitimate income then that calls unwanted attention to that unlaundered principal.

    My naive mind thinks of laundering in the sense of owning a fake business that reports generating more income than is actually earned, so that the extra unearned income can be reported as earned and taxed so it looks legitimate. then the fake earnings can be spent by the crooks without arousing suspicion. The car wash business in Breaking Bad is an example of that type of scheme where Walter and his wife simply pretended to earn a whole lot more reportable income than they were actually bringing in, making the proceeds from their meth sales look like proceeds from the car wash business.

    When it comes to trusts, I can’t dispute the reports of laundering money but I don’t really understand how using a trust makes that any more possible for the crook than a car wash or any other business that enables the owner to claim more income than actually earned by the business. In fact, a trust would seem more problematic. At least in a business like a car wash the laundered income appears on its face to be coming from fictitious customers.

    Anyway, I enjoyed our discussion.

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