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Noem, Jackley Demand Castleberry Pay Back $603K in Illegal Covid Relief Payments

Governor Kristi Noem appointed preschool owner Jessica Castleberry to Rapid City’s District 35 Senate seat in 2019. Now Governor Noem has launched a legal attack on Senator Castleberry that could cost the Castleberry over $600,000, if not her Senate seat.

Yesterday the Governor released three letters, one that she sent Tuesday to Attorney General Marty Jackley concerning Senator Castleberry’s receipt of $603K in coronavirus relief funds for her Little Nest Preschool in 2020, one that Jackley sent on Wednesday to Noem in response, and one that A.G. Jackley sent to Senator Castleberry on Wednesday.

Noem’s letter alleges that Senator Castleberry violated the law and the state constitution by taking money that she voted to appropriate.

The Department of Social Services recently discovered apparent violations of S.D. Const. Art. I, § 12 involving Senator Jessica Castleberry’s receipt of COVID-19 federal stimulus funds. This letter is a formal request for your investigation and enforcement of this constitutional provision, which may include disgorgement and other penalties.

Based on public records filed with the Secretary of State, the Senator is the owner of Little Nest Preschool, LLC ni Rapid City, SD since its organization in 2010. Beginning ni 2020, Little Nest Preschool applied for and received COVID-19 federal stimulus funds totaling, what is believed to be, over $603,000.

Payments were found by Department fiscal staff who recognized the Senator’s name on arecent grant application for Little Nest Preschool to receive another $4,000. At that point, further review into Little Nest Preschool turned up over a dozen payments since 2020.

The Senator was appointed to a vacant seat in the Senate of the state legislature in 2019 and continues to serve today. These federal stimulus funds where appropriated by various General Appropriations Acts that Senator Castleberry voted on in 2020 Special Session (HB 1001 and SCR 601), 2021 Regular Session (SB 64 and SB 195), 2022 Regular Session (HB 1340 and SB 60), and 2023 Regular Session (SB 210).

The South Dakota Constitution prohibits a state legislator from having a direct or indirect interest in a contract authorized during their time in office and up to one year thereafter. See, S.D. Const. Art. III, § 12. The South Dakota Supreme Court strictly construes this prohibition and said that this provision “precludes a current state legislator from contracting directly or indirectly with the State to receive funds from [COVID-19] grant programs.” In re Noem, 950 N.W. 2d 678 (2020). The Supreme Court could not have spoken more clearly or on point to this issue. The Senator has a personal and ethical obligation to avoid conflict of interests. The Senator also swore an oath to support the state Constitution. While the ethics of this malfeasance may be resolved by the Senate body itself, the multiple alleged constitutional violations are within your jurisdiction to determine and your duty to enforce. For a century, the Supreme Court has declared that such contracts are null and void. Supporting documentation will be forthcoming separately for the Department.

In addition, while SDCL 5-18-17 through 5-18A-17.6 does not ordinarily apply to members of the Legislature because members are already bound by the state Constitution to not self-deal, the subrecipient grant agreements include a provision that references these conflicts of interest statutes. Please review the content of this provision in your investigation as the State may have a breach of contract claim which is is your duty to prosecute as well [Gov. Kristi Noem, letter to A.G. Marty Jackley, 2023.07.25].

Jackley responded to Noem the next day saying he agrees: Senator Castleberry took coronavirus relief funds, and Article 3 Section 12 says Senator Castleberry can’t. Jackley thus sent Castleberry this nastygram telling her the contract granting her that covid money was (citing the 2020 South Dakota Supreme Court opinion Noem requested and mentions in her letter) “wholly illegal, void, and against public policy, and cannot be enforced in whole or in part on any theory of any kind.” Jackley gives Castleberry until high noon her time on Monday, August 7 to repay $603,219.79. If she doesn’t cough up the coronavirus cash, he says he’ll take her to court.

As this blog reported in October 2020, some legislators, including Castleberry’s Senate boss Lee Schoenbeck (R-5/Lake Kampeska) groused about having to give up six-figure welfare checks for their paltry low-five-figure Legislative salaries. Evidently Castleberry felt grousy enough that she found a lawyer who would contradict the Supreme Court:

The senator told South Dakota Searchlight in an emailed statement that she hired independent legal counsel about her company’s eligibility to receive federal grants through the state.

“After consulting with legal counsel, I believed my company was eligible,” Castleberry said. “Upon several occasions, I communicated directly and transparently with DSS staff regarding grant applications. I am committed to resolving the issue with the state and will work with them to ensure I acted in compliance with the state constitution” [Makenzie Huber, “Rapid City Senator Accused of Illegally Accepting $600,000 in Covid-19 Relief Funds,” South Dakota Searchlight, 2023.07.27].

I look forward to hearing Castleberry’s counsel explain what the state Supreme Court got wrong in 2020.

The Governor has been selective in tackling Legislative conflicts of interest. Another Rapid City Senator, Helene Duhamel from District 32, holds down a job with the county even though that job violates Article 3 Section 12, since the county budget is made possible by state dollars on which she votes. Representative Gary Cammack (R-29/Union Center) has made money on state contracts and gotten no public keelhauling. But the party machine flagged Representative Kevin Jensen (R-16/Canton) for apparent contractual conflict of interest when he dared challenge Noem’s favored candidate for party chairman, Senator John Wiik (R-4/Big Stone City).


  1. Curt 2023-07-28 08:07

    Little Nest? Little Graft? Lotta Graft?

  2. jerry 2023-07-28 10:30

    Wow, when you take a look at the list of business who received Covid 19 funds, it’s a who’s who of republican donors. That shouldn’t be surprising as these are business people. Castleberry did something that NOem is upset about. Maybe she got the same pair of shoes that the queen has or gave Lewandowski a smile. Some burr got under her petticoat that is for sure. NOem gets subsidies for her farm and insurance business, so why doesn’t Marty come down on her? Pretty easy, just go down the hall.

  3. bearcreekbat 2023-07-28 10:56

    At first glance it seemed that perhaps Castleberry created a seperate legal “person” (remember Citizen’s United) that contracted to receive these COVID-19 funds, but the prohibition’s inclusion of the term “indirect interest in a contract” seems to negate the viability of that approach since Castleberry would have at least an indirect (if not direct) interest in that company’s (i.e. seperate legal person) contracts with the State. Indeed, it also raises a question about what other state officials, such as the excellent question jerry asked about Noem’s farm and insurance interests, might have had a “indirect interest in a contract” of some business or company receiving COVID-19 dollars. Indeed, wouldn’t just owning stock in any public company constitute an “indirect interest” in theat company, if not a “direct interest?”

  4. 96Tears 2023-07-28 11:15

    The AG’s and Governor’s offices have used S.D. Const. Art. III, § 12 like a political blackjack to whack Democrat legislators, sometimes to a ridiculous extent. One legislator was targeted for serving on a cooperative board of directors whose scope included an ethanol plant. Because ethanol received subsidies, the AG’s office said, the legislator was in violation of S.D. Const. Art. III, § 12, even though the cooperative gained to profit, not the legislator. The legislator laughed that one off and the AG dropped the shenanigan.

    Castleberry’s case is a lot clearer, as is Helene Duhamel’s (why is she pandering the county? I thought the Duhamel clan was very wealthy.). The same goes for Gary “hiccup!” Cammack.

    Of course, we in South Dakota just sit and watch as Kristi Noem’s family got $600,000 in COVID relief grants and she “borrowed” another $5 million in COVID relief funds to put her campaign face on tourism ads placed in media markets that would help her national campaign objectives.

    Another day in South Dakota and with the selective righteous indignation of its elected poobahs.

  5. P. Aitch 2023-07-28 14:08

    Thank you, Governor Noem. “We The People” of this United States of America have better things to spend $600K on. And when it’s returned enclose a thank you letter for the roads and bridges being repaired by Joe “Steady” Biden.

  6. All Mammal 2023-07-28 15:40

    Senator Castleberry was one of the spazzes who testified at the Rapid City board meeting for the Hillsdale Social Studies standards. She condescendingly said she cannot imagine why anyone would possibly not embrace the new standards. She said she couldn’t believe how anyone could possibly complain about the new standards. And so on. She sounded like a snob who couldn’t possibly figure out there are people who actually know how to think for themselves.

  7. Nick Nemec 2023-07-28 16:08

    A few years back didn’t Noem feature Castleberry in a State of the State speech praising her for something and having her stand up to receive the applause and adoration of the entire legislature? What was that all about?

  8. Linda 2023-07-28 19:14

    Here is the link for the state of South Dakota, for those who received PPP loans.
    It is really eye opening.

    There are so many ‘businesses’ who claimed to have been shut down, due to the Pandemic, yet they were not. Farms, ranches, small construction firms, car dealerships did not close, yet they received large payments. You can also see the banks which received those payments. … those same banks promoted the program and received fees for processing the applications.

    This was such a scam.

  9. larry kurtz 2023-07-28 20:12

    In my home state of South Dakota the Republican governor chose to infect thousands (some reports say millions) with the Trump Virus putting its entire population at risk. Kristi Noem’s biological war on her own constituents created dire circumstances sending nurses out of state, forcing people over 65 into the workplace and driving the closure of nursing homes.

    Without butts in the pews the Rapid City Diocese even received almost $400,000 in aid from the Trump Organization but it was too little, too late according to President Paula Langteau at Presentation College in Aberdeen.

  10. Tim 2023-07-29 08:54

    It sure would be interesting to find out what Castleberry did to piss the snow queen off. That’s about the only thing that would get Noem to get in the way of a fellow republicans grift.

  11. jerry 2023-07-29 10:26

    Ms. Linda provides a public service with this list of interesting sorts who got millions here in South Dakota. Check it out and see how some of your neighbors did and why they seem so trumpy.

  12. All Mammal 2023-07-29 11:32

    Plenty of recipients appear multiple times on the list, with llc or inc added. That kind of liquid should have been flowing down the streets.

  13. Bonnie B Fairbank 2023-07-30 07:07

    I wondered the same thing, Tim. I always rejoice when Reptilians cannibalize each other, so this cheered me up to no end. How does a preschool owner qualify for $603,000+ coronavirus relief funds, and what did she do to the Snow Queen of covid 19?

    Ahhhh, to be a fly on the wall in Jessica’s “independent legal council’s” office while they plan their strategery (George Wanker Bush.)

  14. Curt 2023-07-31 17:30

    Dakota Scout is writing that Sen Castleberry has decided not to run for re-election in 2024, and may consider resigning before the 2024 Session.

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