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Castleberry Resigns, Must Repay State $500K for Violating Constitutional Conflict-of-Interest Clause

What’s the punishment for taking an illegal state contract in violation of Article 3 Section 12 of the South Dakota Constitution? Paying back the money, with interest, and resigning immediately, say Attorney General Marty Jackley and, as of yesterday, former Senator Jessica Castleberry:

State Sen. Jessica Castleberry, R-Rapid City, will make $2,400 monthly payments over a span of 20 to 30 years to repay state government, with interest, for pandemic relief money she accepted in alleged violation of state law.

Attorney General Marty Jackley announced details of the agreement Thursday at a press conference in Pierre. At about the same time, Castleberry announced her resignation from the Legislature in an email to the media [Joshua Haiar, “Legislator Resigns and Agrees to Repay Nearly $500,000, Plus Interest in Pandemic Relief Funds,” South Dakota Searchlight, 2023.08.17].

"Love My Gov! Grateful for a Governor that trusted the people and respected our rights!" Senator Jessica Castleberry, FB post, 2020.09.17.
I’ll bet Jessica could make at least her first monthly payment by auctioning that t-shirt. Senator Jessica Castleberry, FB post, 2020.09.17.

According to the settlement posted by the Attorney General yesterday, Castleberry will write the state monthly checks for $2,309.94 until she has repaid $499,129.79, about 83% of the $603,229.79 in coronavirus relief funds that her Little Nest daycare center received. The state is forgiving about a sixth of Castleberry’s CRF, because the money didn’t benefit Castleberry herself but went to parents in need not serving the Legislature:

$499,129.79 went directly to the benefit of Castleberry and her operational costs; the balance of $104,100 was directly credited to the benefit of “income qualified” parents. Thus, in Castleberry’s case, $104,100 did in fact arrive where Congress intended it to arrive, in the hands of income qualified parents and their children, and was not part of the funds directly benefiting Castleberry and her costs of operation.

Castleberry did in fact use the portion she received, $499,129.79 for a variety of DSS approved purposes, including wages, operating costs, rent, utilities, facility modifications, and other uses as contemplated by Congress in the stimulus package known as CRF. Castleberry’s expenditures of the portion she received, were regularly reported to DSS, and in many cases expressly approved by DSS prior to the expenditure. The investigation did not reveal any abuse in expenditure of funds, and all funds were spent for DSS approved purposes; nonetheless the State concluded Castleberry could not receive the funds under Article III Sec. 12 due to her status as a State Senator [Chief Deputy Attorney General Mark Barnett on behalf of the State of South Dakota, settlement agreement with Jessica Castleberry, 2023.08.17].

The settlement did not require Castleberry’s resignation, nor does it require her to stay out of daycare. But she likely can’t afford to remain in the Legislature, because (a) she was naughty, and no one wants a naughty Senator, and (b) she’ll need to put in extra hours running the daycare to cover this big new monthly expense of paying her penance for violating the Constitution. (Maybe she can get the lawyer who she claimed told her she could legally take the CRF contract to chip in.) Per the settlement, Castleberry can even resume seeking state contracts once she has been out of the Legislature for a full year.

We now eagerly await similar settlements with and resignations from Representative Roger Chase, Senator Helene Duhamel, Senator Randy Deibert, Representative Gary Cammack, and Lieutenant Governor Larry Rhoden, all of whom have been accused by the right-wing legislators of the South Dakota Freedom Caucus of the same violations of Article 3 Section 12 that have cost Jessica Castleberry significant financial freedom and her seat in the Legislature. If Senator Lee Schoenbeck is right about more conflicts of interest just waiting to come to light, we may see a whole new Legislature when Session opens in January.

37 Comments

  1. Nick Nemec 2023-08-18 06:41

    So in about 20 years she will be square with the state? Boy, what a harsh restitution deal.

  2. sx123 2023-08-18 06:47

    I’m still trying to figure out what she did wrong if funds were regularly reported and approved.

    The conflict of interest is clearly BS as nearly everyone now does business with the state.

  3. Cory Allen Heidelberger Post author | 2023-08-18 06:51

    I’m still trying to figure out the harshness, Nick. When folks owe the state money because of illegal activity, do they usually get 20-year payment plans? Do we ever say, “pay it all now or go to jail”?

    I will say that I’d find it awful to be stuck with a $2,400 payment to the state every month for the rest of my working years. That’s more than my mortgage and car payment together!

  4. Cory Allen Heidelberger Post author | 2023-08-18 06:55

    SX, it’s all constitutional. Yes, daycares could get CRF funds to cover their operational costs and salaries. But the money was authorized by the state, and legislators voted on that funding, so legislators can’t take contracts funded by their votes, even if they otherwise execute those contracts and use those funds perfectly legally.

    Suppose you steal my car. Maybe you don’t speed or run drugs across the border or break any other laws while driving my car. But the way you acquired my car in the first place was illegal, so you’re still going to jail, or at least giving me my car back and paying for the gas you burned.

  5. Gus Middendorp 2023-08-18 06:58

    what about every farmer that takes Gov’t money and serves in the legislature?

  6. sx123 2023-08-18 07:33

    Not sure it’s worth the hassle being in the legislature and then this makes it actually risky to be.

    I don’t know her, never met her, but just saying… I could understand the outrage if she was just pocketing the money but it looks like she used it for what it was meant for.

    That monthly payment will suck and she probably wishes she never signed up to be in the legislature now. Lesson Learned: don’t take govt money during a pandemic.

    I’m just an armchair quarterback with almost zero knowledge of the details.

  7. Nick Nemec 2023-08-18 08:15

    Color me heartless but she did get the money, unless 100% of the money directly replaced income caused by loss of daycare kids due to the pandemic, she got more income than she would have otherwise. Some of it should still be in her accounts, unlike her daycare ladies I doubt she is forced to live paycheck to paycheck. Is this agreement by the AG on behalf of SD taxpayers with Castleberry personally or with her daycare providing entity? Is this obligation dischargeable through bankruptcy? It is time for Jessica to step up and get this paid off as soon as possible, if for no other reason than to demonstrate contrition. Sell the house and find cheaper diggs, sell the late model car and get one 15-20 years old, take a second job working a gas station register and a third mowing lawns. Or maybe expand the daycare business, by all accounts quality daycare is hard to find in SD.

  8. Joe 2023-08-18 08:33

    What was the application process? Wasn’t there some type of safeguard in place to make sure the state didn’t give money to someone who wasn’t eligible? A simple application which lists occupation and a question about working for the government or government entity could have helped avoid giving her the money in the first place. Ignorance of the law is no excuse but it feels like the process was to hand out cash quickly and not really ask too many questions.

  9. larry kurtz 2023-08-18 08:38

    Republicans punishing Republicans makes me happy.

  10. jerry 2023-08-18 09:01

    So when do we find out about the rest of these lawbreakers? I especially want to see Helene go down for all of her bullpuckey. Rhoden too would look good resigning and paying back. Highly unlikely as both are gal pals of NOem.

  11. Ben Cerwinske 2023-08-18 09:09

    Nick Nemec- “daycare ladies”…I take umbrage at your erasure of men like me :-)

    sx123- I see what you’re saying about risk. However, it seems like it would only be financially risky (in the sense you used it) if you’re a business owner. Owning a business seems like a de facto requirement for serving and maybe that’s the problem. If I were to serve it would only be financially risky in the sense that it would be financially difficult to run an effective campaign in the first place and then be able to afford to serve if elected.

  12. Nick Nemec 2023-08-18 09:32

    Ben, I apologize and actually thought twice about using that term but it is the term my own kids used to describe the daycare workers when they were in daycare. I do realize a small minority of daycare workers are men but the vast majority in actual direct care jobs are women.

  13. Ben Cerwinske 2023-08-18 09:39

    No worries, just ribbing ya Nick :-)

  14. John 2023-08-18 09:57

    What a sweetheart deal. The state of South Dakota is now Castleberry’s bank. Any prosecutor worth her/his salt would look out for the public interest by: a) demanding a resignation, b) requiring immediate full restitution with interest, and c) make an example to Representative Roger Chase, Senator Helene Duhamel, Senator Randy Deibert, Representative Gary Cammack, and Lieutenant Governor Larry Rhoden, – and other legislative and executive scofflaws.

    Want a low interest loan on a big ticket item or big business expense? Just acquire it through unjust enrichment . . . then get uncle Marty to allow you retain 20% of the enrichment (tax free), then give you below market rates on a loan for balance. Good business, if you can arrange it. They ought to teach this in USD’s schools of business, government, and law.

  15. bearcreekbat 2023-08-18 10:15

    sx123 makes a reasonable argument. Indeed, it seems entirely possible that the SD Constitutional restriction in question could conflict with the requirements of the particular federal l;aw governing the distribution and use of these federal funds. If the funds were used as targeted by federal law (caveat – I haven’t researched that particular federal law so cannot say what, if any, targeting requirements existed), then there is precedent that a state lacks the aurthority to legally sidestep that targeting requirement by categorically excluding an identifiable group that the law was designed to assist. And under that precedent the intended targeted recipients have standing to challenge the conflicting state law. See e.g., Crawford v. Janklow, 710 F.2d 1321 (1981).

    https://casetext.com/case/crawford-v-janklow-3

    Of course this legal argument is now moot since the case has been settled. Given the apparent appropriate uses of 100% of the funds, however, it seems surprising that Castleberry did not challenge this particular implementation of SD Constitution’s Article III Sec. 12 arguing that such impletation would conflict with the federal law distributing these Covid relief funds, and would be thereby unenforceable under the federal supremacy clause.

  16. Bonnie B Fairbank 2023-08-18 10:39

    Does Castlebarry’s resignation mean Kristi Lynn gets to appoint another sleazy reptile for senator?

  17. DS 2023-08-18 10:54

    DO THE MATH: $500K AT 3.5% FOR 20 YEARS IS $2900 MONTHLY INCLUDING $196K INTEREST. BUT IF 30 YEARS IS $2245 MONTHLY WITH $308K INTEREST.
    $500K AT 7% FOR 20 YEARS IS $3876 MONTHLY INCLUDING $430K INTEREST. BUT IF 30 YEARS IS $3326 MONTHLY WITH $698K INTEREST.
    LOOKS TO ME THE STATE IS LOANING HER 1/2 MILLION WITH SWEETHEART DEAL TERMS…DID THE STATE GET ANY LOAN INSURANCE IN THE DEAL?

  18. P. Aitch 2023-08-18 11:02

    BCB – You’re a genius.

  19. P. Aitch 2023-08-18 11:23

    Let’s get an EXPERT opinion before your Governor (who has near zero research skills) has her way with a beloved day care provider.
    *great photo, too :)

    Alison J. Ramsdell is the 44th United States Attorney for the District of South Dakota. Ms. Ramsdell was sworn in by U.S. District Judge Roberto A. Lange on April 21, 2022, and her appointment took effect on April 22, 2022.
    As U.S. Attorney, Ms. Ramsdell serves as the chief federal law enforcement officer for the District of South Dakota. She leads an office responsible for prosecuting federal crimes and defending the interests of the United States in South Dakota.
    https://www.justice.gov/usao-sd/meet-the-us-attorney

  20. 96Tears 2023-08-18 12:11

    To DS’s point, is the state taking a partial equity position in her business by being her banker to repay the money?

  21. Mike Lee Zitterich 2023-08-18 13:04

    The constitutional Provision does NOT say Legislators cant enter into contratcts. It says “ELECTED” individuals having been elected cannot be party to, in any manner direct or indirect to any such contract between the State and a private organization. THis was a withhunt, cause Castleberry has plans of running for a At-Large Position and is supported by many of us Precinct Committees, especially in her own County.

    Noem gets her wish, she gets a rising political foe out of her way, and Lee Schoenbeck is also happy. It is wrong how these Neo-Cons treat their fellow citizens when they go against their agenda.

    Now, lets see how they handle Kevin Jenson, who clearly has NOT taken no money, nor entered into a contract, that will be fun to watch…Kevin will NOT back down when he knows hes innocent.

  22. larry kurtz 2023-08-18 13:21

    Thank you, Jesus for making the SDGOP into a circular firing squad.

  23. jkl 2023-08-18 15:06

    Thank you jesus

  24. Cory Allen Heidelberger Post author | 2023-08-18 17:31

    Mike Z alleges Noem is getting a political foe out of the way, but I still haven’t heard what Castleberry may have done to sour her relationship with Noem, who appointed Castleberry in 2019.

    Mike Z also retreads his “elected” theory, which has been picked up by absolutely no one and is likely without merit.

  25. P. Aitch 2023-08-18 18:39

    It’s more probable your Governor just doesn’t want a Joe “Steady” Biden program to help anyone in her state.
    Much like she doesn’t want an Obama/Biden program, i.e. Medicaid Expansion to help anyone in South Dakota.
    Turning down federal funds that we liberals in our blue states want South Dakota to have and use to help those with need is just evil Machiavellian manipulation.

  26. John 2023-08-18 19:07

    Cory, Bonnie, Rick: South Dakota needs a constitutional amendment for special elections for open legislative and judicial seats. Enough of this good old girl/boy corruption.

  27. Arlo Blundt 2023-08-18 23:33

    It doesn’t seem to me that Ms. Castleberry is the kind of person who would scheme to defraud the State of over 600,000 dollars. I think she’s a political neophyte, with little or no knowledge of government or contract law, who was led into this windfall by a blind trust in Christian Republicans and, of all things, State Government. Fact is: She may have fully complied with the regulations distributed by the DSS.

  28. Bonnie B Fairbank 2023-08-19 06:44

    Thank you for that information, Cory. According to Ballotpedia, the 2023 minimum requirements to be a South Dakota state senator are a person must be twenty-one, does NOT need to be a district resident nor a citizen (?), must be a registered voter and a state resident for two years.

    You know what this means in this great State of Nepotism and Freedumb? Kristi Lynn can appoint Booker Noem to the vacancy, assuming Ballotpedia is correct and I’m interpreting the categories correctly.

  29. 96Tears 2023-08-19 12:08

    The public crucifixion of ex-Senator Castleberry demonstrates that there are no points allowed by Governor Noep for friendship and loyalty. Now, Noep is asking for recommendations to appoint a replacement. Who in their right mind would want to put their head on the chopping block?

    grudznick, which district are you in? This might be your chance for fame and power! However, for the level of grease and gravy you seek in breakfasts, I’m sad to say the D&E closed a long time ago. No real greasy spoon replacement in Pierre. Those bureaucrats eat healthy and work out.

    https://www.keloland.com/keloland-com-original/gov-noem-asks-for-public-input-on-castleberry-replacement/

  30. grudznick 2023-08-19 18:44

    Mr. 96tears, grudznick is in the insanest district of them all. The District numbered 30. My close personal friend Bob also lives in the same District, the one numbered 30, and he has vowed to oppose me with all his dirt should I run for or be appointed to office.

  31. grudznick 2023-08-19 18:52

    Mr. Tears, that old D&E joint was a fine one. The bejeweled proprietor, he of many fancy rings, and grudznick were on very good terms when it came to breakfasting, at any hour of the day.

  32. 96Tears 2023-08-19 19:14

    True that, grudznick. The ambience left much to be desired, you can’t beat a $3.50 sirloin steak dinner, not including dessert. They had truly great pie at the D&E. Well worth the extra .75.

    Sad to learn you’re in a major whackadoodle district. Does Mark Hollenbeck still live there?

  33. Dougy 2023-08-19 20:13

    Dilly Deibert has a contract with the Sanford lab isn’t that a conflict of interest? Why did they only attack Castleberry? Deibert is still a commissioner. Asking for a friend.

  34. Cory Allen Heidelberger Post author | 2023-08-20 08:38

    Dougy, you refer to Randy Deibert? Do you have a copy of that contract? Is a contract with the lab a contract with the state?

  35. grudznick 2023-08-20 08:39

    Mr. Hollenbeck used to have a ranch down in Ms. Fairbank’s corner of the pasture, I believe. grudznick assumes he is still playing around with dangerous heavy metals down there, and scratching out a living from his office in that town where Mr. Russell got fired as city attorney.

  36. Cory Allen Heidelberger Post author | 2023-08-20 09:05

    If those farmers take federal subsidies, they have no conflict with Legislative service. They just can’t take contracts authorized by the state.

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