Seems to me the pivotal moment in the fiasco that has come to be known by me as Slaughterhouse EB-5 came in 2008. A state employee named Joop Bollen had just created a company called SDRC, inc. While serving as a state employee at Northern State University's International Business Institute, Bollen contracted with his self-created company to take over the administration of the EB-5 "cash for green cards" program that had up to then been handled by Bollen as a state employee. Are you following me so far? Bollen, working for the state and on behalf of the state signed a contract between the state and a company he formed. It's of no little coincidence that the deal diverted about $120 million of fees generated by EB-5 investments from the State of South Dakota to Bollen's SDRC, inc. Having walked away from Northern State University shortly after signing the contract, all the files (15 years worth, apparently) regarding the EB-5 program in hand, Bollen was in possession of all the insights and information that led him to realize that doing this work privately, not for the state, could turn out to be a very lucrative deal.
Unbelievable as it may seem, this actually did occur. And it happened while Republican Senatorial candidate Mike Rounds was the governor of South Dakota. Asked about it in writing this week, Rounds replied that it wasn't his job to know what was going on with Bollen and that contract. You can follow the exchange here. The written conversation occurred this week between the South Dakota Legislature's Government Operations and Audit Committee (GOAC), which is investigating this and other matters involving Slaughterhouse EB-5. The questioners asked when Rounds approved the contract. Rounds replied, "I did not approve this contract. This contract was under the supervision of Northern State University and the Board of Regents."
Before I go on I should note that Regent Kathryn Johnson is my sister-in-law and that I have no information or insights about this matter from her and don't intend to seek any. That said, I think it's astounding that Rounds is passing off responsibility for having missed this glaring (some might say criminal) act of conflicting interest. Rounds obviously has no time for the executive dictum set forth by President Harry Truman: "The buck stops here." To him the buck stops with college administrators and the Board of Regents. However, from the Regents own website, it's clear that all "fiscal, business and personnel practices of state entities also applies to the Board of Regents." It's also clear (directly from the SD Constitution) that the Governor shall be responsible for the faithful execution of the law. In short, whether the Governor likes it or not, the buck stops at his desk.
No way do I think this lets the Regents off the hook. I questioned their lack of oversight and apparent lack of follow-through in the piece I wrote for the Rapid City Journal a few days back and I'd still like some response. How they stood by and let Bollen waltz out of Northern State with all those records seems like an appalling level of institutional indifference. But when it comes to the final bulwark of responsibility for this mess, it stands at the Governor's door. That Rounds is trying to deflect the blame is a weak attempt at evading responsibilility, an admission of incompetence . . . and genuinely raises questions, not necessarily accusations, but questions, of complicity. $120 million bucks is a lot of money. Where did it go?