In a typically brilliant effort, Denise Ross at the Mitchell Daily Republic came up with an itemized list of fees collected by Joop Bollen's SDRC, inc. in yesterday's Mitchell Daily Republic. Bollen is the former state employee who worked jointly for the South Dakota Board of Regents and then-Governor Mike Rounds' office. Until 2008, he ran the "cash for green cards" program known as EB-5, collecting sizable sums of money (to the tune of $500 thousand a pop) from foreigners willing to invest in South Dakota-based projects in exchange for permanent residency in the United States. According to Ross' piece, the state of SD charged investors no fees for setting up projects with their money. That all changed in 2008, when, under the noses of his bosses at the BOR and the Governor's office, Bollen created SDRC, inc. to handle the EB-5 program, taking it away from the state via a contract with himself that he signed on behalf of South Dakota. That's when the fees started piling on. The fees that SDRC, inc., collected from the investors--fees that were charged in addition to the money they invested--amounted to well over $100 million by 2013, when current Governor Daugaard pulled the plug on SDRC, inc. and cancelled its tainted contract with the state. I've seen credible estimates of total fees collected that range from $120-$140 million, none of which have been challenged.
This is fee money (not investment money) that EB-5 investors were perfectly willing to pay in order to get in on the action, fee money that could just as easily have gone to the State of South Dakota when the state was running the program. Bollen's realization of that fact and subsequent diversion of the fee money from the state to himself, how it could have happened, if it were the result of complicity or lax oversight, just who knew about the events--all of these are being questioned throughout the state. The Federal Bureau of Investigation also just announced that its investigation into the matter is active. We'll get answers soon enough. Meantime, the political price to Michael Rounds and his campaign for the U.S. Senate seat that's open this year is incalculable. The once popular Governor, who won two terms handily with substantial majorities, has been struggling to get out of the high-30s in polls. Rounds' EB-5 troubles no doubt have something to do with his lackluster support so far, but I haven't seen any breakdown that pins specific issues to support or lack thereof, which is why I say it probably can't be calculated.
As to the amount of money lost to the State of South Dakota, I suppose that's open to conjecture. I'm inclined to think that everything collected by SDRC, inc., is money that was lost to Bollen's company once he got away with his scheme. Those who surmise that it might have been substantially less because Bollen's fees were significantly higher than those charged elsewhere in state-operated programs have a point, but it's a point based on speculation. I'm just going by numbers that look real and the fact that EB-5 investors weren't turned off by Bollen's fee schedules, which suggests to me that SDRC, inc.'s charges were acceptable to the market. I stand by my opinion that the amount of money taken in by Bollen's firm was money that just as easily gone into South Dakota state coffers. If you review Ross' itemized list of charges in the piece that I linked above, you'll see that this whole fiasco has been a very expensive mess for South Dakota. I can't conclude without a thank you to Denise Ross for the diligence and thoroughness she's putting into this story. Most appreciated, Ms. Ross.