For Immediate Release: Wednesday, September 24th, 2014 Contacts: Sen. Larry Lucas
DOCUMENT: The Lucas Report from GOAC hearing on EB5 scandal
Sioux Falls (September 24, 2014) — Today, Sen. Larry Lucas submitted a report to the Government Operations & Audit Committee on the state’s management of the EB5 program under Governor Mike Rounds and Governor Dennis Daugaard. The report can be downloaded at the following link:
The report, along with all the supporting exhibits, will be posted online by the Legislative Research Council. An appendix of the document follows the executive summary.
The executive summary of the report is below:
Executive Summary
The information from this report, along with the attached exhibits, will show that Governor Mike Rounds, Governor Dennis Daugaard, and other state leaders knew about Joop Bollen’s contract with a company he owned to manage the EB5 program. Any competent public official briefed on the basic facts about the Darley litigation would have understood that the core controversy of the litigation is Joop Bollen’s creation of SDRC, Inc.
State employee Joop Bollen set up SDRC, Inc. to deceive anyone following his work, willfully concealed the Darley litigation from the state, and repeatedly violated South Dakota law in the process. Yet Governor Mike Rounds and the Board of Regents protected Bollen in court instead of firing him for his unethical and potentially illegal behavior.
The state is liable for $4 million in potential liability claimed – not including attorney fees and pre-judgment interest – from the Darley litigation. This is 4 times more than reported by the Auditor General’s report in 2010 and 2011, and this ongoing liability hasn’t been reported since even though South Dakota taxpayers have already spent over $500,000 defending the state in the Darley arbitration. In fact, this liability was not disclosed in the 2009 Auditor General’s report, and was no longer disclosed after the 2011 Auditor General’s report – even though the Darley litigation remains open today.
In addition, this report estimates that South Dakota taxpayers spent nearly $500,000 for Joop Bollen’s office over the nearly two years that he had already privatized the EB5 program on January 15, 2008. Since the privatization of the program, Joop Bollen and his associates have harvested over $100 million in EB5 franchise fees.
The conclusions of this report reinforce a few simple unanswered questions:
· Who authorized Rounds employee Joop Bollen to sign a contract with himself to administer the EB5 program? · If Bollen didn’t have authority, why isn’t anyone pursuing legal action against Joop Bollen to recover the EB5 franchise fees he and his associates have harvested? · Why didn’t Governor Mike Rounds and the Board of Regents fire Joop Bollen after he dragged South Dakota into this lawsuit? · Why did the Board of Regents continue to protect Joop Bollen from depositions and the production of documents in an August 2013 legal brief long after his unethical and illegal behavior was well known?
The appendix of documents is below:
Ex. A Darley Motion to Compel Arb 31July2008 Ex. B Bollen opposition to Darley Arb Dermand 22Aug2008 Ex. C SDRC, Inc. Articles Ex. D MOU SDIBI SDRCInc Ex. E SD Brief to Vacate Federal Order Ex. F DarleyHanul Confidential contract 18Oct2007 Ex. G California Court rules against SD on Motion to Quash 14Oct2009 Ex. H CA Court rules SD must Arbitrate Ex. I SD request to USCIS for Amendment Ex. J Loan Pools formed by Joop Bollen Ex. K USCIS Memo Ex. L Joop Bollen Decl CA 11August2009 Ex. M LarryLongDeclaration Ex. N Jackley Decl CA 23April2010 Ex. O PerryDeclaration Ex. P Jack Warner Decl 23April2010 Ex. Q Fed Court Order to Arbitrate Ex. R John Meyer Decl CA 23April2010 Ex. S Shekleton Decl CA 23April2010 Ex. T SD Motion to Quash 13August2009 Ex. U darley refiles arbitration petition in CA Court Ex. V Board of Regents Brief in CA Court 21May2010 Ex. W SD Memo of points in response to Darley 14Sept2009 Ex. X CA Court on Motion to Quash 14Oct2009 Ex. Y CA Court Orders South Dakota to Arb 2June2010 Ex. Z Millions in EB-5 liability hidden 17Sept2014 Ex. AA EB-5 Investment recruiter took cut of EB-5 money Ex. BB SD BOR Fraud Policy 4-37 Ex. CC EB-5 Investment recruiter took cut of EB-5 money Ex. DD Darley Confidential overseas recruitment contract for EB5 investors dated Oct 2007 Ex. EE Lynch Legal Contracts Ex. FF SDIBI 6 contract 1Jan2008 thru 30June2008 Ex. GG SDIBI 7 contract 1July2008 thru 30June2009 Ex. HH SDIBI opposes deposition of joop
Darley litigation billing invoices paid by South Dakota taxpayers w
2335-Feb09 2381-Mar09 2456-Apr09 2520-May09 2619-Jun09 2666-Jul09 2762-Aug09 2885-Sept09 2941-Oct09 3186-Nov09 3280-Dec09 3321-Jan10 3382-Feb10 3402-Mar10 4073-Apr10 4112-May10 4184-Jun10 4245-Jul10 4289-Aug10 4359-Sept10 4379-Oct10 4485-Dec10 4541-Jan11 4561-Feb11 4660-Mar11 4691-Apr11 4798-May11 4889-Jun11 5017-Aug11 5299-Oct-Nov-Dec-11 5300-Jan12 5445-Mar12 5446-Apr12 5483-May12 5550-Jun12 5825-Dec12 5949-Mar13 6089-Jun13 SD Bd of Regents 1.14 Inv# 6431 SD Bd of Regents 2.14 Inv# 6461 SD Bd of Regents 3.14 Inv# 6512 SD Bd of Regents 4.14 Inv# 6546 SD Bd of Regents 5.13 Inv# 6047 SD Bd of Regents 5.14 Inv# 6608 SD Bd of Regents 6.14 Inv# 6660 SD Bd of Regents 7.13 Inv# 6118 SD Bd of Regents 7.14 Inv# 6715 SD Bd of Regents 8.13 Inv# 6170 SD BD of Regents 10.13 Inv# 6255 SD Bd of Regents 11.13 Inv# 6291 SD Bd of Regents 12.13 R Inv# 6346
The Governor’s Office of Economic Development contracts with Joop Bollen
Did Board of Regents authorize the contract? No.
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1) Mike Rounds’ employee Joop Bollen signed an illegal contract with a company he owned to privatize the EB5 program, a key component of the Rounds economic development strategy.
2) As a result of the illegal contract, Joop Bollen walked off with a $108 million in EB5 fees that belong to the people of South Dakota.
3) Mike Rounds knew about his employee’s illegal activities, and Mike Rounds didn’t fire Joop Bollen; Rounds rewarded him with a sweetened no-bid contract in December of 2009.
4) When asked questions about the EB5 scandal by a legislative committee, Mike Rounds submitted testimony that the Rapid City Journal quickly found to be untrue. Submitting false testimony as Mike Rounds did is a class 6 felony in South Dakota.
5) Even now after everyone agrees that Rounds employee Joop Bollen had an illegal contract that enriched himself over $100 mil, Mike Rounds continues to protect and cover up for his employee.