Lawmakers on the Government Operations and Audit Committee appear divided over how far to take their inquiry into alleged fraud surrounding the EB-5 program.
The EB-5 program allows foreigners a green card if they make a half-million dollar investment in rural development.
The program is mired in a scandal that’s tied to Richard Benda the former head of the Governor’s Office Of Economic Development. Benda’s death last year was ruled a suicide, it came as state and federal investigators probed alleged fraud in the office.
Some lawmakers now want to use their legislative subpoena power to question private individuals in the case.
The Government Operations and Audit Committee spent four hours questioning state officials and auditors around the scandal. Lawmakers on the committee back changes to policy and laws to correct areas of concern highlighted by the audits. Republican State Representative Justin Cronin says any efforts by the committee to dig even deeper won’t result in new information.
“We haven’t started to correct the problems that were identified. And, I don’t know that we can dig far enough find a problem that is going to require us to call all these folks back and basically chew them out, which is some of the feelings I’m getting here today. That we have something that they’re hiding, and I don’t think anything that has been hidden here,” says Cronin.
But others on the committee like Democratic Representative Susan Wismer want to exercise subpoena power to compel business leaders like Joop Bolen the head of SDRC Incorporated to testify. Wismer says the state gave over some of its power to this private company.
“We’ve signed away a lot of state responsibilities, or signed over a lot of state responsibilities in that contract. And, I don’t that we can use that to protect ourselves. Those are the state’s responsibilities and we need to look at those. So I’m hoping a review of the SDRC inc. contract will be a part of perhaps a day we could spend with Mr. Bolin,” says Wismer.
Wismer also criticizes the current efforts to probe wrongdoing as too limited in scope.
"Overall, the thing that troubles me is that South Dakota's good name was used to advance several projects that not only became bankrupt. But particularly or at least in my corner of the state brought a whole lot of other people down with them. A whole lot of other innocent people who didn’t know they were dealing with bad actors,” says Wismer.
Officials testified that in the case of the bankrupt Northern Beef Packing Plant the state has recovered most of its investment back in taxes. A federal investigation into the issue is continuing.
Pat Costello is the Commissioner for Economic Development. He says the revelations of the past year – including the death of his predecessor Richard Benda were difficult for staff.
“When concerns of inappropriate actions on Richard’s part became known emotions ranged from doubt, confusion, disbelief and betrayal. Upon his death emotions ranged from shock, horror, grief, and bitterness. Trying to reconcile the actions Richard took, with the actions of the Richard they thought they thought they knew was very difficult. But now most have come to accept the realities of the last year,” says Costello.
Costello says the federal investigation is still on-going that includes the U.S. Attorney and FBI. He says the scandal has also sparked new federal inquiry from the departments of Treasury, Energy and HUD. Committee members plan to continue meeting on this topic. They’re backing new legislation including one bill that requires background checks for state employees.