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South Dakota's EB-5 business ventures leave trail of bankruptcy, suicide

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Bankruptcies, a suspicious suicide and an FBI investigation have cast a pall over foreign-investment ventures in South Dakota.

The state Legislature voted last week to launch hearings into five EB-5 investor-visa projects:

Dakota Provisions of Huron; Northern Beef Packers of Aberdeen; NextEra Energy’s Day County 2 Wind Farm; Basin Electric’s Deer Creek generation plant at Elkton; and the Deadwood Mountain Grand hotel and casino.

Lawmakers acted after the FBI began investigating the EB-5 dealings of the South Dakota Regional Center, which collects $500,000 to $1 million investments from foreign nationals seeking U.S. green cards.

SDRC and the Governor’s Office on Economic Development used the federal investor-visa program to pump millions of dollars into the now-bankrupt Northern Beef Packers plant.

“Questions relate to what happened to tens of millions in EB-5-funding,” said David North, a policy analyst with the Center for Immigration Studies.

The $100 million slaughterhouse, funded largely by Asian EB-5 investors, was auctioned off for $4.7 million in cash and $35 million in the cancellation of a “somewhat murky debt,” North reported.

Adding a grisly note to the intrigue, Richard Benda, a former state development secretary and one-time financial monitor of the bankrupt packing plant, purportedly killed himself with his shotgun in October.

South Dakota state government plays a large role in the federal investor-visa program. Joop Bollen of Aberdeen formed SDRC in 2008 to serve as administrator and manager for the EB-5 program for state government.

The failed beef plant is only the tip of South Dakota’s questionable EB-5 ventures.

The state has favored mega-dairies with EB-5 cash, at the expense of small local dairies, asserts Cory Allen Heidelberger, a political blogger with the Madville Times.

“One of the largest dairies supported by EB-5 money, the Veblen mega-dairy, went bankrupt in 2009,” Heidelberger said.

Lora Hubbel, a Republican gubernatorial candidate, says Huron’s EB-5-funded turkey farm has employed migrant workers from Mexico. Investments in the EB-5 program are supposed to generate jobs for U.S. citizens.

As for the packing-plant flop, a recent state audit threw dirt on the deceased Benda.

Benda allegedly amended two grant agreements to give Northern Beef an additional $600,000 in state money, the Associated Press reported.

Overall, the audit concluded that the Governor’s Office on Economic Development didn’t adequately monitor the EB-5 program as run by SDRC.

Hubbel calls that an understatement.

“Government should not be in the business of picking winners and losers,” she told Watchdog. “It should not be in the game of buying businesses and building industries that fail and leave the taxpayers and foreign investors on the hook.”

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