For Immediate Release: Friday, September 5, 2014
SDDP statement on “Rounds for Senate” EB5 ad:
On EB5 scandal, Mike Rounds is only kidding himself
Mike Rounds recruits EB5 investor
Sioux Falls, SD (September 5) — Mike Rounds is only kidding himself when it comes to the EB5 citizenship-for-sale scandal, says Zach Crago, Executive Director with the South Dakota Democratic Party. Crago released the following statement after Mike Rounds tried defending his indefensible position on the EB5 scandal in a new ad:
“Who is Mike Rounds kidding on the EB5 scandal? Governor Mike Rounds made EB5 a key component of his economic development strategy. A state employee administered the EB5 program. Mike Rounds privatized the EB5 program with a no-bid contract to his state employee. And when the EB5 investments went belly up, South Dakota taxpayers lost millions of dollars, South Dakota businesses never got paid, and South Dakota workers lost their jobs.
“Maybe Mike Rounds hasn’t read the 8 different South Dakota editorials calling the EB5 program under Mike Rounds a “scandal,” “controversy,” and a “black mark on South Dakota and state leadership. Or maybe Mike Rounds forgot that his administration is under state and federal investigations for its bungled mismanagement of the EB5 program.
“When it comes to the EB5 scandal, Mike Rounds is only kidding himself.”
Investigative blogger Cory Heidelberger rebutted the Rounds ad point for point in the following article:
MadvilleTimes.com
Rounds Projects, Refuses to Own Economic Development Corruption and Failure
Posted by caheidelberger, 9.5.2014
Mike Rounds, Dick Wadhams, and Pat Powers are projecting. They say Rick Weiland and I and anyone else who reports the facts about Mike Rounds’s economic development policies are telling big desperate lies, when in fact the big desperate deception comes from those trying to help Mike Rounds win a U.S. Senate seat. As is the case with deficit spending and government intrusion in the doctor-patient relationship, Republicans accuse Democrats most loudly of the sins Republicans themselves commit.
Rick Weiland encapsulated the corruption of Mike Rounds’s administration in the neat and direct 30-second “Auction” ad released yesterday, accusing Rounds of selling U.S. residency to wealthy foreigners through the EB-5 visa investment program so his cronies could make millions. The attack stung enough to provoke immediate and voluminous responses from Rounds, including a swiftly produced video summarizing Rounds’s evasions and absurdity.
As usual, Rounds says EB-5 is a federal program. “Mike didn’t create EB-5, didn’t run it,” says the Rounds response. The former is true; the latter is either false or damning. But the federal provenance of EB-5 is far less important than how Mike Rounds used and abused it:
· Through his Governor’s Office of Economic Development, Mike Rounds authorized state employee Joop Bollen to seek EB-5 investment for projects that apparently couldn’t stand on their own in the South Dakota market.
· Mike Rounds allowed his cronies Joop Bollen and Richard Benda to privatize this portion of the Governor’s Office of Economic Development’s portfolio, for no apparent reason other than sheer greed.
· Mike Rounds allowed his cronies to create a bank that appears to have violated South Dakota law and cheated the state of millions in bank franchise tax.
· Mike Rounds signed off on $2.36 million in lame-duck handoutsto subsidize his delayed and doomed centerpiece EB-5-financed economic development project, Northern Beef Packers.
· Mike Rounds hired and admired a GOED chief, Richard Benda, who used his EB-5 travel expenditures as his personal slush fund.
Rounds responding to concerns about bad policy choices, corruption, and mismanagement in the Governor’s Office of Economic Development by shouting “EB-5 is federal!” is like the kid we nab running with scissors shouting, “But these scissors were made in China!”
In further evasion, Rounds repeats his absurd semantic stretch that “the state did not lose money” in Rounds’s/GOED’s/Joop Bollen’s/Richard Benda’s (yes, this is complicated) exploitation of the EB-5 program. Even under the most generous yet documentable reading, the state poured $4.3 million in tax dollars into the EB-5-dependent Northern Beef Packers, which generated $3 million in sales, use, and contractors excise tax. That’s a loss. And even that $3 million came at the cost of one local contractor being stiffed $2.1 million and other contractors and suppliers losing big money when the plant went bankrupt after just nine months of operation.
The newest Rounds ad then goes for the big enchilada, saying EB-5 “creates thousands of jobs across South Dakota. If Rick Weiland had his way, thousands of South Dakotans would be unemployed today.”
Hogwash. EB-5 job creation numbers are mathematical fictions, not real bodies at new work. Fortune agrees:
First, the government is exceedingly generous in its employment tally. It gives EB-5 investors credit for all the jobs theoretically spawned by a project even when EB-5 money represents only a sliver of its financing. Second, for many mainstream ventures, EB-5 money isn’t really creating jobs—it’s merely saving developers money for projects that would be financed anyway. (Indeed, those big companies are actually “hijacking” money from worthy smaller investments in hard-hit areas, argues Michael Gibson, a financial adviser who vets EB-5 investments.) [Peter Elkind and Marty Jones, “The Dark, Disturbing World of the Visa-for-Sale Program,” Fortune, 2014.07.24]
Homeland Security says EB-5 projects provide no evidence that they have created new jobs. The Brookings-Rockefeller Project on State and Metropolitan Innovations says “there is a dearth of reliable and publically available data that would enable better monitoring and evaluation of the economic impacts of regional center investments.”
In other words, Mike Rounds is talking out his backside. Show us, Mike, the “thousands” of people at work in South Dakota right now who would not be working if you had not included EB-5 investment in your Governor’s Office of Economic Development strategies. Where are they, Mike? Are they the Korean contractors brought in to drag Northern Beef Packers to completion? Are they the hundreds of Aberdeen workers who got stiffed paychecks by Northern Beef Packers when it collapsed in July 2013? I don’t see them, Mike. Where are these mighty and prosperous thousands whom you say Rick would turn to paupers?
Mike Rounds is lying. He’s making stuff up. He’s kicking up dust to keep voters from seeing that Mike Rounds owns his bad policy choices and his sloppy management of his economic development policies.