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 Lucas Report for GOAC on EB5 scandal

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

GOED Bollen scope of work contracts

Did Board of Regents authorize the contract? No.

Warner-Tyler BOR authorization Bollen

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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.