The SDWC Top 10 Political stories of 2014: #6 The EB-5 issue that wasn’t.

The SDWC Top 10 Political stories of 2014: #6 The EB-5 issue that wasn’t.

Early last legislative session, I’m told that an e-mail went out from a South Dakota state legislative leader to his caucus… as well as mistakenly to a Republican legislator who received it when they sent it to them. The marching orders for the Democrats were clear – (As it was related to me) the Dem leader directly said that they needed to keep the EB-5 federal immigration visa issue in the public eye at least through the June primary.

Welcome to South Dakota politics.

The EB-5 immigration visa program was one used in several instances by the State of South Dakota to attract foreign investment to opportunities that might require the type of investment that you don’t receive from banks. A little more pie-in-the-sky. A little more risk. And when one of those investments went under, it attracted a bit of attention.

Along with that attention, it also caused a review of how the program was implemented in the state, as well as how a state employee slid from a job with the state into the company that had been handling the EB-5 program in South Dakota.

Tragically, that same employee committed suicide prior to an indictment being brought accusing him of grand embezzlement.The most significant charge from the indictment may never be conclusively proven that the manner in which he was paid $550,000 was conducted in an illegal manner.

The result was (and is) an example of how long and convoluted a financial investigation actually can be as people trace transactions in and out of rabbit-holes. The investigation possibly involved at least one bad actor, and still resembles a badly tangled reel of fishing line as the state and federal government attempt to untangle it.

Now try to make a mess like that sexy, concise, and direct enough to be used against a candidate who was a level or so of supervision above the potential bad actor(s) in the matter.

Democrats tried to raise the issue early. It was too confusing, and too little information was known. How seriously was it taken by them at the time? Democrats on the legislative committee looking into it either skipped meetings, or in the case of the Democrat Gubernatorial candidate…..

At a legislative hearing in March, at which state officials answered numerous questions, Rep. Wismer said the following to a state-retained auditor: “Your report takes up about an inch of this book or more. Could you talk – I didn’t read it. Could you talk a little bit about what else takes up the rest of the inch of paper?”

Read that here.

With that little understanding of what took place, Democrats were ill-prepared to turn it into anything resembling a sound-bite at that point.  And Republican opponents to Mike Rounds and Dennis Daugaard fared even more poorly as they attempted to raise the issue in the primary.

Post-primary, as more information came out and was released from the investigation into the death of Richard Benda, as well as the EB-5 investigation itself, opponents tried to latch onto nuggets and use them for political purposes.

Individually they failed, but each instance reinforced, or at least attempted to impress, one thing with the public – “EB-5 bad.”

The public couldn’t and largely still can’t pick out why it was bad or what was wrong with it. They just knew that all these people were making all sorts of accusations of unsavory behavior over it, whether truthful or not.

Democrats rallied publicly and made demands of the committee looking into it that went far beyond it’s statutory authority. They made demands which, if implemented, would have been violative of due process and 5th Amendment rights. But at this point in the campaign, it wasn’t about the rule of law – it had become full blown political theater.

And the issue remained completely confusing for most voters. After the issue had been railed on in the public eye for over a year, 79% of voters really didn’t care. As noted in the Argus Leader:

The Democratic campaign against Rounds has focused on his management as governor of South Dakota’s EB-5 program, in which foreign investors were recruited for South Dakota projects. After millions of dollars of ads attacking Rounds on the subject, around half of all voters say EB-5 has affected their vote. But most of them say it’s only had a minor impact.

Meanwhile 45 percent of voters say EB-5 has had no effect on their vote — driven by huge numbers of Rounds voters who don’t care about the issue.

“The only concern I have is that Weiland is making an issue out of it,” said Floyd Mills of Custer, a committed Rounds supporter.


Of the 21 percent who say EB-5 has had a major impact, Weiland wins 65-18 over Rounds, with Pressler at 12. It’s a mirror image among the larger group of voters for whom EB-5 hasn’t had an impact: Rounds wins 68-17 with Pressler at 6 percent.

Read it here.

After a year of a constant political drumbeat of the issue in a heated US Senate campaign, with millions of dollars spent attacking the Senate front runner Rounds over the issue, only 21% of voters cared enough that it mattered, and 20% percent of them sided with Rounds.

Considering that Mike Rounds won over Rick Weiland 50% to 21%, despite millions spent on advertising trying to convince people there was evidence of wrongdoing, the numbers in which it drove people away from the front runner Rounds could be said to be negligible. Considering that Dennis Daugaard won with a record setting percentage over his opponent who only was curious enough to request to know “a little bit about what else takes up the rest of the inch of paper?” it affected him even less.

There might be a lesson to be learned here. But ultimately it was that when it came to electoral politics, no matter how hard Democrats pushed the EB-5 issue few understood it, and even fewer cared.

Sometimes, it comes down to picking the right horse. And in the 2014 election cycle the EB-5 issue wasn’t it.

20 Replies to “The SDWC Top 10 Political stories of 2014: #6 The EB-5 issue that wasn’t.”

  1. Anonymous

    There are still some reforms to state government that I would like to see. I’m not sure why this is such a taboo topic.

    Why can’t we talk about reforms without going nuts? The Weiland and Stace/Hubbel/Howie crowd always go to extremes and hurt causes like reform for EB5 (which Rounds said he is ok with all programs being reviewed and reformed if needed) or Common Core.

    Some people need to keep their mouths shut because they do not help their causes.

    1. Anonymous

      they people who used the issue against rounds could care less about reforming it – – it was implemented and greatly increased by congressional democrats after all – – they wanted the smell of the issue to derail an unbeatable candidate. and it almost worked, rounds had to be biting his fingernails off as he led the pack by only double-digits at every moment.

  2. Anonymous

    It’s not that people didn’t “care” about the issue. It’s that they didn’t understand it. You say it yourself: “And the issue remained completely confusing for most voters.”

    What happens when people are confused? They shut down. Unfortunately most people shut down and many simply just didn’t vote.

    It was a confusing situation. A lot of moving parts. But unfortunately people didn’t know the full and true story of corruption, greed and wrongdoing. If it was a little easier to understand, without the layers of secrecy and dodging the players ended up being allowed to participate in with no consequences, people would’ve seen the truth. But now we’re stuck with a plastic smiling senator who will do/say anything to make a buck.

      1. Anonymous

        wow, slander is alive and well i see. rounds isn’t a “plastic smiling senator willing to do anything to make a buck.” people who hold this lie close to their hearts deserve the marginalization and depowerment it gets for them.

  3. Anonymous

    It’s best that keep such topics swept under the rug, then glued down with 3m fast tack and have everyone’s focus on future opportunities.

  4. Troy Jones

    I think the people actually understood it at its core.

    1). Foreigners who invested in economic develop, job creating businesses got their green card. No jobs, no green card and money was gone.

    2). They saw there were successes around the state (turkey plant, dairy farms) that were good for the state and localities impacted.

    3). They saw NBP as one that failed. The state invested about $4 million and got about $4 million in tax receipts. Not anything to go ballistic over. They get some things succeed and others fail.

    4). Rich Benda did some things bad (who killed himself and paid enough) but didn’t believe Rounds deserved blame.

    5). They saw the accusations and shrillness as over-the-top and too overtly motivated by politics. See #1 & #2 above.

    So, it didn’t enter top-of-mind consciousness for a lot of voters.

    Net-net, I believe it hurt Rounds/Daugaards opponents (GOP & Dem) more than it hurt Rounds and Daugaard. To assert otherwise ignores the election results.

    1. Anonymous

      you could also say that

      1) people could easily see the silliness of the argument that ’rounds wanted to sell citizenship to the highest bidder.’ the mechanisms of the program did not work that way and to effort to cast an evil intent could be sold convincingly but they kept trying and trying. upshot: the effort to divorce rounds from a conservative base by casting him as a “shamnesty queen” wholly failed by its sheer unbelievability.

      1.5) and by extension of the above, the effort to seriously damage the republican establishment, fire up the anti-amnesty conservatives via EB5 arguments, and pull the party more under the control of stace nelson and gordon howie, THAT effort imploded as well. it’s fun to watch logic take its logical course.

      1. Anonymous

        CORRECTION – – “the effort to cast an evil intent could NOT be sold convincingly but they kept trying and trying.”

  5. Anonymous

    Mercer wrote The committee settled for superficial answers, Hunhoff wrote, “probably because a deeper search might have been too embarrassing for certain parties.

    Isn’t that the truth! This whole affair should just be forgotten and move on to the next opportunity to profit more discreetly from our government/taxpayers. Nothing like good o’le fashioned Cronyism!

    1. Anonymous

      yeah, the “certain parties” due for embarassment included brendan johnson, rick weiland, susan wismer, etc. bernie should name names.

  6. mhs

    Lessons from EB-5:

    1. Never let the Higher Ed system manage anything that is not directly related to their core mission. They don’t want to do it, don’t have the expertise and don’t have the top-down management systems or audit accountability safeguards these activities require.
    2. RFP every state contract.
    3. Expand the powers of the State Auditor and State Treasurer. The Legislature has so stripped the constitutional offices of any power, they’ve become meaningless. Real audit and budget accountability would have caught the problems much earlier.

    This was a management failure and the responsibility does rest on the Rounds administration. The Dems and black-helicopter crowd, though, turned it in to a conspiracy theory circus and thus doomed any effort to make a real examination of the causes or suggest a better way to do things.

    There are structural issues within state government than should be addressed, with the laughable GOAC process as a prime example. (when members publicly say they really don’t know what to do: that’s a problem).

    Let the Hubble-craft circle, let’s see if the real leaders recognize there needs to be some tightening up.

  7. Anon.

    The important lesson here is that the State of South Dakota has our backs. We can trust our State government, and our leaders, to do what is right.

  8. Straight Cash Homey

    Mike Rounds is a fantastic guy. It really torques me off when I think back on how the media and left wingers attempted to tarnish his image over an issue that has been a non factor since the day after the election.

  9. Hubbel for US House 2016

    GOAC was a joke and pure whitewash blaming it all on a dead guy. There is going to be reckoning here in South Dakota when the results of the Federal Investigation are made known. Too bad we don’t have a recall option yet here in SD but the electorate may demand it afterwards.

    Hubbel for US House 2016!

      1. Anonymous

        Anyone else notice that this is the second election cycle in a row where Brendan Johnson has found one of his lackeys to do his dirty work for him? Varilek in 2012 and Weiland in 2014. At some point he needs to man up and run himself or else move on.

        Democrats might not respect Noem but they sure as heck don’t want to run anyone decent against her.

    1. Anne Beal

      Yes what happened to that big federal investigation? The one the FBI said was ongoing just a week before the election, details of which Kyle Loven ( or whatever his name is) couldn’t provide until he returned from someplace, which would of course be after the election. Has he come back yet? Where was he? Vacation? Pilgrimage? Sabbatical?

      We’re still waiting.


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