The South Dakota economic development office has cut ties with the South Dakota Regional Center, which handled the EB-5 foreign investment program that provided much of the funding for the Northern Beef Packers Aberdeen plant, according to documents obtained by the Associated Press today.
Pat Costello, commissioner for the South Dakota Governor’s Office of Economic Development, sent a letter to Regional Center president Joop Bollen on Sept. 19 terminating the 2009 amended contract "for cause, effective immediately."
"Demand is hereby made that SDRC turn over to GOED all books, records and reports required to be kept by it under the Contract within ten business days," Costello wrote. The letter also demanded that the regional center turn over balances of the expense fund and an indemnification fund to the state treasurer.
The South Dakota Regional Center is based in Aberdeen, with an office at the Aberdeen Development Corp. Smart Center on Production Street.
Attempts by the American News to reach Bollen today and this evening were unsuccessful.
Gov. Dennis Daugaard acknowledged Wednesday an investigation was underway into GOED involving possible financial misconduct prior to his administration. Daugaard said there has also been a federal investigation, but declined to provide details of either.
Tony Venhuizen, Daugaard’s spokesman, said Saturday the economic development office will, for the time being, handle what the regional center did. He declined comment on details of the "for cause" in the termination letter.
Construction of the idled Northern Beef Packers plant was spurred by funds from the EB-5 program, in which foreign investors can secure permanent residency for as little as $500,000. Former plant officials say federal investigators have been asking questions about the plant’s finances and EB-5.
Northern Beef Packers’ former loan monitor, Richard Benda, was found dead with a gunshot wound on Oct. 22 near Lake Andes, and his funeral happened a day before Daugaard put out his statement. Benda had also served as secretary of the department that handles tourism and economic development from 2006 to 2010 under former Gov. Michael Rounds.
The death remains under investigation, according to the South Dakota attorney general’s office.
Northern Beef Packers opened its $109 million state-of-the-art facility on a limited basis in 2012 after years of delays. Its owners filed for Chapter 11 bankruptcy protection in July, saying they did not have enough money to buy cattle for slaughter. The plant is scheduled to be sold at auction Dec. 5.
Once a locally owned project, Northern Beef Packers is 41 percent owned by businessman Oshik Song with 69 Korean investors who each gave at least $500,000 under EB-5.
Dennis Hellwig, who stepped down as Northern Beef Packers’ general partner more than four years ago, and Bob Breukelman, the plant’s former construction engineer, told the AP on Thursday they’ve been questioned by federal investigators about the plant’s finances and how the EB-5 funds were used.
The EB-5 government program allows foreigners to get visas if they invest $500,000 to $1 million in projects or businesses that create jobs for U.S. citizens. The amount of the investment required depends on the type of project. Investors who are approved for the program can become legal permanent residents after two years and can later be eligible to become citizens.