PIERRE, S.D. (AP) – South Dakota's economic development office on Friday defended its ability to administer a program for recruiting wealthy foreign investors for projects in exchange for green cards, saying problems flagged by the federal government stem from a private company that previously ran the program.
The state asked that U.S. Citizenship and Immigration Services refrain from ending South Dakota's participation in the EB-5 visa program as a result of alleged problems going back several years.
The agency determined that South Dakota's regional center for the EB-5 visa program isn't promoting economic growth and said administrators have failed to submit required information to the agency, according to the late September notification. The state had until the end of the month to respond.
SDRC Inc. previously managed the program, but the state took over administration after ending that contract in 2013. Since then, there haven't been any new projects.
The Governor's Office of Economic Development said in its response to the immigration agency that it is not seeking to defend SDRC, as it recognized the firm's problems and responded by terminating its contract.
Joop Bollen, a pioneer of EB-5 in South Dakota whose firm is the target of a state lawsuit about the program, said in a separate response to the federal agency that its grievances against him are overstated. He argued that Citizenship and Immigration Services shouldn't terminate the state's participation and said the regional center helped spawn successful projects with very few failures, according to a copy of his responses to the agency provided to The Associated Press.
Many questions raised in an agency inquiry into the South Dakota regional center concern the management of the program under Bollen, who oversaw it as a public employee and as part of SDRC.
The notification to the state cites conflicting information in federal filings that leaves $5 million in EB-5 funds unaccounted for, and the diversion of about $1.7 million intended for a South Dakota beef plant to a Cyprus-based holding company for two Russian firms involved in railway transportation and the repair of railroad rolling stock, among other allegations.
In his responses, Bollen denied intentionally providing inaccurate or incomplete information to Citizenship and Immigration Services and said the agency never flagged reports as problematic. He also "vehemently" disputed failing to meet management and oversight responsibilities when he was associated with the state's regional center.
Bollen explained that fund discrepancies came from simple mathematical errors and argued that neither he nor anyone associated with SDRC were aware of the wire transfers to the Cyprus firm.
A review of the notice "indicates that (the agency) has gone well out of its way, beyond any norm, to terminate South Dakota's regional center," he said.
The state filed a lawsuit earlier this month against SDRC in part to compel it to turn over all documentation about its management of the program. Bollen said in written testimony to a legislative oversight committee in 2014 that he gave the state EB-5 documents when the contract to run the regional center was canceled.
The economic development office maintains that it still hasn't received a complete set of records from SDRC, including contact information for all EB-5 petitioners and the books, records and reports relied upon to complete its immigration agency reports. The office also wants the books, records and reports from each limited partnership created to pool investors' money.
SDRC said it has provided the records it uses to file its immigration reports, but limited partnership records are not part of the management of the regional center.