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Published August 29, 2014, 03:43 PM

Officials probe SD beef plant deals

South Dakota officials are studying more legal action to learn more about the handling or diversion of public economic development funds in a mothballed Aberdeen, S.D., beef plant, even as a separate, new company attempts to reopen it.

By: Mikkel Pates, Agweek

South Dakota officials are studying more legal action to learn more about the handling or diversion of public economic development funds in a mothballed Aberdeen, S.D., beef plant, even as a separate, new company attempts to reopen it.

Todd Veldhuizen, communications director for Gov. Dennis Daugaard, says there is no time schedule on the work of Paul Bachand, a private lawyer in Pierre, S.D. The governor’s office has retained Bachand to determine whether the state can recover $550,000 that might have been diverted in connection with the former Northern Beef Packers plant in Aberdeen.

Bachand has a court order allowing him to review information from Attorney General Marty Jackley’s extensive criminal investigation, Veldhuizen says.

“If the decision is made to move forward, we would consult with the attorney general and with Bachand to determine the best way to pursue the claim,” Veldhuizen says.

Benda at the center

The legal issues revolve around actions of Richard Benda, who left his job as head of economic development in 2010 and went into a private company called SDRC (South Dakota Regional Center) Inc. Some officials think Benda improperly added $550,000 to a grant agreement. Funds came from the EB-5 visa program, in which people from China and other countries gain U.S. residency by investing $500,000 in approved U.S. businesses.

Benda died of a gunshot wound during a hunting trip in October 2013. It was eventually ruled a suicide, which has been disputed by some of his family members and others.

In July, Jackley had released draft criminal complaints against Benda, which would have charged him with illegally obtaining economic development money that should have gone to the Northern Beef Packers plant. Jackley agreed to release information, but only if Benda’s family consented, despite requests from Pierre, S.D., independent journalist Bob Mercer.

In November 2013, Mercer requested more records but Jackley denied releasing information unless the family approved it. Mercer appealed the issue to the South Dakota Office of Hearing Examiners. Examiner Hillary Brady upheld Jackley’s handling of the death records. Mercer has appealed that decision, which is now before Circuit Judge Kathleen Trandahl of Winner, S.D.

“Her decision, regardless of outcome, likely will be appealed to the South Dakota Supreme Court,” Mercer tells Agweek. “State law allows release of these records in redacted form, but there aren’t standards for what should be redacted.”


Meanwhile, Lawyer Rory King of Aberdeen, who worked for Northern Beef, says the $550,000 paid to the SDRC had been properly paid as a two-year fee to monitor a $59 million loan. The payment was a contractual obligation and Northern Beef considered it “legitimate,” King says.

King told a blogger he doesn’t think Northern Beef was threatened or defrauded by Benda.

King did not immediately respond to a request for an interview from Agweek.

The South Dakota Government Operations and Audit Committee is slated to meet Sept. 24 in Pierre, to study the matter. State Sen. Larry Tidemann, R-Brookings, the committee’s chairman, has asked Joop Bollen, the former administrator of the EB-5 program, for a chronology of the events, and has asked U.S. Attorney Brendan Johnson for an update on criminal investigations.

State Rep. Susan Wismer, D-Britton, the Democratic nominee for governor, requests another member of her party sit in on the hearing. In an Aug. 14 column, Wismer says the SDOA Committee had failed to subpoena Bollen and is not being aggressive enough in seeking information.

Subpoena threat

State Sen. Larry Lucas, D-Mission, and Rep. Bernie Hunhoff, D-Yankton, have asked for more disclosures from Gov. Daugaard, former Gov. Mike Rounds, Bollen and Jeff Sveen, an Aberdeen lawyer. Lucas and Hunhoff say the officials have until Sept. 3 to respond voluntarily, or they’ll push for the committee to subpoena them.

“We need this packing plant for both North Dakota and South Dakota,” Lucas says. He says people have lost $50 million to $100 million, mostly foreign investors from China and Korea. He wants to know how much the state was spending for loan monitoring that was used for salaries and travel junkets.

From 2004 to 2013, $620 million was invested in EB-5 in South Dakota, Lucas says. “We have reason to believe that 10 percent of each of those 500,000 investments was devoted to salary.”

Meanwhile, the president and CEO of the new beef processing operation moving into the Aberdeen facility, Robert Cooper of Kansas City, Mo., says he is ramping up to begin production in 2015. He is hopeful the plant, under the name New Angus, can be profitable, eventually processing 1,000 head of cattle per day.