Funds through divisive visa system helped SD dairy

Staff Writer
Columbus CEO

SIOUX FALLS, S.D. (AP) — Rodney and Dorothy Elliott had a milking operation in Northern Ireland when a newspaper ad — "Wanted: Dairy farmers in South Dakota" — caught their attention. Along with more favorable regulations and cheaper land, there was also the incentive of four foreign investors putting up $500,000 each through a U.S. visa program.

The Elliotts used that $2 million at their Drumgoon Dairy near Lake Norden to build a larger barn to accommodate more cows and start off stronger financially after their 2006 move to South Dakota.

"I can honestly say we've had no regrets," Dorothy Elliott said about packing up their dairy operation and three children and leaving Europe.

But the federal EB-5 program, which allows foreign investors to seek U.S. residency with a $500,000 investment in an approved rural project that creates at least 10 jobs, has become a major issue in the state's U.S. Senate race. A beef packing plant approved as part of the program, which also received state economic development money, went bust while Republican Senate candidate Mike Rounds was governor. Democrats say millions in taxpayer dollars may have been lost.

Yet most of the 26 businesses identified as EB-5 projects in the state are still operational, including the Elliotts'. They have since expanded to milk more than 2,600 cows and employ about 40 people. Three investors have been repaid and the fourth will be soon, Dorothy Elliott said. And since the dairy created the required number of jobs, all four investors are now U.S. citizens.

More than $642 million has been invested in such projects in South Dakota since 2004, creating an estimated 5,658 direct and indirect jobs, and 304 investors have been granted green cards, said Pat Costello, commissioner of the Governor's Office of Economic Development, which approves the projects.

There are currently no new projects funded through the program, he said.

Three dairies went bankrupt, as did Northern Beef Processors in Aberdeen — the project at the center of the political controversy. But the dairies are operating under new owners, and the beef plant was sold to an investment firm that said it plans to reopen it in 2015.

"From an economic development perspective, if that beef plant gets operating again it's going to be a really big home run for the state of South Dakota," Costello said.

Democrats, though, want more information from Rounds and Gov. Dennis Daugaard. The two released written answers Monday that a committee of lawmakers plans to review Wednesday. Democrats also want answers from a man the Elliotts met in Ireland: Joop Bollen, the former administrator of the EB-5 program, who was recruiting farmers on behalf of the state.

Rep. Bernie Hunhoff said the issue isn't whether the program is a success or failure but how much money was lost and how much some people have benefited from it personally. Several of the projects likely would have succeeded without the foreign investments, he said.

"There's never enough for education and health care, but we spend tens of millions of dollars to manipulate the marketplace," Hunhoff said.

Rounds and Daugaard say the state did not lose millions of taxpayer dollars, and that neither had any knowledge of former GOED commissioner Richard Benda, who investigators say committed suicide in October after having stolen $550,000 from the program when he left his job.

Democrats and Republicans in Congress support EB-5, but Sen. Tim Johnson, D-S.D., has asked for a review of any safeguards to detect fraud.