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Written claims must be filed within strict time limits, see current FedEx Service Guide. https://www.fedex.com/shipping/html/en//PrintIFrame.html 10/28/2015 US. Department of Homeland Security US. Citizenship and Immigration Services Notice of Action Applicationflietition 1-924, Application For Regional Center Under the Immigrant Investor Pilot Program Receipt Applicantil?etitioner ID 1031910140 South Dakota Regional Center Notice Date Page Beneficiary September 28, 2015 1 of 18 South Dakota Regional Center . c/o South Dakota GOED Notice of Intent to Terminate 711 E. Wells Ave Pierre SD, 57501 . EVIDENCE IN OPPOSITION TO THE GROUND OR GROUNDS IMPORTANT WHEN YOU HAVE COMPLIED WITH THE ALLEGED IN THIS NOTICE MUST BE RECEIVED BY THIS INSTRUCTIONS ON THIS FORM. RESUBMIT THIS NOTICE OFFICE NO LATER THAN THIRTY (30) DAYS FROM THE DATE ON TOP OF ALL REQUESTED DOCUMENTS AND 10R ON THIS NOTICE. IF YOU DO NOT PROVIDE A RESPONSE TO INFORMATION TO THE ADDRESS BELOW. THIS OFFICE THIS NOTICE wypHIN THE TIME ALLOWED, YOUR HAS RETAINED YOUR WITH DESIGNATION FOR PARTICIPATION AS A REGIONAL CENTER SUPPORTING DOCUMENTS IN THE IMMIGRANT INVESTOR PROGRAM WILL BE TERMINATED PURSUANT TO 3 C.F.R. CSC WS DIV I RETURN THIS NOTICE ON TOP OF THE REQUESTED INFORMATION LISTED ON THE ATTACHED SHEET. Note: You are given until October 31. 2015 in which to submit the information requested. Pursuant to 8 you must submit ALL evidence in opposition to the ground or grounds alleged in this notice of intent to terminate at one time. Submission of only some evidence will be considered a request for a decision on the record and may result in the termination of your designation for participation as a regional center in the Immigrant Investor Program pursuant to 8 C.F.R. For more information, visit our website at gov Or call us at 1'800'375'5283 Telephone service for the hearing impaired: 1-800-767-1833 You will be noti?ed separately about any other applications?or petitions you ?led. Save a photocopy of this notice. Please enclose a copy of it if you write to us about this case, or if you ?le another application based on this decision. Our address is: U.S. CITIZENSHIP AND IMMIGRATION SERVICES IMMIGRANT INVESTOR PROGRAM 131 STREET, NE MAILSTOP 2235 WASHINGTON, DC 20529 Form. 1-797 (1100) Please see additional information on the back. South Dakota Regional Center/ ID103 1910140 Page 2 of 18 NOTICE OF INTENT TO TERMINATE Form I-924, Application for Regional Center Under the Immigrant Investor Program SOUTH DAKOTA REGIONAL CENTER This notice is in reference to the approved designation of South Dakota Regional Center (the ?Regional Center?) as a regional center under the Immigrant lnvestor Program The purpose of this notice is to notify the Regional Center that, pursuant to 8 CFR 204.6 US. Citizenship and Immigration Services intends to terminate the participation ofthe Regional Center in the Program because it failed to submit information required by and no longer serves the purpose of promoting economic growth. The regulation at 8 C.F.R. 204.6 provides: Termination of participation of regional centers. To ensure that regional centers continue to meet the requirements of section 610(a) of the Appropriations Act, a regional center must provide with updated information to demonstrate the regional center is continuing to promote economic growth, improved regional productivity, job creation, or increased domestic capital investment in the approved geographic area. Such information must be submitted to on an annual basis, on a cumulative basis, and/or as otherwise requested by using a form designated for this purpose. will issue a notice of intent to terminate the participation of a regional center in the pilot program if a regional center fails to submit the required information or upon a determination that the regional center no longer serves the purpose of promoting economic growth, including increased export sales, improved regional productivity,job creation, and increased domestic capital investment. The notice of intent to terminate shall be made upon notice to the regional center and shall set forth the reasons for termination. The regional center must be provided 30 days from receipt ofthe notice of intent to terminate to offer evidence in opposition to the ground or grounds alleged in the notice of intent to terminate. 1f determines that the regional center?s participation in the Pilot Program should be terminated, shall notify the regional center ofthe decision and ofthe reasons for termination. As provided in 8 CFR 103.3, the regional center may appeal the decision to within 30 days after the service ofnotice. Section 610 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993, Pub. L. No. 102-395, 106 Stat. 1828 (1992), as amended by section 116 ofPub. L. No. 105-1 19, 1 11 Stat. 2440 (1997); section 402 of Pub. L. No. 106-396, 1 14 Stat. 1637 (2000); section 11037 ofPub. L. No. 107?273, 16 Stat. 1758 (2002); section 4 of Pub. L. No. 108-156, 117 Stat. 1944 (2003); and section I of Pub. L. No. 1 l2-l76, 126 Stat. 1325 (2012) (hereinafter ?Appropriations Act?). South Dakota Regional Center/ ID103I9IOI40 Page 3 of 8 1. Procedural History A. Initial Designation On April 08, 2004, USCIS designated South Dakota Regional Center as a regional center following approval ofits proposal for regional center designation under the Immigrant Investor Pilot Program. Based on the initial designation, the Regional Center obtained approval for the following geographic area: Name of State Counties South Dakota Brookings, Clark, Codington, Dcuel, Grant, Hamlin, Kingsbury, Lake, McCook, Miner, Moody and Roberts B. Amendments On December 22, 2004, the Regional Center ?led an amendment to its designation that added 33 additional counties that are contiguous to the original 2 eastern South Dakota counties encompassed in the initial designation (for a total of45 counties to be the geographic focus ofthe Regional Center). The geographic area speci?cally excluded the city of Sioux Falls located within Minnehaha County, the city ofAberdeen located within Brown County and the city of Watertown located within Codington County. The amendment was approved on July 18, 2005. On December IO, 2006, the Regional Center filed an amendment to its designation to include investments in the following two industries: meat processing and packing operations; and dairy, beefcattle and other animal feed lots and the use of RIMS II multipliers. The amendment was approved on December 12, 2006. On November 8, 2007, the Regional Center filed an amendment to its designation to change its name from South Dakota International Business Institute to South Dakota Regional Center. The amendment also sought to expand the Regional Center?s geographic area of coverage by adding an additional 18 contiguous counties within South Dakota and to add seven target industry economic clusters. The Regional Center also provided a Memorandum of Understanding between the Regional Center and SDRC, Inc. The amendment was approved on June 25, 2008. On May 26, 20] ,the Regional Center filed an amendment for a new project (RCWI I 1465021 I). The new project required nine NCEs (SDIF LPI I9) to pool immigrant investor funds for the Keystone XL Pipeline. The amendment also sought to expand the Regional Center?s geographic area to include the last two remaining South Dakota counties, adding six contiguous counties across the Northeastern corner of Montana to the South Dakota border and 24 contiguous Nebraska counties from the South Dakota border running north to south in central Nebraska.2 The amendment also sought to expand the industry 2 The additional counties include the following counties in South Dakota: Meade and Pennington, the following counties in Montana; Philips, Valley, McCone, Dawson, Prairie and Fallon and the following counties in Nebraska; South Dakota Regional Center Page 4 of 18 designations to include pipeline transportation 486) and construction 23). This amendment has yet to be adjudicated. Based on the 2004, 2006, and 2007 amendments, the Regional Center obtained approval for the following geographic area: Name of State Counties South Dakota 63 counties, excluding the cities of Rapid City, Aberdeen and Watertown C. Regional Center Projects USCIS has received a total of 1,002 Forms [-526, Immigrant Petition by Alien Entrepreneur ?led by petitioners associated with the Regional Center based on investments in thirty-two Regional Center- associated New Commercial Enterprise[s] as shown in the table below. Of these Form [-526 petitions, 705 have been approved to date. There were twenty?one NCEs related to dairy and cattle farming.3 Non-dairy or cattle farm NCEs include the following: ?New Commercial Enterprise - Job-Creating Entity i? Northern Beef Packers LP Northern Beef Packers LP SDIF LP6 Northern Beef Packers LP CSDIF LP9 Northern Beef Packers LP LP2 Tentexkota LLC LPS Nextera Energy Capital Holdings lnc. 4 LP8 Buffalo Ridge ll LLC EDIF Dakota Provisions LLC5 Keya Paha, Cherry, l-lolt, Rock, Brown, Wheeler, Gar?eld, Loup, Boone, Greely, Valley, Nance, Howard, Sherman, Merrick, Hamilton, York, Hal], Saline, Fillmore, Clay, Jefferson, Thayer and Nuckolls. 3 These dairy and cattle farming NCEs include: Allied Cattle, LLC, Badger Dairy LLC, Crosswind Jersey lnc., Drumgoon Dairy LP, Dutch Dakota Dairy LLC, Global Dairy LP, Hammink Dairy, Hill Top Dairy lnc., KC Dairies LLP, Linde Dairy LLC, Mill Valley Dairy LP, County Dairy LP, Mossings Dairy LLP, Newark Veal lnc., Old Tree Farms LLC, Sunrise Dairy LLC, Swier Dairy LP, Valley View Dairy LP, Van Winkle Dairy LP, Veblen East Dairy LP and Winter Dairy LP. 4 The [-829 record submitted to indicates that Day County Wind, LLC is the entity most closely responsible forjob creation, however, the NCE loaned EB-5 funds not to Day County Wind, LLC but to Nextera Energy Capital Holdings, Inc. (Nextera). The relationship between borrower Nextera and Day County Wind, LLC is unclear. The Con?dential Offering Memorandum states NextEra and Day County Wind, LLC are vertically integrated. The Business Plan states Day County Wind, LLC is an indirect subsidiary of Nextera. Despite these assertions, no evidence in the record is provided to corroborate or explain the specific nature ofthe relationship between the entities. 5 the Job Creating Entity (JCE) is actually Dakota Turkey Growers, LLC d.b.a. Dakota Provisions, LLC South Dakota Regional Center/ 1D1031910140 Page 5 of 18 i SDIF 14P4 Dakota Provisions, LLC 7 LP20 Dakota Provisions, LLC SDIF LP3 Basin Electric Power Cooperative SDIF Basin Electric Power Cooperative D. Annual Reports (Forms I-924A) The Regional Center has ?led five Forms l-924A, Supplement to Form 1-924, and the table below summarizes the information provided to in those forms regarding the aggregate amount of capital investment from petitioners, and the aggregate number of direct and indirectjobs created and maintained as a result ofthose investments per year. Aggregate A . . ggregafe EB 5 Direct and Aggregate Jobs Fiscal Year Receipt No. Date Received Capital . . Indirect Job Maintained Investment Creation 2010 RCWI 104150160 02/24/201 1 $207,000,000 499 0 201 1 RCWI 129350341 10/17/201 1 $277,000,000 672 0 20l2 RCW1230750796 1 1/12/2012 $19,500,000 300.1 0 2013 RCW1404351682 2/ 1 2/2014 $20,500,000 1,726 0 2014 1/2/2015 0 160.3 0 E. Regional Center?s Management Timeline: April 8, 2004: the Regional Center is approved by At the time its name was South Dakota International Business Institute (?80181?) Dairy Economic Development Region The approval letter is addressed to Mr. Joop Bollen who is identi?ed as the director of the Regional Center. 2004-2009: the South Dakota Governor?s Of?ce of Economic Development contracted with Northern State University School of Business to manage the Regional Center under the directorship of Mr. Bollen. November 8, 2007 the Regional Center submitted a proposal for a third amendment seeking that review and recognize a Memorandum of Understanding (MOU) between the South Dakota International Business Institute and SDRC, Inc. The MOU indicated that SDRC lne. would serve as the exclusive agent to recommend, coordinate, and manage regional center investment projects for the State of South Dakota?s regional center (the Regional Center). This amendment was approved on June 25, 2008. South Dakota Regional Center/ ID1031910140 Page 2008: a Memorandum of Understanding is signed between the Regional Center (South Dakota International Business Institute Dairy Economic Development Region) and SDRC, Inc. SDRC, Inc. was created to sign contracts with outside parties, work with the immigrant investor partnerships, vet projects, and ensure compliance with the Program rules and regulations (such as ?ling ofthe Forms 924A). Mr. Bollen signed the MOU on behalfof the Regional Center and James Park of Hanul Professional Law Corporation (?Hanul?) signed the MOU on behalfof SDRC, Inc. 0 .lune 2009: SDRC, Inc. amends its Articles oflncorporation. SDRC, Inc. is a private company 100% owned by Mr. Bollen. 0 December 22, 2009: Mr. Bollen?s company, SDRC, Inc., is awarded a management contract to run the program for the Regional Center. That same day Mr. Bollen resigned from his state employment in order to manage SDRC, Inc. The contract between the Regional Center and SDRC, Inc. is signed by the Secretary of Economic Development for South Dakota, Mr. Richard Benda. 0 End of 2010: Mr. Benda leaves state of?ce and goes to work as a loan monitor for South Dakota Investment Fund 6 and South Dakota Investment Fund 9, speci?cally monitoring the Northern Beef Packers, LP loan. The general partners of both of these funds are Limited Liability Companies that are solely owned by SDRC, IncForm 1?924 amendment is ?led for a new project. Part 3.1a ofthe 1-924 application notes Inc. is the sole exclusive management entity which operates and manages all aSpects ofthe regional center on behalf of SDIBI and the South Dakota Department ofTourism and State Development which is the entity to which the regional center privileges are granted. Mr. Ioop Bollen, who as a state employee originally obtained regional center status for the now is the sole shareholder Inc. and is solely responsible for managing and administering the regional center.? Part 3.4 states, Inc. is responsible for the regional center?s administration, oversight and management functions and the allocations ofthe resultingjobs.? 0 September 24, 2013: State of South Dakota terminates its management contract with SDRC, Inc. II. Reasons for Termination A. Failure to Submit Required Information to USCIS The Regional Center provided inaccurate or incomplete information to USCIS [on its annual Form 1? 924A ?lings for ?scal years 2010, 201 I 2012, 2013 and 2014. Under 8 C.F.R. a regional center: must provide USCIS with updated information to demonstrate the regional center is continuing to promote economic growth, improved regional productivity, job creation, or increased domestic capital investment in the approved geographic area. Such information must be submitted to USCIS on an annual basis, on a cumulative basis, and/or as otherwise requested by USCIS, using a form designated for this purpose. South Dakota Regional Center/ 1D1031910140 Page 7 of 18 i. Failure to Provide Required Information The Form 1-924A instructions direct the regional center to provide a detailed statement for the last ?scal year which addresses topics including: The names, addresses, and industry category title of each job creating commercial enterprise located within the geographic scope of your regional center that has received alien investor capital. For each located within the geographic scope of your regional center: 0 The aggregate amount of capital investment 0 The aggregate number of new direct and/or indirectjobs created by EB-S investors; If applicable, the aggregate number of jobs that have been maintained through EB-S capital investments into a troubled business 0 1f the serve as a vehicle for investment into JCEs that will create or maintain jobs for EB- 5 purposes: 0 Names and addresses of JCEs 0 Amount capital investment in JCEs 0 Number ofjobs created or maintained by JCE through 133-5 investments; 0 Total number of approved, denied, or revoked Form 1?526 petitions ?led by alien investors, for capital investments sponsored through your regional center. The Regional Center?s pattern of incorrect and inconsistent ?lings detailed below has not ended with the new management, but rather continues through the most recent l?924A ?ling. Regardless whether the Regional Center has intentionally provided conflicting or incorrect information to the magnitude of these discrepancies casts doubts on the credibility ofthe Regional Center?s ?lings and management. 0. Failure to accoun?br capital investments in all New Commercial CES As noted above, the amount of capital invested and jobs created through the Regional Center?s capital investment projects should be reported within the ?scal year in which they were respectively accomplished. For example, Form ?lings for ?scal year 201 1, should include the capital investment andjob creation that occurred between October 1, 2010 and September 30, 201 1. The following NCEs had Form 1?526 petitions approved between 2009 and 2012, but were not reported on the 1-924A annual ?lings for 2010, 2011, 2012, 2013 or 2014. 0 Allied Cattle, LLC, one [-526 petition was approved on 6/17/20] 1 0 Dutch Dakota Dairy LLC, one 1-526 petition was approved on 3/21/201 7 South Dakota Regional Center/ ID1031910140 Page 8 of18 0 Valley View Dairy LP, ten 1-526 petitions were approved between 2/2009 and 3/2010 0 South Dakota Investment Fund, LP6 sixty eight 1-526 petitions were approved between 4/2010 and l/12012 0 South Dakota Investment Fund, LP 7 nine I-526 petitions were approved between 5/2010 and 7/201 1 0 South Dakota Investment Fund LLC 1, twelve [-526 petitions were approved between 3/2009 and 8/2009 Conversely, the Form I-924A ?lings for ?scal years 2010 and 20] 1 incorrectly re?ect that EB-5 capital was disbursed to four NCEs that, according to other ?lings submitted to USCIS, were actually projects or job creating entities Speci?cally the I-924As in 2010 and 201 1 show: Deadwood Mountain Grand Casino received an aggregate capital investment of $59,500,000 Dakota Provisions received an aggregate capital investment of $105,000,000 Basin Electric- Deer Creek Station received an aggregate capital investment of $208,000,000 Nextera Energy received an aggregate capital investment of $61,000,000 According to documents submitted in support ofthe associated 1-526 and [-829 petitions, South Dakota Investment Fund, LP2 was the NCE that ?nanced the Deadwood Mountain Grand Casino. South Dakota Investment Fund, LPI and South Dakota Investment Fund, LP4 were the two NCEs that ?nanced Dakota Provisions. South Dakota Investment Fund, LP3 and South Dakota Investment Fund, LP7 were the two NCEs that ?nanced Basin Electric-Deer Creek Station and South Dakota Investment Fund, LP5 is the NCE that ?nanced the Day County Wind Farm, which was developed by Nextera Energy. Not only are the Regional Center?s incorrect in reporting the EB-5 capital invested into each NCE, the amounts reported on the I-924As are inconsistent with the total amount of EB-5 funds loaned for these projects according to the 1?526 and 1-829 petitions. For example, according to both the Form 1- 924A and [-526 documents submitted to USCIS for petitioners associated with South Dakota Investment Fund, LP 2 $59,500,000 of 138-5 capital was invested in the Deadwood Mountain Grand Casino. However, SDIF business plan and petitioner documents show that only 65 investors were expected to raise a total of $32,500,000, which is consistent with the number ofinvestor petitions received by USCIS. Accordingly, it is unclear how Deadwood Mountain Grand Casino could have received $59,500,000 in capital. Similarly, according to both the Form I-924A and documents submitted to USCIS for petitioners associated with South Dakota Investment Fund, LP3 $208,000,000 of EB-5 capital was invested into the Basin Electric?Deer Creek Station. However, a maximum of210 investors were expected to raise a maximum of$105,000,000, which is consistent with the number of investor petitions received by therefore it is unclear as to how Basin Electric-Deer Creek Station could have received $208,000,000 in EB-5 capital. Additionally, according to the 924A ?lings, Northern Beef Packers, LP received an aggregate capital investment of$45,500,000; however the project plan for NBP, LP indicated a need for up to 70 138-5 investors for a total capital investment of $35,000,000, which is consistent with the number ofinvestor petitions received by USCIS. Furthermore, according to USCIS records, NBP, LP was not fully subscribed. Accordingly, it is unclear as to how the Northern Beef Packers project could have received $45,500,000 in EB-5 capital. South Dakota Regional Center/ lD103I9l0140 Page 9 of 18 Such inconsistencies between and among ?lings submitted to USCIS suggest that funds have been impermissiny commingled between investor accounts and projects. For instance, for the NCE SDIF LP6, which had 68 investors, certain SDIF LP 6 Checking Account Statements provided to USCIS in support ofI-829 petitions show that signi?cantly more than the estimated $36,040,000? comprised ofthe $500,000 investment and $30,000 fee from each investor -- was collected. Because the limited partnership agreement indicated that all funds would be from EB-5 investors, the source of the additional monies is unclear. It also appears that the immigrant investor funds from the NCEs SDIF LP3 and SDIF LP5 were commingled. According to the comprehensive business plans and organizational documents submitted to USCIS at the 1-526 and [-829 stage, SDIF LP3 loaned monies to Deer Creek Station Electric Energy Facility Project, for the construction and operation of an electrical substation at Deer Creek. According to the comprehensive business plans and organizational documents submitted to USCIS at the 1?526 and I- 829 stage, SDIF LPS loaned monies for the construction and operation of Day County Wind Energy Center located in Day County, South Dakota. None ofthe business plans submitted in support of SDIF LP3 or the business plans submitted in support of SDIF LPS, their respective pro formas or any other documents associated with these projects indicated that these projects were in any way connected or that their funding would share a common source. In addition, the FY2010 l-924A shows $l I million in EB-S capital investment from SDIF LPS to Nextera Energy and the FY 2011 I-924A ?ling from the Regional Center indicates $50 million was invested from SDIF LP5 to Nextera Energy. There is no indication on any Form of any money transferred from SDIF LP5 to SDIF LP3 or Deer Creek Electric. Yet, a petitioner 1-829 ?ling contained a Promissory Note signed on [0 October 20 0 by Mr. Joop Bollen stating that SDIF LP3 borrowed $2.5 million from SDIF LP5.6 b. Conflicting information provided in I?924Ajilin? The information provided in the I-924A ?lings has discrepancies both within the same ?lings and between the ?lings and information provided to USCIS in other ?lings such as the related [?526 and 1-829 petitions. Speci?cally, the ?lings incorrectly identify the new commercial enterprises receiving capital investment and inaccurately account for funds invested through the Regional Center. In its l-924A ?ling for the ?scal year ending September 30, 201 I, the Regional Center incorrectly identi?ed .lCEs as NCEs. Furthermore, the Regional Center indicated that it sponsored $207,000,000 in aggregate EB-5 capital investment, however only $202,000,000 is accounted for as having been invested in each of the NCEs named on the form. The Regional Center indicated that $66,000,000 had been invested in ?Animal Production?, however the two entities identi?ed as being related to animal production; ?Dakota Provisions? and ?Northern Beef Packers? were only allocated $61,000,000 in aggregate. To date, the Regional Center has not accounted for $5,000,000 in EB-5 capital investment in its ?lings with USCIS and, therefore, has not provided required information to USCIS. 6 In the I-829 petition for thong Hu, a petitioner with SDIF LP3, there was a Promissory Note signed on 10 October 2010 by Mr. Joop Bollen stating that SDIF LP3 borrowed $2.5 million from SDIF LPS. Yet there is no record ofthis loan in any of the petitions associated with investors in SDIF LPS. Ifthis was a legitimate investment from SDIF LPS, then record of this loan should show up in the various petitions for SDIF LP3, SDIF LP7 and SDIF LPS. South Dakota Regional Center/ lD103 l910l40 Page 10 of 18 B. Failure to Demonstrate Promotion of Economic Growth Under 8 C.F.R. will issue a notice ofintent to terminate . . . upon a determination that the regional center no longer serves the purpose of promoting economic growth, including increased export sales, improved regional productivity,job creation, and increased domestic capital investment.? To ensure that a regional center continues to meet the requirements of section 610(a) of the Appropriations Act of 1993, must be assured that the terms and conditions ofthe operation ofthe regional center remain valid after the regional center receives designation for participation in the Program. This includes the scope and nature of the projects used as the basis for the job creation methodologies presented in the initial designation application or subsequent amendments. In addition, all regional centers must comply with EB-S statutory and regulatory provisions in order to maintain a regional center within which investors seeking to obtain permanent resident status under 203(b)(5) of the INA will be able to invest in a new commercial enterprise with a qualifying investment that will bene?t the United States economy and createjobs, includingjobs created indirectly through the new commercial enterprise. has considered all evidence provided ?for relevance, probative value, and credibility, both individually and within the context of the totality of the evidence,? in determining whether the Regional Center?s continued participation isjustified under the regulations by a preponderance ofthe evidence. See Matter ofChawathe, 25 Dec. 369, 376 (AAO 2010). For the reasons set forth below, the Regional Center has failed to demonstrate that it will more likely than not continue to promote economic growth in compliance with the Program. Lack of Credibility Impacting Regional Center?s Ability to Promote Economic Growth has discovered, through the existing record and facts outside of the record detailed below, that the Regional Center may no longer be able to promote economic growth in compliance with the Program. a. Diversion funds from job creation purposes EB-S funds were used for purposes that were not aligned with the business plans the Regional Center submitted to and in furtherance of job creation. The Regional Center bears responsibility for mismanagement and failure to oversee deployment of such funds because the relevant NCEs were monitored by the Regional Center and/or its affiliates and the Regional Center principals also managed and controlled the NCEs, often serving as the general partners. The Regional Center failed to ensure that the EB-S funds were made available forjob creation purposes, by engaging in or failing to stop diversion ofinvestor funds. For instance, SDRC, Inc. was intimately involved with monitoring the use of 133-5 funds invested in LP6 and LP9 forjob creation. Under the Credit Agreement and the Amended Credit Agreement between these NCEs as lenders and NBP, LP, their associated JCE, as borrower, the NCEs (and by extension, the Regional Center through the general partners, each a wholly owned 10 South Dakota Regional Center/ lDlO3l9lOl40 Page ll of IS subsidiary inc.) have broad oversight over how EB-5 funds are to be used by the Speci?cally, the NCE-approved Loan Monitor, Project Manager, and Architect are each respectively tasked under Section of the Amended Credit Agreement with reviewing, signing offon, and approving draw requests for hard costs submitted by NBP, LP.7 However, based on draw requests made in 20] and 20l2 submitted to USCIS in conjunction with numerous petitions, it appears that EB-5 funds were used for expenses that were not related to the activities ofthe JCE. These draw requests were all addressed to either Mr. Joop Bollen or Mr. Richard Benda (as authorized signers for the lender). The requests, including the requests for monies to be used for purposes that were not related to the activities LP or the Regional Center, were approved and all monies were released from escrow. The following expenses that do not appear to be related to the business activities LP or to the Regional Center were not listed on any source or use of funds document submitted with associated petitioners? filings, nor were they explained in any version ofthe comprehensive business plan. Those expenses include: $550,000 SDCI Summary Judgment Settlement Payment $70,000 Young Family Settlement payment $l50,000 Blake Witkin Loan l,390,000 Loan repayment to Song The following expenses seem to be regional center expenses and it is unclear as to why NBP, LP would be paying these expenses as they do not relate to the business LP. Again these expenses were not were not listed on any source or use of funds document submitted with associated petitioners? ?lings, nor were they explained in any version ofthe comprehensive business plan. Those expenses include: 5. $727,000 Agent fees; 6. $52,000 Korean Meal Expenses and Housing Expenses (from this was listed under ?plant operating costs?; 7. $43,000 Korean Labor, listed under ?construction hard costs?; and 8. $200,000 SDRC legal Costs Because the Regional Center clearly indicated its intention to monitor and oversee the monies even after the loan was made, hired a loan monitor to monitor the deployment of EB-5 funds, required either the manager of SDRC, Inc. or the loan monitor to approve all draw requests for the receipt of EB-5 funds, and these draw requests clearly itemized how the EB-5 funds were to be used; it stands to reason that the Regional Center was aware ofand allowed EB-S funds to be used for purposes unrelated to the business activities ofthe JCE. This diversion of EB-5 funds away from job creating purposes casts considerable doubt on the Regional Center?s ability to promote economic growth. b. Diversion ?ma?s into Ultracare Holdings Limited Based on bank documents from US Bank, during the ?rst year of construction, NBP, LP made at least three wire transfers to an offshore account held by Ultracare Holdings Limited (?Ultracare Holdings?). NBP, LP bank statements list wire transfers to Ultracare Holdings in the amount of$504,350 on 7 The Amended Credit Agreement between Northern Beef Packers, LP and SDIF LP6 signed March 4, 201 1. ll South Dakota Regional Center/ IDIO3I9IOI4O Page 12 of18 December 5, 2007; $308,600 on January 3, 2008; and $887,225 on April 2 I, 2008. The record contains no evidence demonstrating how these expenses relate to the business plan or the ?lings of the Regional Center. Based on independent open source review ofthe companies? websites, Ultracare Holdings Limited is based in Cyprus and is a holding company for BalTransServis, 000 and RemTransServis, 000 both of which are Russian companies whose principal activities are related to railway transportation and the repair and maintenance of railroad rolling stock. Ultracare Holdings is in turn a subsidiary of Globaltrans Investment, PLC. The principal activity ofGlobaltrans Investment PLC, according to the Director?s report and consolidated ?nancial statements for 20 I 3, is the provision ofrailway transportation services using owned and leased rolling stock as well as the ?eet engaged from other operators and operating lease of rail cars.8 This is further detailed on the Globaltrans website which states ?Globaltrans provides through its subsidiaries freight rail transportation, railcar leasing and certain ancillary services to clients in Russia, the CIS countries and the Baltics.? It is unclear from the evidence presented to USCIS, including the business plan, how Russian rail transportation, railcar leasing and the repair and maintenance of rolling stock relates to the NBP, LP stated business plan of constructing and operating a meat packing plant, and the promotion of economic growth within the Regional Center?s geographic area. Rather it appears that Northern Beef Packers used EB-S funds to invest in a holding company which was a deviation from the business plan and diverted funds away from job creation. The diversion of EB-S funds by an NCE sponsored by the Regional Center casts considerable doubt on the Regional Center?s ability to promote economic growth. c. Diversion gt? EB-5 funds into Epoch Star Based on Northern Beef Packers Limited Partnership Revised Business Plan dated 201 1, Northern Beef Packers LP Consolidated Financial Statements dated December 31, 2OIO and 2009 and the William E. Clark Title Company title assignment document order number Northern Beef Packers LP, also used EB-S funds to purchase its lender, an entity named Epoch Star Limited (?Epoch Star?). The purchase oproch Star is another example of EB-S funds invested through the Regional Center being diverted away from job creation activities. The Regional Center not only allowed these transactions to occur, but also facilitated them through Mr. Bollen and his involvement in SDRC, Inc. In doing so, the Regional Center failed to promote economic growth. Epoch Star was a company incorporated in the British Virgin Islands ?solely for the purposes of providing a one-time lending facility of foreign investors to Its parent company, Pine Street Special Opportunity Fund I (?Pine Street?), was incorporated in the Cayman Islands and based out of Hong Kong. Epoch Star and Pine Street were managed by Anvil Asia Partners, another company incorporated in the Cayman Islands. On June 29, 2010 Wai Yee Christine Ma, a director ofa company responsible for managing both Pine Street and Epoch Star, signed an af?davit stating that there were less than 10 investors in Pine Street and that none were a bank, ?nancial institution or in the sole business of ,lending money. 3 httpu?fedgl I 8652/6LTRconsoIidatedFSZO I Zl? 9 Document 187-2 in Court Case I3-OIOI6 Filed on 2/13/2014. 12 South Dakota Regional Center/ 1D103l910140 Page 13 of 18 Epoch Star agreed to loan $30 million to NBP, LP on 3/18/2010 with an interest rate of 29 percent. The 201 1 business plan, described the terms ofthe Epoch Star loan to NBP, LP as ?unreasonable and exorbitant (bordering on usury) levels ofinterest to be charged.? Even Mr. Park, in a letter to USCIS dated June 201 1 submitted in response to a Notice of Intent to Deny an 1?829 petition, described the Epoch Star interest rates as ?un?reasonable and exorbitant.?l0 On July 29, 2010, NPB, LP received $2.85 million from Epoch Star as bridge ?nancing. By November 4, 2010, NPB, LP had spent over $7.4 million of 138-5 funds to have the benefit of that bridge ?nancing for 3 months.ll On November 4, 2010, ostensibly to escape the burden of servicing debt owed to Epoch Star, NBP, LP purchased Epoch Star for a purchase price of$5, 144,835. funds used to service the debt and ultimately to purchase the lending entity were not made available forjob creation purposes and these expenses are inconsistent with the promotion ofeconomic growth by the Regional Center. The credit agreement between NBP, LP and SDIF LP6 was signed by Mr. Joop Bollen as the general partner for SDIF LP6. SDRC, Inc. acting in the role ofthe Regional Center?s management company oversaw and arguably orchestrated this diversion ofinvestor funds. (1. Lack of regional center due diligence. monitoring and oversight In approval letter dated April 29, 2010 relating to the Regional Center?s third amendment, USCIS noted, in order for USCIS to determine whether your regional center is in compliance with [8 C.F.R. 204.6 and in order to continue to operate as a USCIS approved and designated regional center, your administration, oversight, and management of your regional center shall be such as to monitor all investment activities under the sponsorship of your regional center and to maintain records, data and information on a quarterly basis in order to report to USCIS upon request the following year to date information . . The USCIS approval letter further provides that the Regional Center must be prepared to explain, ?[h]ow the Regional Center is actively engaged in the ongoing monitoring, evaluation, oversight and follows up on any investor commercial activities affiliated through the Regional Center that will be utilized by alien investors in order to create direct and/or indirectjobs through qualifying EB-S capital investments into commercial enterprises within the Regional Center.? According to Mr. Bollen?s testimony, the Regional Center did not engage in vetting projects or in project- related due diligence before 2008 because the projects included bank loans, and it was assumed that the '0 USCIS notes that NBP, negotiated interest rate of 29% does seem commercially unsound. Table 2: The cost ofthe Epoch Star Loan Category To whom Amount Placement fee Quintus Asset Management $240,000 Success Fee Maverick $1,500,000 Pringipal Repayment Epoch Star $2,850,000 Unused Fee Epoch Star $2,410,612 Interest Epoch Star $446,723 Total $7,447,335 l3 South Dakota Regional Center/ ID1031910140 Page 14 of 18 banks, marketing agents, and investors would vet any project. 12 In the same testimony, Mr. Bollen indicated that SDRC, Inc. was created to assist the Regional Center with the management and operation ofthe EB-S projects.'3 The need for an outside party to assist the Regional Center in project due diligence was further supported by language included on page 2 ofa Memorandum of Understanding signed between SDRC, Inc. and the Regional Center on May 1, 2008, stating will request that USCIS acknowledge designation of SDRC Inc. to assist in management, administration and overall compliance ofthe Alien Entrepreneur project. . Based on the evidence in the record, including Mr. Bollen?s testimony and the Memorandum of Understanding, it is clear that the Regional Center was unable to accomplish due diligence for Regional Center projects on its own, relying initially on banks to vet the projects and then on the outside entity of SDRC, Inc.? Now that SDRC, Inc. is no longer contracted to assist the regional center in monitoring, evaluation and oversight of investment activities under the sponsorship ofthe Regional Center, it is unclear how the current management ofthe Regional Center is fulfilling its monitoring and oversight responsibilities, speci?cally over any commercial activities af?liated with the Regional Center that will be relied upon by alien investors in order to create direct and/or indirectjobs through qualifying EB-S capital investments into commercial enterprises sponsored by the Regional Center. Notably, a number ofthe NCEs which SDRC, Inc. or its af?liates[5 have overseen have failed, including Veblen East Dairy LP, Winter Dairy LP (also known as Willow Lake Farm), Hill Top Dairy, lnc.; and NBP, LP, which all ?led for Chapter 11 bankruptcy relief. 12 Virtual Deposition of Mr. Bollen taken April 16-18, 2014. '3 While being deposed on April 16, 2014, Mr. Bollen conceded that ?Hanul, Darley, or any other service providers were not able to perform the due diligence needed to protect the investors.? Mr. Bollen also conceded that separate entity was needed to screen, qualify, and select all future projects in order to protect the integrity of the regional center. SDRC was created to meet these roles. SDRC Inc., was established to select projects and enter into agreements with oversees recruiters.? '4 Deposition testimony from Mr. Bollen and others also suggests that the scope of due diligence to be performed by SDRC, Inc. and its other duties and reSponsibilities for the Regional Center as outlined in the Memorandum of Understanding was deliberately phrased too broadly, although the parties involved did not believe it was realistic for SDRC, Inc. to ful?ll such responsibilities. In fact, it appears that the Memorandum of Understanding was primarily signed to satisfy perceived USCIS requirements. When asked about the authority granted to SDRC, Inc in the MOU Mr. Bollen in his testimony indicated ?The intention was to be as broad as possible, but the reality is that it does not do these activities.? (Bollen Dep. 22324-22427, April 14,2014) 5 SDRC, Inc. or its af?liates continue to serve as the general partner of limited partnerships associated with the Regional Center and have a direct role in their management. For example, Page 1 ofthe SDIF LP6 Offering Memorandum provides that, ?The sole general partner of the Limited Partnership, SD Investment Fund LLC6 (the ?General Partner?), is an af?liate of SDRC, Inc. (the ?Promoter?). Page 6 of the same offering memorandum provides that, ?the Promoter has recommended the Limited Partnership after acareful review ofthe business plan and the ?nancial information of the Project included in the offering for the full period ofthe Limited Partnership?s investment, indicating the Project will have suf?cient revenue to create and maintain the requisite number of jobs under the Program.? 14 South Dakota Regional Center/ 1D103 1910140 Page 15 of 18 The issues outlined above cast considerable doubt on the credibility ofthe Regional Center, its operations, and its ability to promote economic growth in compliance with the Program, especially given its administration and oversight responsibilities as detailed in its designation approval letter. The record indicates that the Regional Center has failed to meet its management, monitoring and oversight responsibilities in order to ensure compliance with EB-S regulations. As stated above, such failure casts considerable doubt on the credibility of all of its operations. Thus, it has failed to demonstrate that it will more likely than not continue to promote economic growth in compliance with the Program. e. Investor complaints: violation of the terms of escrow gzreements and moving investors between CEs Numerous documents in the record Show that the entities under the Regional Center?s management and/or oversight violated the terms of escrow agreements with investors. Past management of the Regional Center has eroded credibility with investors and with For instance, both the Offering Memorandum and Escrow Agreement for one NCE, LP8, provide for the return of escrowed funds to the investor ifthe [-526 petition is denied and provide that funds will only be released from escrow to the NCE upon approval of the investor?s [?526 petition. The LP8 Offering Memorandum provides in pertinent part, ?The release by the Escrow Agent ofan individual investor?s Subscription Proceeds to the Limited Partnership is conditional upon approval ofthe Investor?s 1-526 petition (immigrant petition by alien entrepreneur) (an ?1-526 Additionally, Section 3.2.2 ofthe SDIF LPS Escrow Agreement states, ?Investment shall be released back to the Investor, if SDRC delivers Written notice to the Escrow Agent that the Investor?s 1-526 Petition has been refused.? On two occasions, however, via correspondence dated October 31, 2011?6 and November 6, 201 l,[7 received complaints from investors that Mr. Bollen and Mr. Park never of?cially informed them ?6 received two letters from investors indicating that the general partner for LP8, an LLC that was 100% owned by SDRC lnc., acted contrary to what the Regional Center stated to investors in those documents. 1- 526 petitioner Zhiyong Sun wrote to stating: I have learnt ofthe denial of my [-526 Application from the USCIS website on October 18, 201 l. I had made a formal request to my attorney, Mr. James Park Esq. from Hanul Professional Law Corporation (?Hanul?) and Joop Bollen, General Partner of SDRC, INC. to provide me with a copy ofthe 1-797C re?ecting the denial of my [-526 Application (?Denial Notice?) and (ii) to release my investment proceeds of $500,000 currently in escrow. Unfortunately, neither Hanul nor SDRC honored this request. . . . Since Hanul and SDRC did not furnish the Denial Notice to me, 1 would like to request assistance to provide me with such Denial Notice directly so that 1 may attempt to secure release ofmy funds. '7 received an email from counsel for an investor in SDIF LP8 stating, ?Our investors found out [our] refusal for their [-526 petitions from the USCIS website but our GP J00p Bollen and lawyer James Park never officially inform us about the refusal. After two weeks of the refusal, Joop Bollen and James Park are still not providing us the refusal letters and refused to release our fund in the escrow accounts even after their repeated request.? 15 South Dakota Regional Center/ 1D1031910140 Page I6 of 18 about denials of their Form 1-526 petitions and therefore, never provided them with the documents necessary to receive their funds held in escrow. These investors instead found out about their 1-526 petition denials from the USCIS website. The South Dakota?s Governor?s Of?ce of Economic DeveIOpment has since informed USCIS that the Regional Center has changed management. According to a letter to USCIS from GOED dated September 24, 2013, the point of contact for the Regional Center has changed from Mr. Bollen to Mr. Hunter Roberts and ?On September 19, 2013 the State ofSouth Dakota terminated the agreement with SDRC, Inc. and Mr. .Ioop Bollen as permitted under provisions ofthe contract. Going forward the SDRC, Inc. and Mr. .Ioop Bollen will cease af?liation with the South Dakota Regional Center.? Despite this change, the Regional Center has not presented any evidence to indicate how the above violations of escrow agreements were isolated incidents that will not be repeated. Failure to inform investors of signi?cant actions in their petitions and to provide them with the necessary documents to obtain their escrowed funds indicates mismanagement and incompetence. These failures cast considerable doubt on the credibility ofthe Regional Center?s ability to promote economic growth and achieve the purposes of the Program through its participation. Signi?cantly, despite the Regional Center?s claims that it has cut ties with SDRC, Inc. and changed management, it appears that the SDRC, Inc. website is, as ofthe date ofthis notice, still actively representing the Regional Center, notifying visitors ofcurrent Regional Center news. Furthermore, USCIS has also accessed Chinese recruiting websites, which continue to tie Regional Center projects to SDRC, Inc.lg In addition, the Regional Center?s 2013 and 2014 Form I-924A filings submitted to USCIS identify the GOED website as the Regional Center?s website and these filings are also posted on such website. The ?lings include six projects where Mr. Joop Bollen is the general partner ofthe Furthermore the SDRC, Inc. website has updated information on these same projects for 1313-5 investors. Therefore, contrary to the information provided to USCIS it does not appear that SDRC, Inc. and Mr. loop Bollen have ceased af?liation with the South Dakota Regional Center. 1' i . Material isrepresentations During the course of its adjudications, and the veri?cation of information submitted by the Regional Center and individual Form 1?526 petitioners, USCIS has discovered signi?cant discrepancies between what the Regional Center represented in its ?lings and in documents provided to individual Form 1?526 petitioners, and what USCIS was able to determine independently. As such, USCIS has determined that the Regional Center misrepresented material facts to USCIS through its ?lings and in documents provided to individual Form 1-526 petitioners, particularly with regard to the NCE under its sponsorship and the job-creating activities to be facilitated by EB-S investments.20 These discrepancies and ?3 l40421/8a51502 1701 43cS.htmI ?9 The 924A for 2013 lists the regional center projects as: SDIF LPI, SDIF LP4, son: LP2, SDIF LPS, and SDIF LP3. The 924A for 2014 lists the regional center projects as SDIF LP3, SDIF LPS, and SDIF LP2. 20 USCIS may verify information submitted by the Regional Center to establish its eligibility for regional center designation at any time to ensure compliance with applicable laws and authorities, pursuant to authority granted by 8 16 South Dakota Regional Center/ lDl03 l9 l0140 Page 17 of 18 misrepresentations cast considerable doubt on the credibility of the Regional Center?s ability to promote economic growth and achieve the purposes ofthe Program through its participation. A review of public records, documents submitted to USCIS, and publicly available statements from representatives of the Regional Center shows that representatives and officials of the Regional Center provided misrepresentations to USCIS and iuvestors regarding the activities and business associations of the Regional Center. Physical alterations to escrow agreements sent to USCIS by Regional Center- associated petitioners raise questions about the authenticity ofthe escrow documents as well as the overall credibility ofthe Regional Center. Investor petitions associated with the Regional Center included questionable documents that appear to have been visibly altered and that did not appear to have the signatures ofthe legitimate parties. The I-829 petition for Ziming Xu, a limited partner in either SDIF LP6 or SDIF contained documents that appear to be visibly altered. In the 1-526 application, there was an escrow agreement for SDI LP6, however in the 1-829 petition that same escrow agreement appeared to have all appearances of the characters changed to throughout the document. The track marks from the paper of the 9 that replaced the 6 was visible on the photocopy provided to USCIS. In addition wire transfer records from Great Western Bank show that $530,000 was transferred from SDIF LP6 to SDIF LP9 on September 30, 20 with the transfer description reading Xu, Ziming This is seems to contradict other account details showing that Ziming Xu?s funds were deposited directly into SDIF account via a wire transfer on November 25, 201 l. The subscription agreement included in Ziming Xu?s -526 application for SDIF LP9 is not signed with Chinese characters, unlike any ofthe other documents, and the signature using western characters does not match any ofthe other signatures in the filing, including the signatures on the escrow agreement. In the l?829 petition for Chang Sheng Chen, the escrow agreement also appears to be similarly visibly altered, with the characters changed to throughout the document. Again, the track marks from the paper of the 9 that replaced the 6 was visible on the photocopy provided to USCIS. In the petition for Hu LaiJie, the escrow agreement appears to be visibly altered, with the characters for 1 changed to While the I-S26 and l?829 are petitioner ?lings, the Regional Center should have been aware ofthe suspect documents in light of the overlapping roles and responsibilities of the leadership of the Regional Center and new commercial enterprises it sponsored. Mr. Joop Bollen, the director ofthe Regional Center, was the manager for the limited liability company SDIF LLC6 that functioned as the general partner for the NCE, SDIF LP6. He was also the manager LLC9 which was the general partner for the NCE, SDIF LP9. According to the MOU between the Regional Center and SDRC Inc. submitted with the associated 1-526 petitioner filings, Mr. James Park, the attorney for the individual petitioners, U.S.C. sections l03, 155, and and the Departments ofCommerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993 Pub. L. No. l02-395, section 610, 106 Stat 1828, 1874 (1992) (as amended). South Dakota Regional Center/ ID1031910140 Page 18 of18 was also the director of SDRC, Inc. Further, as indicated on page two of that MOU, SDRC, Inc. was to ?assist in the management, administration and overall compliance? ofthe Regional Center. It also appears that investors may have been moved between NCEs, at times without their knowledge. The record shows that at least three petitioners wired funds into the checking account for SDIF LP6, only to have those funds transferred to the account for SDIF LP9 on the same day. Petitioners XiaoPing Yao, Chen ChangSheng and YiRong Ma had funds transferred from SDIF LP6 to SDIF LP9. According to SDIF LP6 checking account statements, a wire transfer of $530,000 was received on September 30, 201 I for XiaoPing Yao, and on that same date $530,000 was transferred to SDIF LP9 with the note Yao, XiaoPing LP9 Con?rmation #9301 12998.? On October 7, 201 1, a wire transfer for Ma YiRong was received, and again a wire transfer ofthe same amount was sent on the same date to SDIF LP9 with the following note Ma YiRong LP9 Confirmation #10071 1 1409?. While the fact that there were multiple same-day wire transfers is not suspicious in itself, given the history of altered documents for NCEs under the sponsorship ofthe Regional Center and the impact that switching NCEs could have on a petitioner?s eligibility, these transactions raise the question whether petitioners were fully aware and had agreed to change their investment from SDIF LP6 to SDIF LP9. In addition, on October 18, 201 1, XiaoPing Yao, YiRong Ma and two other plaintiffs ?led a lawsuit in the South Dakota District Court against SDRC 1nc., SDIF LLC and Mr. Joop Bollen. In that lawsuit, the plaintiffs assert that ?the Investors, along with dozens of others, paid $530,000 dollars each to invest and become limited partners in SDIF Limited Partnership 6 It is suspicious that a SDIF LP9 subscription agreement was purportedly ?signed? by XiaoPing Yao on August 20, 2010 almost a year before the same individual ?led suit against SDRC, Inc. on the basis ofher investment in SDIF LP6. The Regional Center bears responsibility in these unauthorized NCE transfers given the shared leadership ofthe Regional Center and the associated new commercial enterprises involved. Mr. Joop Bollen, the director of the Regional Center, was the manager for the limited liability company that functioned as the general partner for SDIF LP6. He was also the manager of SDIF LLC9, which was the general partner for SDIF LP9. Although the above actions took place under the previous Regional Center management, the persistent pattern of visible alterations and inconsistencies and the unauthorized movement of investors between NCEs cast considerable doubt on the credibility of the Regional Center?s ability to promote economic growth and achieve the purposes of the Program through its participation. Conclusion USCIS has determined that the Regional Center has failed to submit required information to USCIS. USCIS has also determined that the Regional Center does not serve the purpose of promoting economic growth, including increased export sales, improved regional productivity, job creation, or increased domestic capital investment. Therefore, USCIS intends to terminate the Regional Center?s participation in the Program. In accordance with 8 C.F.R. within 30 days from receipt of this notice, the Regional Center may offer evidence in opposition to the grounds alleged above. Failure to respond to this notice of 18 South Dakota Regional Center/ lDlO3l910140 Page 19 ofl8 intent to terminate will result in termination of the regional center designation based on the above stated reasons. Please mail any evidence you wish to provide in opposition to the grounds alleged in this notice of intent to terminate to the address noted below and include a copy of this letter on t0p of your submission. US. Citizenship and Immigration Services Immigrant lnvestor Program Of?ce, Mailstop 2235 131 Street NE, Mailstop 2235 Washington, DC 20529 1800 REPUBLIC CENTRE 633 CHESTNUT STREET CHATTANOOGA, TENNESSEE 37450 PHONE: 423.756.2010 FAX: 423.756.3447 www.bakerdonelson.com ROBERT C. DIVINE Direct Dial: (423) 752-4416 Direct Fax: (423) 752-9533 E-Mail Address:rdivine@bakerdonelson.com October 29, 2015 U.S. Citizenship and Immigration Services Immigrant Investor Program 20 Massachusetts Ave., N.W. Mailstop 22355 Washington, DC 20529 Re: Response to Notice of Intent to Terminate Regional Center File No. 1031910140 South Dakota Regional Center Dear Officer: Enclosed please find the response to the above-referenced NOIT issued by your office on September 28, 2015. The primary document is a response letter from Aaron Scheibe, on behalf of the South Dakota Regional Center, which describes the persistent and ongoing efforts of the South Dakota Regional Center, operated by the State of South Dakota through its Governor’s Office of Economic Development (“GOED”), to resolve alleged wrongdoing by SDRC, Inc., a private corporation that administered the regional center under contract with the State until GOED terminated the contract for cause in 2013. Since that time, GOED has made efforts to address issues in the regional center’s administration and demonstrate it is still capable of responsibly promoting economic growth through the EB-5 program. The letter refers to a significant number of exhibits that supports GOED’s position, including the agreement between GOED and SDRC, Inc., the notice of termination of the contract by GOED from September 2013, summons and complaints evidencing litigation initiated by GOED against SDRC, Inc., demand letters from GOED to SDRC, Inc. and to H & H law firm, and screenshots from GOED’s website showing it makes no reference to a relationship with or endorsement of SDRC, Inc. These exhibits (labeled A through L) are attached according to the List of Exhibits following Mr. Scheibe’s letter. The NOIT encompasses an extraordinary volume of factually specific and historic information. It is clear that the regional center has been the subject of an ongoing investigation spanning over five years based on requests for financial transactions from 2010 (e.g., p. 9 inquiring as to a promissory note signed on October 10, 2010 for one of the JCEs; p. 18 challenging a signature on a subscription agreement on or around August 20, 2010). GOED understands its role in managing the regional center and complying with the oversight and reporting requirements for its sponsored projects as required under 8 C.F.R. § ALABAMA • FLORIDA • GEORGIA • LOUISIANA • MISSISSIPPI • TENNESSEE • TEXAS • WASHINGTON, D.C. Reponse to NOIT Page 2 204.6(m). It has continued to take steps to obtain control of documents and information necessary to take any necessary remedial measures from prior annual filings and to appropriately monitor projects going forward. Many of the challenged items in the NOIT are specific to a particular NCE or JCE, or investors’ filings, and would seem most efficiently resolved through the typical Request For Evidence issued to the I-526 or I-829 petitioner rather than a full-scale termination of the entire Regional Center that is not itself manager or general partner of the entities. It would be impossible to make a perfect and complete response to this NOIT in the 30day response time allotted, but the GOED has addressed all issues in the NOIT with the information available to it and is aggressively pursuing channels to uncover and analyze the information to which it currently lacks access. The NOIT is the first notice from USCIS of the apparent deficiencies of the regional center’s required reports. USCIS should first give a regional center notice of errors with an opportunity to correct and clarify the reports without the immediate threat of termination. Without adequate time to obtain records, research the correct information, and prepare a response, due process issues can arise. See Mathews v. Eldridge. 424 U.S. 319 (1976) (due process in administrative proceedings requires consideration of the risk of deprivation caused by the procedures used); 5 U.S.C. § 554 (“[t]he agency shall give all interested parties opportunity for the submission and consideration of facts, arguments . . . when time, the nature of the proceeding, and the public interest permit”). These issues include those of fundamental fairness, given the significant ramifications of termination for regional center investors and the State of South Dakota. See Rodriguez v. Holder, 544 F. App’x 335, 338 (5th Cir. 2013) (suggesting that fundamental fairness issues may arise when there is an “inadequate opportunity to prepare [a] case and present available arguments”). Especially given the volume of the allegations, GOED should get more time than is allowed by the 30-day NOIT process to obtain the relevant records, research the correct information, and amend the forms. To terminate GOED’s designation now would constitute punishment of the victims of SDRC, Inc.’s alleged mismanagement, including innocent investors. Such action by USCIS could result in unfair denial of all the immigration benefits of all investors sponsored by the center. Furthermore, terminating GOED’s designation would not further the goals of the program to foster national economic growth. The regional center has shown that it fosters national economic growth. It has sponsored a significant number of NCEs that placed capital with many JCEs that have had more than 1,000 investors causing the creation of thousands of jobs in the state. The FY2014 filing showed approval of 16 I-829 petitions by USCIS and 160 jobs created. The FY2013 filing showed that 172 I-829s were approved, for a total of 1,726 jobs. In addition to GOED’s response to the NOIT, we are including information provided by SDRC, Inc. (marked as “Attachment 1"). We received this information yesterday afternoon (October 28). Due to GOED’s limited access to full information (the subject of litigation), neither GOED nor the undersigned counsel is in a position to meaningfully review or assess the accuracy or validity of the contents. This information, which because of the limitations noted above and those imposed by the USCIS deadline is not endorsed by GOED in its separate response, is provided to supplement the case record with no assurance or verification. At this point in time, SDRC, Inc. has access to the most information available to best address the Reponse to NOIT Page 3 numerous project-specific, entity, investor, and financial fact allegations in the NOIT. The undersigned offers the statement of SDRC, Inc. into the record in the interest of efficiency and full transparency in order to facilitate USCIS’ understanding of SDRC’s version of events in the NOIT, many of which stem from SDRC’s self-appointed role as manager or general partner of the NCEs, not from GOED’s administration of the regional center. We trust that these materials, combined with those materials already on file regarding the Regional Center, will overcome USCIS’ challenge that the regional center no longer serves the purpose of promoting economic growth and support the South Dakota Regional Center’s continued eligibility as a designated regional center under the EB-5 Program. Respectfully, Robert C. Divine Notice of Entry of Appearance as Attorney or Accredited Representative Department of Homeland Security DHS Form 6-28 . OMB No. l615-0l05 Expires 0331/2013 Part 1. ?InformatiOn Abe'u't Attorney or Accredited Representative Part 2. Notice of Appearance as Attorney or Accredited Representative l. USCIS ELIS Account Number (if any) . >1 or Accredited i??p'rges?mateg .7 7 - 2.a. Family Name (Last Name) Dime Lb. Given Name Name) Ruben of. Middle Name c. Street Number and Name 533 Chestnut Street lb. Apt. El Ste. El Fir. El 1800 Republic Centre 3.c. City or Town Chattanooga 1d. State TN 3.e. ZIP Code 37450 Province 3.g. Postal Code 3.h. CountiL United States 4. Daytime Telephone Number (423) 752-4416 5. Fax Number (423] 752-9533 6. E?Mail Address (if any) ldivine@bakerdonaisen.oom 7. Mobile Telephone Number (ifany) This appearance relates to immigration matters before (Select only one box): La. USCIS Lb. List the form numbers Response to NOIT and Ongoing regional center 2.a. [j ICE 2.b. List the speci?c matter in which appearance is entered CBP lb. List the speci?c matter in which appearance is entered I enter my appearance as attorney or accredited representative at the request of: 4. Select only one box: IE Applicant El Petitioner Requester Respondent CBP) Information AboutAppIicent,? Petitioner; i. "Requestorg-or ResPondent 5.a. Family Name (Last Name) 5.b. Given Name (F irsl Name) 5.c. Middle Name Sdleibe Aaron 6. Name of Company or Organization (if applicable) South Dakota Regional Center Form 0-28 03/04/l5 ii Page I of 4 Part 2. Notice of Appearane as Attorney or Accredited Representative (continued) Part 3. Eligibility Information for Attorney or Accredited Representative Information About Applicant, Petitioner. or Respondent 7. ELIS Account Number (if?(my) . 8. Alien Registration Number (A-Numher) or Receipt Nuntlter RCID 103l9i0140 9, Daytime Telephone Number 605?773-3301 ll]. Mobile Telephone Number (if any) ll. E-Mail Address (ifunt') Aata't Schehe?steze set us rWai/ing Address (J?Applicmrr. Petitioner, Requesmr, or Respondent NOTE: Provide the mailing address ot'thc applicant, petitioner. requester, or respondent. lt?rjtc applicant, petitioner. requester. or respondent has used a safe mailing address on the application. petition. or request being ?led with this Form (3-28. provide it in these Spaces. 12:4. Street Number and Name 12.I).Apl. Ste. Fir. El 12.C. City or Pierre TH Walls Ave 12.d. State so 12.c. ZIP Code 57501 121. Province 12.g. Postal Code 12.h. Country United Slates Select all applleablc items. Ln. mu an attorney eligible to practice law in. and a member in good standing of. the bar ofthe highest courts ofthc following states. possessions, territories, commonwealths. or the District ot?Columbia. (Ifyon need additional space. use Part 6.) Licensing Authority Supreme Court, Tennessee i Lit, Bar Number (ifupph'mble) 0132M l.c. Name (ti-Law Firm Bake-r Done'sen Beam'lan Caldwell EtBerkowitz. P.C l.d. i (Cline-venue) mu mu our subject to any order ot'any court or administrative agency disbarring. suspending, enjoining; restraining. or otherwise restricting me in the practice of law. if you are subject to any orders. explain in the spaec below. (lfynu need .x'fme?e?, H56 2.a. {j i am an accredited representative following quali?ed nonpro?t religious. Charitable. social service. or similar organization established in the United States. so recognized by the Department of Justice. Board ol'lmmigralion Appeals, in accordance with 8 CFR 292.2. PrOVidc the natne oFthe organization and the expiration date of accreditation. 2.b. Name of Recognized Organization 2.e. Date accreditation expires . .. will Fonn (3-25! trait-1?15 Pagelof-l Part 3. Eligibility Information for Attorney or Accredited Representative (emin'imed) 3 i am associated with the attorney or accredited representative ofrecord who previously ?led Form 6-23 in this case. and my appearance as an attomey or accredited representative is at his or her request. NOTE: lfyon select this item, also complete Item Numbers Lu. - Lb. or Item Numbers 2.3. - 2.c. in Part 3. (it-?hicitever is appropriated. I am it law student or law graduate working under the direct supervision ol'tlie attorney or accredited representativt: Ofrecord on this form in accordance with the requirements in 8 CFR ?Lb. Name of Law Student or Law Graduate Part 4. Applicant, Petitioner, Requester, or Respondent Consent to Representation, Contact Information, and Signature Consent to Representation um! Release of Information I. have requested the representation ofand consented to being represented by the attorney or accredited representative named in Pa rt 1. ofthis form. According to the Privacy Act of I974 and DHS policy. 1 also consent to the disclosure to the named attontey or accredited representative ofany record pertaining to me tltat appears in any system of records ICE or CBP. When you (the applicant, petitioner, requester, or respondent) are represented. Dl-lS will send notices to both you and your attorney or accredited representative either through mail or electronic delivery. 2.b. 3.1). If you do not want to receive original notices or secure identity documents directly, but would rather have such notices and documents sent to your attorney of record or accredited representative. please select all applicable boxes below: I request Dl-lS send any notice (including Form l-94) on an application, petition, or request to the business address ofmy attontcy ofrccord or accredited representative as listed in this form. understand that may change this election at any future date through written notice to DHS. I request that DHS send any secure identity document, such as a Pennancnt Resident Card. Employment Authorization Document, or Travel Document, that I am approved to receive and authorized to possess, to the business address ofmy attorney ofrecord or accredited representative as listed in this form. I consent to having my secure identity document sent to my attontey ofreeord or accredited representative and understand that i may request, at any future date and through written notice to DHS, that send any secure identity document to me directly. Signature ol'Applicnnt, Petitioner. Requestor, or Respondci 5 Date QI?Signature go/Ll/U/J/ Part 5. Signature of Attorney or Accredited Representative I have read and understand the regulations and conditions contained in 8 CFR 103.2 and 292 governing appearances and representation before the Department ofHomeland Security. I declare under penalty of perjury under the laws ofth United States that the information I have provided on this form is true and correct. DHS will also send the Form Arrival Departure 1. Signature ofAttorncy or Accredited Representative Record, to you unless you select item Number in Part 4. All secure identity documents and Travel . . Documents will be sent to yen (the applicant. 2. Signature of Law Student or Low Graduate reqttestor, or respondent) unless you ask us tc send those documents to your attorney ofrecord or accredited 3. Date l' l! ll t' I'll ll Funn 6-28 03.304!? l' 11' ll IF Page 3 of-t Part 6. Additional Information Use the Space below [0 provide additional infommllon pertaining to Part 3., Item Numbers Ln. - Other attorneys authorized in Baker Donelson ?lm. Robert C. Dunno. L. Mabel Arroyo. Robert M. Johnson Melanie C. Walker, Amber Seay. Wendy Maddcn. or any other enemy of the ?rm. l' In?h FurmtiAES 03/04/l5 ll . I I. Page 4 0H SOUTH DAKOTA OFFICE OF ECONOMIC DEVELOPMENT October 28, 2015 US Citizenship and Immigration Services Immigrant Investor Program 131 Street, NE Mailstop 2235 Washington, DC 20529 Re: Response to Notice oflntent (0 Terminate Regional Center File No. 1031910140 South Dakota Regional Center Dear Of?cer: South Dakota Regional Center, operated by the State of South Dakota through its Governor?s Office of Economic Development appreciates the opportunity to go on record regarding the past and present administration of the regional center, and reSponds as follows to the USCIS Notice of Intent to Terminate the regional center?s designation. It is unfortunate the past actions of SDRC, Inc., as administrator of the regional center under contract to GOED (?Exhibit have now placed the regional center?s designation at risk with USCIS. The State of South Dakota, through GOED, takes the responsibility of administering the regional center seriously, and entrusted SDRC, Inc. with administration of the regional center in the belief that its purported expertise concerning the program would be of significant benefit to our state?s projects and foreign investors. Subsequent events have shown that belief was misplaced, and GOED has taken and continues to take action aimed at ensuring GOED has the information and capability of administering the regional center in a more responsible manner. actions include, among others, the termination of SDRC, Inc.?s contract in 2013, consultation with outside immigration law experts concerning the regional center on several occasions, retention of expert immigration law counsel Robert Divine to reSpond to the NOIT, and lawsuits filed against SDRC, Inc. in 2015. As South Dakota continues to deal with the consequences of SDRC, Inc?s administration of the 'regional center, the State seeks partnership and forbearance to ensure foreign investors The Amended and Restated Consulting Contract dated December 22, 2009 refers to the South Dakota Department of Tourism and State Development GOED is the successor agency to DTSD pursuant to South Dakota Codified Law 1-53-2, effective April 12, 2011. 605 773 3301 800 872 6190 I SDREADYTOWORK.COM 711 EAST WELLS AVENUE PIERRE SOUTH DAKOTA 5750?! Response to Notice of Intent to Terminate Page 2 receive a fair adjudication of their petitions on the merits. GOED furthermore believes any response to the NOIT must clearly distinguish between the actions of SDRC, Inc. and GOED. Therefore, because of potential confusion with the separate private entity SDRC, Inc., South Dakota Regional Center refers to itself throughout this reSponse as Procedural History The Procedural History as set forth in Section I of the NOIT is essentially accurate. GOED supplements the timeline of Section LB. with the following: GOED terminated the contract with SDRC, Inc. for operation of the regional center on September 19, 2013, for cause, as set forth in the attached letter (?Exhibit giving notice of the termination. Specifically, GOED believed at the time of termination that SDRC, Inc.?s actions had damaged, and would continue to damage, the reputation of the regional center among foreign investors, USCIS, and the citizens of South Dakota. Additionally, GOED was also concerned about the appearance ofa con?ict of interest by SDRC, Inc. in its administration of the regional center. GOED subsequently became aware of many additional failings that further justified the decision to terminate SDRC, Inc.?s contract. Although GOED terminated the contract in 2013, it continues to learn of additional failings on the part of SDRC, Inc. to this day, most recently in the allegations presented by USCIS in its NOIT. Both before and after terminating its contract with SDRC, Inc., GOED has engaged in extensive efforts to resolve disputes with SDRC, Inc. and its principal, Joop Bollen, in order to reduce the burden on the state?s taxpayers and promote the interests of foreign investors with petitions pending before USCIS. These efforts have included efforts to obtain information about the projects and investors, as well as to obtain SDRC, Inc.?s performance of various other responsibilities under the contract, including service of a lawsuit against SDRC, Inc. in January 2015 (?Exhibit While at times it appeared that negotiations would become fruitful, ultimately these efforts have been unsuccessful and all negotiations with SDRC, Inc. have been terminated (?Exhibit On October 16, 2015, GOED brought a second lawsuit against SDRC, Inc. in state court (?Exhibit asking the Court to require defendants to provide the requested information about the projects and investors and to perform other reSponsibilities under the parties? contract. All I-924A reports prior to the reports for FY2013 and FY2014 were ?led by SDRC, Inc. GOED used information supplied by SDRC, Inc. and its agents to prepare the reports for FY2013 and FY2014. The NOIT does not allege that the reports for FY2013 or FY2014 are erroneous. GOED has not sponsored any new projects since terminating SDRC Inc.?s contract because it has focused its resources on resolving issues arising from prior activity and Inc.?s administration of the regional center. Response to Notice of Intent to Terminate Page 3 0 GOED has provided written and oral instruction to SDRC, Inc. in both the termination letter (?Exhibit and subsequent correspondence (?Exhibit to cease representing itself as having any ongoing responsibility for the South Dakota Regional Center. GOED included in its October 16 lawsuit against SDRC, Inc. a request for the court to prohibit SDRC, Inc. from any further representation of itself as having any authority or responsibility for the regional center, and simultaneously with ?ling the lawsuit, GOED sent another letter to SDRC, Inc., attaching the Complaint, which Complaint made clear demand that SDRC, Inc. remove any such representations from any materials it publishes (?Exhibit As of the date of this response, and only after GOED ?led its lawsuit, SDRC has ?nally removed portions of its website that represented SDRC, Inc. as a regional center and being USCIS?approved (?Exhibit The October demand letter (?Exhibit from GOED requested that SDRC, Inc. immediately provide certain documents. While SDRC, Inc. responded to this demand letter, full access to all relevant ?les is not yet available, and GOED is working to resolve this issue. 0 GOED has made separate demand to what it understands to be the law ?rm representing all investors in the af?liated projects, law ?rm, formerly Hanul Professional Law Corp. demands for access to investor ?les were ?rst made in the 2013 termination letter and have continued through the day on which the NOIT response was submitted. As is evident from the attached communications (?Exhibit GOED continues to be precluded from accessing necessary investor ?les to properly report and monitor investors? ?lings. GOED responds to Section II of the NOIT, concerning ?Reasons for Termination,? as follows: A. Failure to Submit Required Information to USCIS All of the errors alleged in the NOIT relate to the annual reports for years before FY2013 when GOED took over responsibility for making such ?lings. The NOIT states that ?[t]he Regional Center?s pattern of incorrect and inconsistent ?lings detailed below has not ended with the new management, but rather continues with the most recent I-924A ?ling.? Yet, after scouring Section I.A. of the NOIT with counsel, GOED has not detected any allegation of incorrect information in the Y2013 and FY2014 ?lings made in good faith by GOED based on available information from SDRC, 1nc. and its agents. Speci?cally, the NOIT states at page 7 that the regional center?s annual reports have not reported 1-526 petitions approved through FY2012. However, approvals ofI-526s before FY2013 would not belong on reports for FY2013 and FY2014 made by GOED. GOED nevertheless stands ready to cooperate with USCIS to address any speci?c issues USCIS may raise with respect to FY2013, FY2014, or future I-924A ?lings. Any inconsistency 01' inaccuracy USCIS has identi?ed in reports preceding FY2013 is news GOED received for the ?rst time in the NOIT and, as the NOIT itself acknowledges, would be the result of SDRC, Inc.?s administration of the regional center. GOED would be happy to cooperate with USCIS in obtaining the correct information and amending prior I-924As if 2 Redacted portions are not material to the factual issue presented and are subject to attorney-client privilege. 3 Redacted portions are not material to the factual issue presented and are subject to attorney-client privilege. Response to Notice of Intent to Terminate Page 4 necessary, and has ?led suit (?Exhibit to obtain records to that end. In addition, GOED notes that it has sought in the past to obtain information from USCIS about the status of petitions, but has been told that GOED is not a party to the petitions and thus cannot be given such information. Speci?cally, in January 2015 GOED wrote the attached letter (?Exhibit to USCIS expressing its concern over the status of 274 foreign investors? petitions awaiting adjudication and urging USCIS to take action. March 2015 reply (?Exhibit declined to provide information to the regional center due to the Privacy Act and DHS policy. While disappointed that USCIS recognized neither equitable interest in these cases by virtue of its status as a regional center nor the implicit privacy act waiver from investors who associated their petitions with the regional center, GOED chose not to press the matter with USCIS in hopes negotiations with SDRC, Inc. would prove fruitful and facilitate its engagement with the investors. We included a demand in our October 16 lawsuit against SDRC, Inc., however, as of the date ofthis response, GOED still has not received a complete set of records from SDRC, Inc. that would enable it to seek Privacy Act waivers from investors, as USCIS has indicated it would requrre. Unlike earlier ?lings by SDRC, Inc., the FY 2013 and 2014 reports properly distinguished between NCEs and JCEs. Based on information from SDRC, Inc. and its agents, the FY2014 ?ling reported zero new investment for the year because no additional amount was placed into any NCE capital account from investors or from escrow and no additional amount moved from NCE into JCE. It showed the approval of 16 1-829 petitions by USCIS. By the methodology for counting job creation provided to that date by USCIS, in its 2011 document, this would count for 160 jobs created. In fact, the FY2014 report showed 160 jobs created: 40.1 in the Deadwood Mountain Casino Hotel in SDIF LP2, 10.] jobs in NextEra Energy Day County Wind Farm in SDIF LP 5, and 110.1 in Basin Electric Deer Creek Station in SD LP 3. This correlates to 40.1 lobs in the casino hotels industry and 120.2 jobs in the electric power generation industry. The FY2013 report similarly shows job numbers that roll up properly from JCEs to NCEs (including the numbers for Deadwood Mountain Grand Casino in SDIF LP 2 shown on a continuation sheet attached at the end of the report) with aggregates for the primary industries for the respective projects for a total of 1726 jobs corresponding to the 172 I-829s approved during the ?scal year. The report shows $20.5 million aggregate investment for the regional center but shows no amounts of investment into any NCE or JCE, which admittedly is inconsistent. Once full information has been made available from SDRC, if necessary, GOED can prepare and submit to USCIS an amended report for FY2013 showing the speci?c NCEs that received the $20.5 million of EB-S capital during that year and any JCEs that in turn received their allocation of capital during that year. GOED notes there is no regulatory requirement that USCIS terminate a regional center for failure to properly complete Forms I-924A. The NOIT is the ?rst notice from USCIS of the 4 The numbers above add up to more than the ten jobs per 1-829 of160jobs, 160.3). The additional 0.3 was driven by a placeholder to try and account for multipliers used by SDRC, Inc. in calculatingjob creation in prior years? I-924A ?lings. Without the full information for the methodology used in earlier years? I-924A ?lings, GOED used the conservative estimate of leobs per approved [-829 with an additional 0.1 to serve as a placeholder multiplier when preparing the FY2014 ?ling. Response to Notice of Intent to Terminate Page 5 apparent de?ciencies of the reports, the instructions for which are not entirely clear and which have been the subject of and a recent stakeholder meeting that meaningfully clari?ed how to use the form but did not amend the form instructions. GOED would contend USCIS should ?rst give a regional center notice of errors with an opportunity to correct and clarify the reports without the immediate threat of termination. USCIS should not terminate designation for failure to have prepared correct forms in the ?rst instance, as the NOIT does not re?ect material failures of GOED in completing the forms after it terminated its contract with SDRC, Inc. for regional center operation. Ultimately, any errors and inconsistencies are attributable to the information and c00peration GOED received from SDRC, Inc. and its agents. As the NOIT itself acknowledges, the enumerated errors are ultimately the reSponsibility of a third party administering the regional center, a third party whose contract GOED terminated for cause. GOED should instead be given more time than is allowed by the 30?day NOIT process to obtain the relevant records, research the correct information, and amend the forms. In addition, USCIS should c00peratively share information with GOED to aid GOED in its efforts to investigate the past actions of its contractor. B. Failure to Demonstrate Promotion of Economic Growth Section ofthe NOIT alleges that SDRC, Inc. diverted funds from job creating purposes; failed to perform due diligence, monitoring, and oversight; generated investor complaints about violation of escrow arrangements and movement of investors between and materially misrepresented the contents of documents through alterations, etc. Most of the wrongdoing alleged in the NOIT actually relates to management of the NCEs, which is a separate function from the role of a regional center, which is not required to be the manager or general partner of the NCEs it sponsors. GOED would note it has already cooperated extensively with both federal and state investigations into the administration of the program in South Dakota, including the conduct of SDRC, Inc. GOED is at least as concerned as USCIS about the alleged wrongdoing and intends to cooperate with USCIS and all relevant federal and state law enforcement agencies that may conduct further inquiries concerning such activity. But if such wrongdoing occurred, it does not re?ect that the regional center as currently managed by GOED directly is not promoting growth of the state?s economy through the program. The speci?c facts alleged at the end of NOIT Section on page ll concerning loan monitoring represent acts and decisions made solely by SDRC, Inc. during its contract administration ofthe regional center. There is no allegation any particular event followed termination of the SDRC, Inc. contract. SDRC, Inc?s decisions to require or hire loan monitors, as well as the approval of any draw requests, were acts of SDRC, Inc. not in its capacity as administrator of the regional center, but in its separate capacity as manager or general partner of the speci?c NCE. SDRC, Inc. has itself repeatedly differentiated between the two activities in refusing requests for all books, records, and reports related to the regional center. GOED therefore lacks the information necessary to respond individually to factual assertions, but is nevertheless attempting to secure such information through its October lawsuit against SDRC, Inc. in order to assist USCIS in understanding the circumstances leading to SDRC, Inc?s actions. The facts asserted by USCIS in Section with respect to the alleged diversion of funds into Ultracare Holdings Limited are new information to GOED, which as described above has never had access to the records of the various entities created by SDRC, Inc. in its role as Response to Notice of Intent to Terminate Page 6 manager or general partner thereof. GOED cannot, and will not, defend or otherwise attempt to explain these transactions beyond simply reiterating that the acts to which USCIS refers as evidence of the regional center?s lack of credibility impacting its ability to promote economic growth were made solely Inc. in its separate role as manager or general partner of the NCE prior to the termination of SDRC, Inc.?s contract, not by GOED. With respect to assertions elsewhere in Section some of the allegations of diversion of funds away from job creating activity of Northern Beef Packers may re?ect the deSperation that can arise when a risky venture begins to fail. It is not entirely clear that the financing arrangements involving Epoch Star were contrary to job creation in the beef operation, even if they seem to have been on unfavorable terms. The purchase of Epoch Star as described in the NOIT seems to have been in an effort to escape more disadvantageous financing arrangements in the absence of such purchase, however ill-advised. While the allegations re?ect desperate financing efforts by SDRC, Inc. in managing the NCE and its involvement with the operations of the JCE, they do not re?ect that GOED currently is incapable of promoting economic growth through the EB-S program. As far as due diligence and oversight, GOED does not seek to defend SDRC, Inc. from the allegations, but GOED contends that they do not re?ect that GOED is not capable of responsibly promoting economic growth through the EB-S program. It is true that GOED did contract to SDRC, Inc. the task of managing the regional center, but GOED has recognized the problems with such vendor, has terminated the contract, and is working assiduously to rectify the issues stemming from SDRC, Inc.?s administration of the regional center, including through litigation against SDRC, Inc. GOED is evaluating whether to continue to sponsor EB-S projects and if so how to perform the necessary oversight and diligence required for participating projects, whether through State employees (as is done by the State of Vermont) or through contracted parties (as is done successfully by several local governments elsewhere in the United States). Since terminating the SDRC, Inc. contract and directly managing the regional center, GOED has consulted with nationally respected immigration counsel and will continue to do so to ensure its responsible administration of the regional center. However, GOED must first focus its resources on resolving past arrangements, which it is doing through its lawsuit against SDRC, Inc. and in responding to this NOIT. GOED commits to USCIS that it will not sponsor further projects without first giving notice to USCIS by e-mail of any management changes and, if instructed, by filing Form 1-924 for amendment of its designation. It would appear at the root of many of the issues USCIS has identi?ed, including the violations of escrow agreements, was SDRC, Inc.?s dual role in managing the regional center while also serving as a general partner or manager of the NCEs. GOED would like to clarify that it will never ?nd itself in this same position because South Dakota state agencies cannot constitutionally become a general partner or manager of a commercial enterprise with other investors. See In the Matter of the Request for an Advisory Opinion Concerning the Construction ofHB. 1255, HB. 1132, and H.J.R. 1004, 456 546 (SD. 1990) (holding the State of South Dakota may not constitutionally own or invest in only part of a business enterprise, but instead must have ?full management, control, and ownership?). Thus, GOED will not itself serve as the manager or general partner of an NCE and will not allow any contracted manager ofthe regional center to do so. Response to Notice of Intent to Terminate Page 7 The fact that several NCEs or JCEs have failed as businesses is not re?ective of a need to terminate the designation of the regional center. The regulations require that investors? capital be placed ?at risk,? and Matter oflzummz? makes clear that this means the investors must stand to lose some or all of their investment. GOED contends it is not the necessary role of a regional center to pick economic winners and losers, but rather to evaluate projects for their apparent compliance with rules. Nonetheless, while the NOIT takes great care to point out failures associated with the regional center, USCIS does not also acknowledge that a number of NCEs and JCEs associated with the regional center have been successful, bringing economic development to South Dakota and facilitating favorable adjudication of foreign investors? petitions by USCIS. In fact, USCIS has approved hundreds of 1-526 and petitions with all ofthe project documents included in such petitions. USCIS is not tasked with picking economic winners and losers either. GOED has not been aware of mismanagement of funds by SDRC, Inc. until after the petitions were ?led, and GOED took action to terminate the agreement and now has brought suit against SDRC, Inc. The NOIT at page 16 accuses SDRC, Inc. and Joop Bollen of mismanagement and incompetence. The NOIT recognizes that GOED terminated its contract with those parties and declared that it would cease af?liation with them. The NOIT then suggests that ?the Regional Center has not presented any evidence to indicate how the above violations of escrow agreements were isolated incidents that will not be repeated.? GOED has stated in this response that it will carefully study the best way to manage its obligations as a regional center and will give notice and make any necessary ?ling with USCIS before sponsoring further projects. It would seem unreasonable for USCIS to infer that just because a previously contracted party may have committed wrongdoing that a future vetted government or contracted party would commit unlawful acts. With respect to the assertion of ongoing ties between GOED and SDRC, Inc., when terminating the agreement with SDRC, Inc. (?Exhibit and in subsequent correspondence (?Exhibit GOED did in fact instruct SDRC, Inc. and Joop Bollen to remove any references to association with the State and its regional center. GOED was not aware of the extent of any continuing references and appreciates the notice of same. GOED has followed up by bringing a lawsuit against SDRC, Inc. requiring it to cease such references and will seek to enforce this. As of the date of this response and because of lawsuit, SDRC, Inc. has ?nally changed portions of its website to remove confusing references to association with the State, its regional center, and USCIS approval or endorsement (?Exhibit The NOIT unfairly interprets website as re?ecting an ongoing material association by GOED with SDRC, Inc. and Joop Bollen. The site includes a page on its ?Public Records? section concerning the program with a simple statement about the nature of the program and designation (?Exhibit That text offers no link to SDRC, Inc.?s website, contains no reference to a relationship with or endorsement of SDRC, Inc. or Joop Bollen, and provides readers no hint of any intention by GOED to sponsor any future projects managed by SDRC, Inc. or Joop Bollen. The EB-S program in South Dakota has been the subject of federal and state criminal investigations, oversight committee action by its Legislature, independent third-party audits ordered by GOED, and sustained, in-depth news reporting. In reSponse, GOED has delivered on the State of South Dakota?s commitment to transparency by posting the FY 2013 and 2014 annual reports online. The fact that some or all of the NCEs required to be Response to Notice of Intent to Terminate Page 8 mentioned in those reports happen to be managed by SDRC, Inc. and/or Joop Bollen is an artifact of a contract terminated in 2013 by GOED for cause. As any omission of references to SDRC-associated NCEs would undoubtedly be held against GOED by USCIS as an incomplete ?ling, it is unreasonable to interpret any reference in this required reporting as re?ecting that GOED has ongoing association with SDRC, Inc. or Joop Bollen, except that the regional center did sponsor those projects (while SDRC, Inc. was managing the center for GOED) and continues to sponsor them in hope that, if the foreign investors show themselves quali?ed via their petitions, they will be able to receive the immigration bene?ts that were a goal of their investment. Given the interests of the foreign investors, it would be far less responsible for GOED simply to have surrendered its regional designation upon terminating SDRC, Inc.?s contract, leaving those investors to be denied all their immigration ?lings for lack of a sponsoring regional center. In fact, the regional center has sponsored a signi?cant number of NCEs that placed capital with many JCEs that have had more than 1,000 investors, causing the creation of thousands of jobs. While not all projects have been successful, this is in keeping with the program?s requirement of investment risk, and it is not re?ective of a failure to promote economic growth. While the NOIT in other sections alleges problems in the management of NCEs by SDRC, Inc. and some recordkeeping failures before FY2013, these do not re?ect a failure to promote economic growth. Rather, any failure of the NCEs, which were managed by SDRC, Inc., not GOED, to place the respective investors? capital at risk in job creation are matters for adjudication in the I- 526 and I-829 petitions of the respective investors under individual and project-level analysis, and they should not be used to terminate the designation of the entire regional center with the effect of denial of all I-526 or petitions on that basis alone. Such a position by USCIS would constitute punishment of the victims of SDRC, Inc.?s alleged mismanagement and would not further the goals of the program to foster national economic growth. Terminating the South Dakota Regional Center and the resulting denials would in fact scare investors away from all regional center investments under the program nationwide for fear that some unrelated misdeeds of the regional center entity or its contracted manager could result in denial of all the immigration bene?ts of all investors sponsored by the center. In conclusion, GOED requests that USCIS refrain from terminating the regional center designation. GOED further urges USCIS to cooperate with the State in pursuing any remedies against SDRC, Inc. and to adjudicate each pending and I-829 on its merits giving due process to each investor. GOED offers to meet with USCIS representatives at their earliest convenience to discuss further obligations and cooperation going forward. Respectfully submitted, 4W4, Aaron P. Scheibe Deputy Commissioner South Dakota Governor?s Of?ce of Economic Development aaron.scheibe@state.sd.us Response to Notice of Intent to Terminate Page 9 Exhibit A Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit I Exhibit Exhibit Exhibit List of Exhibits December 2009 consulting contract between GOED and SDRC, Inc. GOED September 2013 letter terminating contract with SDRC, Inc. Summons and Complaint, January 2015; GOED October 2015 letter demanding answer GOED negotiation termination letter, October 2015 Summons and Complaint October 2015 Correspondence from GOED asking SDRC, Inc. to cease representing itself as having any ongoing responsibility for the South Dakota Regional Center GOED October 2015 Letter to SDRC, Inc.; SDRC, Inc.?s response; GOED reply Screenshots from SDRC, Inc.?s website Communications between GOED and law ?rm, formerly Hanul Professional Law Corp, regarding access to investors? ?les. GOED January 2015 letter to USCIS USCIS March 2015 response letter Screenshot from website Exhibit A December 2009 consulting contract between GOED and SDRC, Inc. AMENDED AND RESTATED CONSULTING CONTRACT SOUTH DAKOTA DEPARTMENT OF TOURISM AND STATE DEVELOPMENT AND SDRC, INC. THIS AGREEMENT is made and entered into the 22nd day of December, 2009 by and between the South Dakota Department of Tourism and State Development and SDRC, Inc, a' South Dakota corporation RECITALS A. DTSD is an agency and instrumentality of the State of South Dakota empowered and directed to promote economic development in South Dakota and to enter into public-private I partnerships for the purpose of promoting economic development in South Dakota. B. A Pursuant to a letter ruling dated April 2, 2004, as revised by a letter ruling dated June 13, 2004; an undated letter ruling issued in response to a December 10, 2006 request; a letter ruling dated June 25, 2008; and an undated letter ruling entitled Third Antendment revising the June 25, 2008 letter ruling, DTSD has been designated by the US. Customs and Immigration . Service as a regional center (the ?Regional Center?) forthe purposes of and pursuant to 8 CFR 204.6 and other applicable law. C. SDRC is a South Dakota corporation with its principal place of business in Aberdeen, South Dakota. its principal, Joop Bollen, have extensive experience in the marketing by 3 CFR 204.6 and administration of the so-cailed Program? provided for and authorize and other applicable law.? D. DTSD desires to contract with SDRC for the purpose of having SDRC administer the Regional Center and the BBS Program and to market the EBS Program for the bene?t of South Dakota, all in conformity with applicable statutes and regulations. AGREEMENT Based upon the foregoing Recitals and for good and valuable consideration, the receipt and suf?ciency of which is acknowledged by each of the parties hereto, the parties agree as follows: 1. SDRC shall undertake all activities necessary to administer the Regional Center for DTSD, which administrative duties shall include, but not necessarily be limited to, the following: a. Contacts'with CIS for and on behalf of DTSD, including but net limited to ?ling all necessary reports, requests for approval, noti?cations, and responding to inquiries from CIS. duties hereunder shall include giving such noti?cations and obtainng such approvals of this Agreement and the terms hereof as'may be required by 1 - b. Maintaining all records and reports required by 8 CFR 2046- and other applicable law; 0. Making recommendations to DTSD relating to improvements or changes to the EB5 Program or the Regional Center in order to keep pace with developments in the EB5 Program generally and to remain competitive with other regional centers in the US. and similar programs abroad; 6. Recommending and administering such actions as are necessary to maintain compliance with all applicable rules and regulations relating to the EB5 Program and the Regional Center; e. Servicing existing BBS Program projects in South Dakota, including but net limited to compliance with the monitoring, record-keeping and reporting requirements of CIS and 8 CFR 204.6 and other applicable law. A list of existing EB5 Program projects in South Dakota is - attached hereto, marked as Exhibit A, and is incorporated herein by this reference; f. Development and maintenance of an appropriate website. The content of the website shall be provided to DTSD for its review and approval prior to the website becoming available to the public; and g. Such other and further duties as are necessary to carry out the foregoing or as may be agreed upon by the parties. 2. Conditioned upon ?ling of this Agreement with C13 and any necessary approvals hereof by C18, DTSD hereby grants to SDRC the non-exclusive right and privilege to market projects for development within the Regional Center's territory, as such territory may be established and approved ?'om time-to-time by C18. It is ?rrther agreed, however, that in the event there are no projects available for SDRC within the Regional Center?s service area, then SDRC may participate in projects with the service areas of other regional centers. 3. SDRC shall have the obligation to market all projects proposed by DTSD for the EB5 Program (within the territory included within the Regional Center), provided that: a. The proposed project uses the loan model of investment; and b. The project is feasible, ?nancially sound, marketable and competitive, as determined by SDRC, acting reasonably. SDRC shall have a ?rst right of re?rsal on all future projects proposed for the Regional Center using the ?loan? model of investment. SDRC must give'notice of its right to exercise its right of ?rst re?rsal within 15 business days of receiving notice of the proposed project from DTSD. 4. Should SDRC not have the obligation to market a proposed project as provided herein, or if SDRC elects not to pursue a proposed project for any reason, DTSD may contract with another person or entity to promote said project or undertake it on its own without any ?rrther obligation to SDRC concerning that project. 5. SDRC may not begin promoting a project for DTSD without ?rst obtaining written consent, which consent may not be unreasonably withheld. DTSD agrees to provide its response to such requests within 30 days of a written submittal to DTSD. DTSD may withhold its consent for any reasonable cause, including but not limited to the following: I a. The proposed project is not feasible; - b. The proposed project violates the public policy of the State of South Dakota; c. The proposed project is not consistent with overall objectives for economic development in South Dakota. 6. In consideration of administration of the existing EBS projects listed on Exhibit A, DTSD shall pay to SDRC a fee of $45,000.00, payable as follows: $22,500.00 payable upon execution of this Agreement and $22,500.00 payable on or before January 15, 2010. SDRC shall not utilize equipment or facilities of DTSD orthe State of South Dakota in connection with this Agreement absent advance written permission ?'om DTSD. 7. In consideration of grant to SDRC of the non-exclusive right and privilege to promote EBS projects within the Regional Center?s territory, SDRC agrees as follows: a. Except as otherwise provided herein, SDRC shall establish and set aside certain ?rnds, ?rrther described below and known as the Expense Fund, Indemni?cation Fund One and Indemni?cation Fund Two, to be heldby' and in the name of SDRC. b. The Expense Fund and Indemni?cation Fund One shall be ?mded ?rm a fee collectible ?'om SDRC for those projects listed on the attached Exhibit and for any ?rture projects undertaken by SDRC hereunder. The fee for each project shallbe agreed upon in writing by DTSD and SDRC and said writing shall be appended to this Agreement as an Exhibit. The parties agree, however, that the fee for each project shall be based generally upon the following: ten percent of the origination/closing fee and twenty-?ve basis points of any and all interest collected in connection with the project except for SDIF LP 1 and SDIF projects where 10 basis points is agreed upon. By way of example and not limitation, if a project bears an interest rate of two percent and the loan amount is $1,000.00, the animal interest payable would be $20.00 and the fee payable by SDRC would be $2.50. If the project is structured as a multi?year loan, the fee payable by SDRC shall be based on the interest collected each year of the loan. By way of example and not limitation, if interest of $20.00 is payable each year for ?ve years, the fee payable by SDRC on account of that project shall be based, in part, on an anticipated fee payable by SDRC on account of interest of $12.50. SDRC agrees it will at a minimum charge an origination fee for each project, except for SDIF LP 1 and SDIF LP 4 where no origination fee is collected by SDRC Inc, of not less than 1% of the capital to be raised through the BBS program and that it will charge an interest rate of not less than twenty??ve basis points. SDRC shall make all reasonable efforts to collect said origination fees and interest for x. am?" each project. In the event SDRC does not make reasonable efforts to collect such fees and interest, DTSD may collect such fees in name and SDRC hereby grants DTSD a limited power of attorney for that purpose. c. The fee shall be collectible and payable as described in this paragraph 7 on all project listed in Exhibit except fOr SDIF and SDIF LP 4 for which the fee of 10 basis points is agreed on and for which no origination fee is collected by SDRC Inc. d. The fee shall only be payable into the ?mds described above upon collection by SDRC of the moneys to which the fee is attributable. I e. The fees payable to the Expense Fund and Indemni?cation Fund One as provided herein shall be paid ?rst into Indemni?cation Fund One. Except as otherwise provided below in subsection Indemni?cation Fund One shall be used for the purposes of satisfying any obligations of SDRC to indemnify DTSD as provided herein which are not covered by and paid under the policy or policies of insurance provided for below in paragraph 16 and not paid out of Indemni?cation Fund Two; and (ii) reimbursing DTSD for expenses it may incur in investigating or defending claims made or which DTSD believes may be made against it arising out of the EB- I 5 Program in relation to which DTSD is not entitled to indemni?cation ?'om SDRC pursuant to this Agreement. SDRC shall pay over ?nds out of Indemni?cation Fund One for the purposes of subsection 7(e)(ii) above upon written request from DTSD. Except as otherwise provided below in subsection there is no limit on the balance to be held in Indemni?cation Fund One. f. Moneys from Indemnification Fund One shall ?'om time-to-time be swept into the Expense Fund as provided in this subsection As ?mds accumulate in Indemni?cation Fund One, they shall be swept into the Expense Fund and used to pay current and future expenses incurred or to be incurred by representatives of DTSD in connection with assistance provided by DTSD and others in providing information concerning projects to be undertaken by . (ii) promoting the EB-S Program and projects related thereto generally, whether a project is undertaken by SDRC or otherwise; and in connection with the monitoring and review of activities by DTSD pursuant to paragraph 14 below. Moneys shall be swept into the Expense Fund periodically as directed by DTSD in writing until such time as the balance of the Expense Fund equals $3 50,000.00, at which time no additional moneys shall be swept into the Expense Fund unless and until it is necessary to replenish it so as to bring the balance of the Expense Fund back to $3 50,000.00. Any expenses to be paid out of the Expense Fund must ?rst be approved ?in writing by the Secretary or the Secretary?s designee (so designated in writing) and DTSD's business manager. (As of the date of this Agreement, business manager is Mardell Davis). SDRC may conclusively rely upon any such written approval when paying out as requested by DTSD. In no event may funds ?om the Expense Fund be paid to or on behalf of any employee of the State of South Dakota in such a manner as to constitute compensation to any such employee for services provided by that employee. g. In addition to the Expense Fund and Indemni?cation Fund One, there shall also be established an Indemni?cation Fund Two, to be ?mded ?'orn collected revenues of SDRC net of reasonable expenses incurred by SDRC to carry out its and duties and obligations hereunder, and in any event revenues other than the fees described above in subparagraph Indemni?cation 4 .1444. 4.. . Fund Two shall be used solely for the purpose of satisfying any obligations of SDRC to indemnify DTSD as provided herein which are not covered by and paid under the policy or policies of insurance provided for below in paragraph 16. On or before November 1, 2010, or receipt of the origination fee ?'om the LP3 Basin Electric Power Cooperative project, whichever occurs ?rst, SDRC shall ?nd the balance of Indemni?cation Fund Two in an amount not less than $500,000.00. It is anticipated that an additional $500,000.00 will be deposited on or before December 31, 2010, but in any event said additional $500,000.00 shall be deposited no - later than December 31, 2011. No later than December 31, 2011, the balance of Indemni?cation Fund Two shall be not less than $1,000,000.00, at which time SDRC shall have no'?irther obligation to deposit additional moneys into Indemni?cation Fund Two unless necessary to restore a balance of $1,000,000.00 after the payment of claims. SDRC may not utilize any of the fees described above in subparagraph 7(b) to ?nd Indemni?cation Fund Two. Indemni?cation Fund Two shall be utilized only for the Existing EBS Projects described on Exhibit and any later EBS Projects undertaken and described in an Exhibit to this Agreement as contemplated above in subparagraph h. The fees payable from SDRC pUrsuant to the terms of this paragraph 7 shall be payable within 60 days of receipt of the applicable revenue by SDRC and shall be payable without any obligation on the part of DTSD to make demand therefor. Payment shall be made into Indemni?cation Fund One as provided above. ?Contemporaneously with such payment, SDRC shall provide notice of such payment to DTSD and copies of records reasonably acceptable to DTSD verifying the amount collected by SDRC. SDRC shall provide DTSD with reasonable access to books and records directly relating to receipt of fees and interest payments on account of projects so that DTSD may assure itself that SDRC is remitting fees into the Funds as required by this Agreement. i. Anything in this paragraph 7 to the contrary notwithstanding, the fees payable from SDRC pursuant to the terms of this paragraph 7 shall be net of any federal or state income tax obligations of SDRC on account of the fees collected by SDRC from project sponsors, participants or investors. It is agreed for the purposes of calculating federal income tax obligation that the hands deposited into the accounts described in this paragraph 7 will be treated on a last-in basis. 8. Upon the termination and winding up of the business and affairs of SDRC or the termination of this Agreement, whichever'occurs ?rst, the balance of the Expense Fund shall be paid over to DTSD. Upon the termination and winding up of the business and a??airs of SDRC - and written demand therefor ??om DTSD, the balance of Indemni?cation Fund One shall be paid over to DTSD. In the event DTSD fails to make written demand therefor, the balance then remaining in Indemni?cation Fund One, less any amount not then obligated or reasonably necessary to pay known or anticipated claims, shall be paid over to DTSD six years and sixty- days alter the termination and winding up of the business and affairs of SDRC or six years and sixty days after termination of this Agreement, whichever occurs ?rst Six years and sixty days after the termination and winding up of the business and affairs of SDRC or six years and sixty days after the termination of this Agreement, whichever occurs ?rst, any balance of - Indemni?cation Fund Two not then obligated or reasonably necessary to pay known or anticipated claims shall be paid over to the shareholders of SDRC. In order to facilitate the 5 winding up of the a??airs of SDRC, the balance of Indemnification Fund Two may be paid to an escrow agent upon terms and conditions reasonably acceptable to DTSD and consistent with obligations hereunder. 9. SDRC hereby grants DTSD a security interest in the Expense Fund, Indemni?cation Fund One and Indemni?cation Fund Two to secure obligations hereunder, including but not limited to obligations to indemnify and hold DTSD and the State of South Dakota harmless. SDRC agrees to execute such further instruments as DTSD deems reasonably necessary to perfect the security interest in the Funds granted by this paragraph _9 including, but not limited to, a Deposit Account Control Agreement. 10. The Expense Fund, Indenmi?eation Fund One and Indemni?cation Fund Two shall be maintained in an account or accounts ?illy insured by the Federal Deposit Insurance Corporation or otherwise seemed against loss to reasonable satisfaction. 11. Any fees received on account of the existing BBS Program projects listed on the attached Exhibit A shall inure to the bene?t of SDRC as a part of its fee for managing and administering said projects as provided for herein. 12. SDRC shall at its own expense retain such foreign agents, attorneys, accountants and other consultants as it deems necessary and appropriate to carry out its duties and obligations pursuant to this Agreement. In order to protect the integrity of the BBS Program and the continuedviability .ot? the Regional Center, SDRC may not contract with any foreign agent, attorney, accountant or consultant without prior written consent, which consent may not be unreasonably withheld. 13. Once a project has been agreed upon in writing, DTSD shall not interfere with efforts to market said project; provided, however, that DTSD may order SDRC to discontinue marketing a project upon a material change in circumstances or upon DTSD obtaining information that the project is no longer appropriate under the terms and conditions of this Agreement. In the event DTSD terminates a project pursuant to the terms of this paragraph 13, DTSD shall reimburse SDRC for its reasonable out-of-pocket expenses for travel, advertising and marketing, but speci?cally excluding any fees owed to agents, attorneys or other professionals. I - l4, SDRC shall maintain such books, records and reports as are currently or in the ?rture required by C18, 8 CFR 204.6 or other applicable law, or as may otherwise reasonably be required by DTSD, SDRC shall provide true and correct copies of such books, records and reperts to DTSD as oiten as such books, records and reports are required to be provided to C18, but in no event less often than SDRC shall provide DTSD or its designee reasonable access to original books, records and reports such that DTSD can assure itself cf compliance with the record-keeping requirements contained in this paragraph. 15. SDRC agrees to indemnify and hold the State of South Dakota and its departments, o??ices, agencies and instrumentalities (including but not limited to DTSD) and its and their elected o?icials, o?icers, employees, agents and consultants harmless hour and against any and all claims, causes, actions, causes of action and liabilities arising out of or related to the services provided by SDRC and of?cers, directors, employees, agents and consultants which are in any way related to this Agreement. Nothing in this paragraph shall require SDRC to provide indemni?cation for any liability arising solely out of an actor omission of the State of South Dakota and its departments, o?ices, agencies and instrumentalities, and its and their elected of?cials, of?cers, employees, agents and consultants. 16. SDRC shall purchase and maintain in force during the term of this Agreement professional liability insurance from companies licensed to do business in South Dakota providing coverages reasonably acceptable to DTSD and with limits of liability not less than $3,000,000.00 per occurrence and provide proof thereof to DTSD. If said insurance is issued on a ?claims made? basis, SDRC shall make arrangements reasonably acceptable to DTSD to maintain ?tail? coverage for a period of six years alter the termination and winding up of the business and affairs of SDRC. Said insurance shall cover obligations to indemnify provided for herein and shall name DTSD as an insured. 17. The term of this Agreement shall cominence December 22, 2009, and end June 30, 2014. This Agreement may be terminated at any time by either party for cause, including but not limited to any breach of this Agreement or the lack of good faith compliance by either party with the terms of this Agreement. 18. This Agreement depends upon the continued availability of appropriated ?rnds, authority ?'om the South Dakota Legislature to continue the BBS Program and/or the Regional Center and authority from CIS to continue with the EBS Program and/or the Regional Center. This Agreement will be terminated by DTSD if the Legislature fails to appropriate funds or if the Legislature or CIS withdraws such authority. Termination for this reason is not a default by the DTSD nor does it give rise to a claim against DTSD. . Termination pursuant to this paragraph 18 shall not a??ect the duties and obligations of the parties as to projects agreed to and ongoing upon such termination. 19. The terms of this Agreement shall be construed and governed under the laws of the State of South Dakota and applicable federal law. Any lawsuit arising out of or pertaining to the Agreement must be commenced in the state courts of South Dakota. Time is ofthe essence in the performance of the covenants, terms and conditions of the Agreement. This Agreement constitutes the entire agreement of the parties concerning its subject matter, and supersedes any prior discussions, representations or agreements, wither oral or written including, but not limited to, the Consulting Contract between the parties dated December 22, 2009. The terms of this Agreement may only be amended by a written document, executed with the same formalities as this Agreement. 20. SDRC may not assign its rights, duties or obligations under this Agreement (including any assignment intended as security for a loan 0r otha obligation of SDRC) without prior written consent, which consent may be withheld at sole discretion. DTSD may assign its rights, duties and obligations under this Agreement to any other instrumentality of the state government of South Dakota without consent. Unless otherwise provided in the legislation or executive order creating a successor entity, this Agreement shall be automatically assigned to any successor entity or instrumentality created by virtue of any reorganization of the executive branch of state government. 21. SDRC agrees to report to DTSD any event encountered in the course of performance of this Agreement which results in injury to any person or property, or which may otherwise subject SDRC, the State of South Dakota or the State?s of?cers, agents or employees to liability. SDRC shall report any such event to DTSD immediately upon discovery. obligation under this section shall only be to report the occurrence ofany event to DTSD and to make any other report provided for by duties hereunder or applicable law. obligation to report shall not require disclosure of any information subject to privilege or con?dentiality under law g, attorney-client communications.) 22. SDRC agrees to avoid con?icts of interest, and to provide DTSD with prompt written noti?cation of any circumstances which may give rise to actual or apparent con?ict of interest. The existence of an unresolved con?ict of interest shall constitute cause to terminat this Agreement. 23. Nothing in this Agreement shall be construed to give rise to a partnership or joint venture between SDRC and DTSD or any other agency or instrumentality of the State of South Dakota. Rather, SDRC shall be acting as an independent contractor and this Agreement is intended to be in the nature of a professional services and licensing agreement. Dated have. 2010. SDRC, Inc. (SEAL) - - Its: 'Pnewl,-L Dated this?a'day of June, 2010. South Dakota Department. of Tourism and State Development . 599995119925) EXHJBIT Existing EBS Projects Van Winkle Dairy LP Global Dairy LP Winter Dairy LP Dairy LP Swier Dairy LP Drumgoon Dairy LP Moody Dairy LP Veblen East Dairy LPA Northern Beef Packers LP (initial equity only) - . A "N'wii'r Exhibit Fees for Existing BBS Projects 1. SDIF Dakota Provisions (100 RES) 2. SDIF LP2 - Deadwood Mountain Grand Hotel, Casino Event Center ("Deadwood Hotel Casino") (up to 65 SDIF LP3 Basin Electric Power Cooperative (up to 200 EB-S) LP4 Dakota Provisions (up to 20 EB-S) SDIF LP5 - Basin Electric Power Cooperative (up to 19 additional EB-S) LP6 Northern Beef Packers (60 EB-S) sash-em The fees for projects 1?6 above shall be negotiated by SDRC and DTSD, reduced to writing and attached as an Addendum to this Exhibit no later than January 15, 2010. Iffor any reason said fees are not agreed upon by the close of business on January 15, 2010, then the stande fee set forth above in subsection 7(b) shall apply to each of projects 1-6. 10 Exhibit GOED September 2013 letter terminating contract With SDRC, Inc. SOUTH DAKOTA OFFICE OF ECONOMIC DEVELOPMENT September 19, 2013 VIA EMAIL to CERTIFIED MAIL, RETURN RECEIPT REQUESTED FIRST CLASS MAJL SDRC, Inc. ATTN: Mr. Joop Bollen 416 Production Street North Aberdeen, SD 57401 RE: SDRC, Inc. Consulting Contract Termination Dear Joop: This is to advise you that GOED is terminating the Amended and Restated Consulting Contract between SDRC, Inc. and GOED (formerly the Department of Tourism and State Development) dated December 22, 2009, (the ?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. Pursuant to paragraph 8 of the Contract, SDRC is also directed (and demand is hereby made) to immediately turn over to GOED, payable to the South Dakota State Treasurer, the balances of the Expense Fund and Indemni?cation Fund One (as de?ned and described in the Contract). Demand is also hereby made that you immediately take steps to take down or modify any websites or other advertisements or promotional materials to remove any reference to SDRC, Inc, acting as the operator or manager of the regional center or any other references to SDRC, Inc. ?5 affiliation with the Govemor?s Office of Economic Development or the State of South Dakota arising out of or related to the Contract. As provided by the Contract, the obligation to maintain the existing insurance or obtain ?tail? coverage if the existing insurance is claims-made, the obligation to maintain and mm 605 773 3301 IT 800 872 6190 I SDREADYTOWORKCOM 711 EAST WELLS AVENUE PIERRE SOUTH DAKOTA 57501 Mr. Joop Bollen September 19, 2013 Page 2 Indemni?cation Fund One and Indemni?cation Fund Two and security interest in Indemnification Fund One and Indemni?cation Fund Two survive termination of the Contract. As to Indemnification Fund Two, we have determined that SDRC did not provide the account number for Fund Two at the time the Deposit Account Control Agreement was signed. Accordingly, a further demand is hereby made that SDRC immediately execute and return to me the enclosed Amended and Restated Deposit Account Control Agreement that includes Indemni?cation Fund Two. Sincerely, South Dakota Govemor?s Of?ce of Economic Development J. Pat Costello Commissioner PC:nl kd Enclosure cc: Tim Engel Jeff Sveen Exhibit Summons and Complaint, January 2015; GOED October 2015 letter demanding answer STATE OF SOUTH DAKOTA COUNTY OF HUGHES STATE OF SOUTH DAKOTA, Plaintiff, V. SDRC, Inc., a South Dakota Corporation, Defendant. IN CIRCUIT COURT )ss SIXTH JUDICIAL CIRCUIT Civ. 15-h? SUMMONS TO THE ABOVE NAMED DEFENDANT: YOU ARE HEREBY SUMMONED AND REQUIRED to serve upon Timothy M. Engel, Plaintiff?s attorney, whose address is 503 South Pierre Street, PO Box 160, Pierre, SD 5 75 01-0160, an answer to the Complaint which is herewith served upon you within 30 days after service ofthis Summons upon you, exclusive of the day of service. If you fail to do so, judgment by default will be taken against you for the relief demanded in the Complaint. Attorneys PO. BOX 160 Pierre, South Dakota 57501-0160 (605)224-8803 tmegEDmagtcom STATE OF SOUTH DAKOTA IN CIRCUIT COURT COUNTY OF HUGHES SIXTH JUDICIAL CIRCUIT I STATE OF SOUTH DAKOTA, I I Civ lS?m I Plaintiff, I v. COMPLAINT I SDRC, Inc., a South Dakota Corporation, I Defendant. COMES NOW Plaintiff, the State of South Dakota, by and through its undersigned counsel, and for its cause of action against Defendant states and alleges as follows. Nature of Action The State of South Dakota brings this action to recover indemnification and reimbursement from SDRC, Inc. under the terms of the Memorandum of Understanding, dated January 15, 2008, between the SDRC, Inc. and the South Dakota International Business Institute. As described more fully below, the acts of SDRC, Inc., primarily through its president Joop Bollen, exposed the South Dakota International Business Institute to various legal claims by Darley International. These claims caused the State of South Dakota to accrue substantial legal costs in defending the action. SDRC, Inc.?s obligations to defend, indemnify and hold harmless are a matter of contract. Facts 1. Plaintiff is the State of South Dakota. 2. Congress created what is known as the program as part of the Immigration Act of 1990 (the Act) to attract foreign investment and create jobs in economically- depressed regions of the United States. The program is under the supervision of the US. Customs and Immigration Service (USCIS), which administers agreements through approved Regional Centers. U1 10. 11. The Regional Centers, which can be private or public entities, select appropriate enterprises for foreign investment, find and screen potential investors, supervise investments, and report compliance to USCIS. In 1994, the South Dakota Board of Regents opened a new office at Northern State University called the South Dakota International Business Institute (SDIBI). loop Bollen was hired as the first Director of SDIBI and worked in that role at all times relevant to this complaint. In 2004, SDIBI began administering the EB-S program for South Dakota?s Regional Center. In 2004, Joop Bollen met and began a business relationship with James Park, a lawyer associated with I-Ianul Professional Law Corporation (Hanul), a California corporation. From approximately 2004 forward, SDIBI began using Hanul as the sole recruiter ofinvestors for its EB-S projects. By 2007, Bollen was working to expand recruiting efforts, including efforts to recruit investors in China, a newly?opened market for EB-S potential investors. On or around the summer of 2007, Bollen was approached by Robert Stratmore, a Delaware attorney with Darley International, LLC (Darley). Stratmore offered to recruit foreign investors for SDIBI. Bollen referred Stratmore to Hanul. Hanul was interested in Stratmore?s claimed ability to recruit investors from China. Between August 2007 and September 2007, Darley and Hanul began negotiating terms of a potential recruiting agreement. On October 18, 2007 Darley and Hanul?s negotiations resulted in both parties signing a document entitled the ?Overseas Recruitment and Service Agreement? (Darley-Hanul Agreement). Bollen was aware of the negotiations leading up to the Darley-I?Ianul Agreement and made comments on some of the proposed contract terms. . In relevant part, the Darley?Hanul Agreement contained the following provisions: a. Paragraph 1, section A stated that the agreement ?shall be valid only while Hanul?s rights are honored by SDIBI and all rights, powers and authorities granted to Darley herein shall terminate when Hanulis rights are rescinded by b. Paragraph 1, section stated agree [sic] to never circumvent the business relationship of DARLEY and its sub?agents even after the termination of this 13Paragraph 9, section C, stated shall not conduct business with sub-agents and Investors for two (2) years following the termination of this In November 2007, Bollen submitted a request to USCIS to amend charter as a Regional Center. The changes proposed by the request would: a. expand the geographic reach of SDIBI operations; b. expand target industries beyond dairy industries; .0 change the methods of determining compliance with the Act?s job?creation requirements; d. change the name from the Dairy Economic Development Region to the South Dakota Regional Center; and e. have the Regional Center contract with a private corporation, SDRC, Inc., to run most of the Regional Center?s operations. On January .10, 2008, Bollen incorporated SDRC, Inc. as a South Dakota corporation. Bollen was SDRC, Inc.?s registered agent and president. On or about JanuarylS, 2008, SDIBI and SDRC, Inc. signed a ?Memorandum of Understanding? The MOU was signed by Joop Bollen as Director of SDIBI and James Park, as Director of SDRC, Inc. A true and correct copy of the Memorandum of Understanding between SDIBI and SDRC, Inc. as referred to in the preceding paragraphs is attached hereto, labeled as Exhibit A and incorporated herein by reference. Under the terms of the MOU, SDRC, Inc. agreed, among other things, 'to ?prepare a desirable business plan to encourage individual investments in the project within the Regional and ?promote investment in projects.? The MOU, paragraph 6, contains the following language: SDRC INC will act in an independent capacity and not as officers or employees of or the State of South Dakota. SDRC INC shall indemnify, defend, and hold harmless SDIBI, the State of South Dakota and its of?cers and employees from liability and any claims, suits, judgments, and damages arising as a result INC acts and/or omissions performed under this Agreement. 19. 21. 22. 25. 26. 27. Soon after its formation, SDRC, 1nc. engaged in direct discussions with recruiters without going through Hanul, and entered into recruiter agreements on behalf of SDRC, Inc. that bypassed Hanul. . SDRC held business discussions with Darley?s sub?agents in China regarding recruiting in China. Some of these discussions culminated in SDRC using some of Darley?s sub-agents to market SD1B1 projects in China. On or about April 30, 2008, Darley ?led two separate Demands for Arbitration through JAMS Arbitration?one against SDIBI and the other against Hanul. The actions were combined by amended complaint. The amended complaint alleged breach of the Darley-Hanul Agreernent?s express and implied terms by both Hanul and SDIBI. Additionally, against SDIBI only, Darley claimed tortious interference with the Darley?Hanul Agreement. When Bollen, holding himself out as acting on behalf of SDIBI, refused to arbitrate, Darley commenced an action in US. District Court in California in an attempt to force SDIBI to arbitrate. Bollen concealed the existence of this action from the South Dakota Board ol?Regents and attempted to defend it himself and with the assistance of Hanul. Bollen did not reveal the existence of the demand for arbitration or the action in US. District Court until after the District Court had handed down an Order directing SDIBI to arbitrate. . Despite efforts to have the case against SDIBI dismissed, a California. Superior Court held that SD1B1 was a party to the Darley-Hanul Agreement and ordered to arbitrate. . Darley?s claim against SDIBI alleged that breached the Agreement by conducting business with Darley?s sub-agents, both during the Agreement?s term and within two years after the Agreement terminated. The complaint also alleged that prevented Darley from recruiting investors and failed to bring additional projects to market, in violation of the Agreement. Darley?s claims generally arose from activities of conducting business with and entering into recruiting agreements with Chinese agents. The Partial Final Award issued by Hon. Robert A. Baines, Arbitrator, in JAMS Arbitration Case No. 1100054680, rejected Darley?s claims for breach of contract and tortious interference against The State ol?South Dakota bore all costs of defending the action in California Superior Court and before the California arbitrator, with no financial assistance from SDRC, lnc. 28. The State of South Dakota, at the time of filing this action, has spent at least $521,338.91 in legal fees and associated costs defending and arbitrating the action brought by Darley International. Breach of Contractual Duty to Indemnify under the Memorandum of Understanding 29. The alleged actions by giving rise to the suit by Darley were performed by SDRC, Inc. pursuant to express and implied agreement between SDRC, Inc. and under the Memorandum of Understanding dated January 15, 2008. 30. Pursuant to Section 6 of the Memorandum of Understanding dated January 15, 2008, Defendant has a contractual duty to indemnify. defend and hold harmless the Plaintiff from the action brought by Darley International?s against SDIBI. PRAYER FOR RELIEF WHEREFORE. Plaintiff prays that this Court grant judgment in favor ofPlaintiff and against Defendant as follows: A. For the costs and attorney?s fees incurred by the State that were reasonably expended in the defense and arbitration of Darley lnternational?s action against and B. For the costs the State reasonably expended in this action. C. For such other relief as the Court, may deem appropriate. Dated this dag, ofJanuary,2015. TIME) . Attorneys for P1 intiff PO. Box 160 Pierre, South Dakota 57501?0160 (605)224-8803 tmet?rmagtcom BEEWE Memara?dwm 9f Agre?mam?? ma?a. ?11113 as. ?ag :3 Say :35? Ewwag?g, by Him ?aw-am: Swim: mm:th inm?na?mgi Ba?m? 1525:13qu Dgiary Hmwmie Reg?m. a Sauth Bahia agmcy, 3:111 i393- Emu} fasaigm 3M. 8mm ?aking; Regitmg? Emmy, 3:222:15, my mga??asad Hugh? 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WC: Wm if: an i?d??n??mi mpmity mad mt m??iiram?m tm?pf?iay?m e53? SLEIBSIEDEQR car QM 31:55:: Swath Dak?ta. SDRC Mi? Emil gimenmiti'y, {Maxim ham hmnig? iha 513% as? Emwh '?ak?m ma? 5E5 9%in and mgg?f?yegs {mm mag}is 311% 53:53:? Eta-Ems; miss} jut?gi?w?s. am damugm arisin as; :51: regal-i sf SERIES 1M: was tans-dim germ??in wit-2r This; Aigx'aam?zm. ragmnm :Ei?m? be gm?mm by 1h: laws a? 553mm as" Smith 32mm. 3. Tm: gart?es agmze: mm: ifhist ?agstmam aim? mmi? in Fi?! game and MRI Fa: mm 5m: Mam. ?$32333 may ia? Emma if {m Tm Agrmmanz may camze??a 11mins a. mefiai braith (35? its 33:2" 53?: mam remixing Em mam Emma: {Ea-31? gm? mam-i {if a Na?iw fr?ent mm th?! iPim?gfi?-S jmi??riagg $119 carimel?a?ia?. SDEBLJQEER wit? ?a?fy - ??ig in w??ag Thfr??y {Elli} gig?. 05 may gimme 135 {he sies?gmtim its? i??f?s?n?ti% {if m? aim gyt??mc?pgi ta mm; m- an? Frigi?im?ant changg an: Emma A?gm?m wi?h gum: ?1 L. 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Busi?mg lrtt??tme imp Emu-am Jay .ibardm Sits mm: mm GSA 0 53mm Ewketa Regime}: Emmy, 1r1?.. ?ames Park Dimcmr 41325 3mm 33$ Mm?wn, 53"4?i E305 gag-mm 'igfhis- ?gmm?mm may hi: mgw?ed amultmw??y is: M121 mam mm?ermm. awh- at? which shai?l he: demwd; migirrm? ale wh?n w?ima i?g?tiwr; wastitm Izmir: and me same dewmmt. signatum 13f any in my cvunmpar? sha?! be damnixzd a sign?mm it}: 331% may ha gammad m. any aimar muramma?. 4? m" 5 WHEREGF. 13w hemm haw-a3 muse-xi this; Agremhem daily- eztxmui?d ?518: ?rst. w?um. Signcz? $1.1msz Signalmy? Em @1131? ?35" EDEN if I ?ll Name; A. vi. 5'1 fut- 135%,; g? Signed by Autherim?i Sigzaamr}! an {ib?m?f in?" Sam-H HARM-A R??i??ml 1.. mt: Mama: Emma ?F-i'ilra: {?recmw Mm 5? Sig??iut?e. Si gnaw-?6 ROBERT B. ANDERSON TIMOTHY M. ENGEL MICHAEL F. Saaw BRETT KOENECHE CHRISTINA L. KLINGEH JUSTIN L. BELL DOUGLAS A. ABRAHAM KARA C. SEMMLER AJ. FRANKEN (-3. or) 4' {Emma for} WWVV.MAGT.COM October 19, 2015 OF COUNSEL DAVID A. GERDES CHARLES M. THOMPSON GLENN W. MARTENS 1381-1968 KARL GOLDSMITH 1835-1966 BRENT A. WILBUR 1949-2006 TELEPHONE 605 2245-8 80 3 FAX 605 224-6289 Email: tmeigymayadam.net VIA EMAIL AND FIRST CLASS MAIL (i veen aw net) Jeffrey T. Sveen Attorney at Law Siegel, Barnett 8: Schutz PO BOX 490 Aberdeen, SID 574402 RE: SDRC MAGT File: 6696 Dear Jeff} Pursuant to my email exchange with you and Julie Dvorak ofJanuary 16, 2015, please consider this letter as my client's demand that your client ?le an Answer or other responsive pleadii?ig in the Barley?related indemnification proceeding that was commenced by your client's admission ofservice on January 16, 2015 within ten days. Another copy ofthe Summons and Complaint are enclosed for your convenience. I will also be ?ling the Summons and Complaint yet today or tomorrow. TMEzdrril Enclosures cc: Client (via email) MAY, ADAM, GERDES THOMPSON LLP 503 SOUTH PIERRE STREET PO. Box 160 Pumas, SOUTH DAKOTA 57501?0160 Exhibit GOED negotiation termination letter, October 2015 MAY ADAM r1 -. Aim/u- h? Rosen'r B. ANDERSON TIMOTHY M. ENGEL MICHAEL F. SHAW BRETT KOENECHE CHRISTINA L. KLINGER JUSTIN L. BELL DOUGLAS A. ABRAHAM C. SEMMLER AJ. Framer: October 13, 2015 VIA EMAIL AND FIRST CLASS MAIL Jeffrey T. Sveen Attorney at Law Siege], Barnett (Sc Schutz PO Box 1190 Aberdeen, SD 57402 RE: SDRC MAGT File: 6696 Dear Jell': OF COUNSEL DAVID A. Cannes CHARLES M. THOMPSON GLENN W. Man-runs 1381-1968 KARL GOLDSMITH 1335-1966 BRENT A. WILBUR 19449-2006 TELEPHONE 6?05 224--BBOS FAX 605 Email: lmc@mnyatlmirnet Given current circumstances and recent developments, we have determined to terminate all Further settlement ne otiations. Any and all prior offers ofcompromise are hereby revoked. Sincerely rm Enclosures cc; Client (via email) MAY, ADAM, GERDES THOMPSON LLP 503 Souru PIERRE P.O. Box 160 PIERRE, SOUTH DAKOTA 57501-0160 Exhibit Summons and Complaint October 2015 STATE OF SOUTH DAKOTA TN CIRCUIT COURT SS - COUNTY OF HUGHES SIXTH JUDICIAL CIRCUIT STATE OF SOUTH DAKOTA, CIV. NO. Plaintiff, v. SUMMONS SDRC INC., a South Dakota Corporation, Defendant. TO: SDRC Inc., by and through its registered agent, oop Bollen. YOU ARE HEREBY SUMMONED and required to serve an answer to Plaintiff Complaint upon Plaintiff?s attorney, at 206 West Missouri Avenue, PO. Box 1174, Pierre, South Dakota 57501, within thirty (30) days after service of this Summons upon you, exclusive of the day of such service. If you fail to do so, judgment by default will be taken against you for the relief demanded in the Complaint. 22 Dated this day of October, 2015. MORE BACHAND, P.C. BY: Paul E. Bachand Special Assistant Attorney General 206 W. Missouri Ave. PO. Box 1174 Pierre, SD 57501-1174 (605) 224-0461 pbachand@pirlaw.com STATE OF SOUTH DAKOTA IN CIRCUIT COURT SS COUNTY OF HUGHES SIXTH JUDICIAL CIRCUIT STATE OF SOUTH DAKOTA, CIV. NO. Plaintiff, i V. COMPLAINT SDRC INC., a South Dakota Corporation, Defendant. COMES NOW Plaintiff, the State of South Dakota, by and through its undersigned counsel, and for its cause of action against Defendant states and alleges as follows. Nature of Action The State of South Dakota brings this action in equity to require SDRC Inc. to comply with and speci?cally perform certain terms required under the Amended and Restated Consulting Contract, dated effective December 22, 2009, between the South Dakota Department of Tourism and State Development and SDRC Inc., and t0 indemmfy the State as provided for in said Contract, to wit: (1) Pay into Indemni?cation Fund One all amounts due and owing into that fund; (2) Execute a Deposit Account Control Agreement for Indemni?cation Fund Two; (3) Provide any and all records to the State regarding SDRC Inc.?s involvement in carrying out the Amended and Restated Consulting Contract; (4) Indemnify the State for expenses the State incurred as a result of the services provided by SDRC and of?cers, directors, employees, agents and consultants under the terms of the Amended and Restated Consulting Contract: and (5) Cease any and all representations that SDRC Inc. is the administrator or marketer of the South Dakota Regional Center. Facts 1. Plaintiff is the State of South Dakota. . On January 10, 2008, Joop Bollen incorporated SDRC Inc. as a South Dakota corporation. Bollen was SDRC Inc.?s registered agent and president. . On or about June 4, 2010, the South Dakota Department of Tourism and State Development and SDRC Inc. signed an ?Amended and Restated Consulting Contract? dated effective December 22, 2009 (?Consulting Contract?). The Consulting Contract was signed by Joop Bollen as President of SDRC Inc. and Ricth Benda, Secretary of the South Dakota Departinent of Tourism and State Development . A true and correct c0py of the Consulting Contract between the State and SDRC Inc. as referred to in the preceding paragraphs is attached hereto, labeled as Exhibit A and incorporated herein by reference. . On September 19, 2013, the South Dakota Govemor?s Of?ce of Economic Development successor in interest to the Department of Tourism and State Development, terminated said Consulting Contract with SDRC for cause. . Certain provisions of the Consulting Contract survived this termination, including obligations to pay into Indemni?cation Fund One, execute a deposit account control agreement for Indemni?cation Fund Two, indemnify or reimburse the State for claims and expenses arising from the operation of the South Dakota Regional Center under the federal EB-S immigrant investor visa program, and to provide the State of South Dakota access to books, records, and reports. . The Consulting Contract, at paragraph 7, contains the following provisions: In consideration of DTSD's grant to SDRC of the non-exclusive right and privilege to promote EB-S projects within the Regional Center's territory, SDRC agrees as follows: a. Except as otherwise provided herein, SDRC shall establish and set aside certain ?inds, further described below and known as the Expense Fund, Indemni?cation Fund One and Indemni?cation Fund Two, to be held by and in the name of SDRC. b. The Expense Fund and Indemni?cation Fund One shall be funded from a fee collectible from SDRC for those projects listed on the attached Exhibit and for any ?iture projects undertaken by SDRC hereunder. The fee for each project shall be agreed upon in writing by DTSD and SDRC and said writing shall be appended to this Agreement as an Exhibit. The parties agree, however, that the fee for each project shall be based generally upon the following: ten percent of the origination/closing fee and twenty-?ve basis points of any and all interest collected in connection with the project except for SDIF LP I and SDIF LP 4's projects where 10 basis points is agreed upon. By way of example and not limitation, if a project bears an interest rate of two percent and the loan amount is $1,000.00, the annual interest payable would be $20.00 and the fee payable by SDRC would be $2.50. If the project is structured as a multi-year loan, the fee payable by SDRC shall be based on the interest collected each year of the loan, By way of example and not limitation, if interest of $20.00 is payable each year for ?ve years, the fee payable by SDRC on account of that project shall be based, in part, on an anticipated fee payable by SDRC on account of interest of $12.50. SDRC agrees it will at a minimum charge an origination fee for each project, except for SDIF LP 1 and SDIF LP 4 where no origination fee is collected by SDRC Inc., of not less than 1% of the capital to be raised through the program and that it will charge an interest rate of not less than twenty-?ve basis points. SDRC shall make all reasonable efforts to collect said origination fees and interest for each project. In the event SDRC does not make reasonable efforts to collect such fees and interest, DTSD may collect such fees in SDRC's name and SDRC hereby grants DTSD a limited power of attorney for that purpose. c. The fee shall be collectible and payable as described in this paragraph 7 on all projects listed in Exhibit except for SDIF LP 1 and SDIF LP 4 for which the fee of 10 basis points is agreed on and for which no origination fee is collected by SDRC Inc. d. The fee shall only be payable into the funds described above upon collection by SDRC of the moneys to which the fee is attributable. e. The fees payable to the Expense Fund and Indemni?cation Fund One as provided herein shall be paid ?rst into Indemni?cation Fund One. Except as otherwise provided below in subsection Indemni?cation Fund One shall be used for the purposes of satisfying any obligations of SDRC to indemnify DTSD as provided herein which are not covered by and paid under the policy or policies of insurance provided for below in paragraph 16 and not paid out of Indemni?cation Fund Two; and (ii) reimbursing DTSD for expenses it may incur in investigating or defending claims made or which DTSD believes may be made against it arising out of the EB-5 Program in relation to which DTSD is not entitled to indemni?cation from SDRC pursuant to this Agreement. SDRC shall pay over funds out of Indemni?cation Fund One for the purposes of subsection 7(e)(ii) above upon written request from DTSD. Except as otherwise provided below in subsection there is no limit on the balance to be held in Indemni?cation Fund One. f. Moneys from Indemni?cation Fund One shall from time-to-time be swept into the Expense Fund as provided in this subsection 7 As funds accumulate in Indemni?cation Fund One, they shall be swept into the Expense Fund and used to pay current and future expenses incurred or to be incurred by representatives of DTSD in connection with assistance provided by DTSD and others in providing information concerning projects to be undertaken by (ii) promoting the Program and projects related thereto generally, whether a project is undertaken by SDRC or otherwise; and in connection with the monitoring and review of SDRC's activities by DTSD pursuant to paragraph 14 below. Moneys shall be swept into the Expense Fund periodically as directed by DTSD in writing until such time as the balance of the Expense Fund equals $350,000.00, at which time no additional moneys shall be swept into the Expense Fund- unless and until it is necessary to replemsh it so as to bring the balance of the Expense Fund back to $350,000.00. Any expenses to be paid out of the Expense Fund must ?rst be approved in writing by the Secretary of DTSD or the Secretary's designee (so designated in writing) and DTSD's business manager. (As of the date of this Agreement, DTSD's business manager is-Mardell Davis). SDRC may conclusively rely upon any such written approval when paying out ?mds as requested by DTSD. In no event may ?mds from the Expense Fund be paid to or on behalf of any employee of the State of South Dakota in such a manner as to constitute compensation to any such employee for services provided by that employee. g. In addition to the Expense Fund and Indemni?cation Fund One, there shall also be'established an Indemni?cation Fund Two, to be ?mded from collected revenues of SDRC net of reasonable expenses incurred by SDRC to carry out its and duties and obligations hereunder, and in any event revenues other than the fees described above in subparagraph Indemni?cation Fund Two shall be used solely for the purpose of satisfying any obligations of SDRC to indemnify DTSD as provided herein which are not covered by and paid under the policy or policies of insurance provided for below in paragraph 16. On or before November 1, 2010, or receipt of the origination fee from the SDIF LP 3 Basin Electric Power Cooperative project, whichever occurs ?rst, SDRC shall fund the balance of Indemni?cation Fund Two in an amount not less than $5 00,000.00. It is anticipated that an additional $500,000.00 will be deposited on or before December 31, 2010, but in any event said additional $500,000.00 shall be deposited no later than December 31, 2011. No later than December 31, 2011, the balance of Indemni?cation Fund Two shall be not less than $1,000,000.00, at which time SDRC shall have no further obligation to deposit additional moneys into Indemni?cation Fund Two unless necessary to restore a balance of $1,000,000.00 after the payment of claims. SDRC may not utilize any of the fees described above in subparagraph 7(b) to fund Indemni?cation Fund Two. Indemni?cation Fund Two shall be utilized only for the Existing EB-5 Projects described on Exhibit and any later EB-5 Projects undertaken and described in an Exhibit to this Agreement as contemplated above in subparagraph h. The fees payable from SDRC pursuant to the terms of this paragraph 7 shall be payable within 60 days of receipt of the applicable revenue by SDRC and shall be payable without any obligation on the part of DTSD to make demand therefor. Payment shall be made into Indemni?cation Fund One as provided above. Contemporaneously with such payment, SDRC shall provide notice of such payment to DTSD and c0pies of records reasonably acceptable to DTSD verifying the amount collected by SDRC shall provide DTSD with reasonable access to SDRC's books and records directly relating to receipt of fees and interest payments on account of proj ects so that DTSD may assure itself that SDRC is remitting fees into the Funds as required by this Agreement. i. Anything in this paragraph 7 to the contrary notwithstanding, the fees payable from SDRC pursuant to the terms of this paragraph 7 shall be net of any federal or state income tax obligations of SDRC on account of the fees collected by SDRC from project sponsors, participants or investors. It is agreed for the purposes of calculating SDRC's federal income tax obligation that the funds deposited into the accounts described in this paragraph 7 will be treated on a last-in basis. 8. SDRC Inc. has failed to pay into Indemni?cation Fund One all moneys as required by the Consulting Contract. 9. The Consulting Contract, paragraph 9, contains the following provisions: SDRC hereby grants to DTSD a security interest in Expense Fund, Indemni?cation Fund One and Indemni?cation Fund Two to secure obligations hereunder, including but not limited to obligations to indemnify and hold DTSD and the State of South Dakota harmless. SDRC agrees to execute such further instruments as DTSD deems reasonably necessary to perfect the security interest in the Funds granted by this paragraph 9 including, but not limited to, a Deposit Account Control Agreement. 10. SDRC Inc. refuses to execute a Deposit Account Control Agreement for Indemni?cation Fund Two. 11. The Consulting Contract, paragraph 14, contains the following language: SDRC shall maintain such books, records and reports as are currently or in the future required by CIS, 8 CFR 204.6 or other applicable law, or as may otherwise reasonably be required by DTSD. SDRC shall provide true and correct copies of such books, records and reports to DTSD as often as such books, records and reports are required to be provided to CIS, but in no event less often than SDRC shall provide to DTSD or its designee reasonable access to original books, records and reports such that DTSD can assure itself of compliance with the record-keeping requirements contained in this paragraph. 12. SDRC Inc. refuses to provide the State access to all of SDRC Inc?s books, records and reports. 13. The Consulting Contract, paragraph 15, contains the following language: SDRC agrees to indemnify and hold the State of South Dakota and its departments, of?ces, agencies and instrumentalities (including but not limited to DTSD) and its and their elected of?cials, of?cers, employees, agents and 14. 15. 16. 17. 18. 19. 20. 21. consultants harmless from and against any and all claims, causes, actions, causes of actions and liabilities arising out of or related to the services provided by SDRC and of?cers, directors, employees, agents and consultants which are in any way related to this Agreement. Nothing in this paragraph shall require SDRC to provide indemni?cation for any liability arising solely out of an act or omission of the State of South Dakota and its departments, of?ces, agencies and instrumentalities, and its and their elected of?cials, of?cers, employees, agents and consultants. In April, 2013, GOED was contacted by Federal authorities regarding the actions of Richard Benda and the EB-S program. After April, 2013, the Federal Bureau of Investigation and the South Dakota Division of Criminal Investigation conducted investigations into the EB-S program administered by SDRC Inc. and in conjunction with those investigations served subpoenas on GOED. The State bore all costs of responding to subpoenas issued to the State by both Federal and State authorities. The State had to retain attorneys and accountants in order to examine any potential claims for liability as a result of the actions of SDRC Inc. in administering the program. The State, at the time of ?ling this action, has spent at least $175,000 in legal fees and associated costs arising out of or related to the services provided by SDRC Inc. and SDRC Inc.?s of?cers, directors, employees, agents and consultants which were in any way related to the Consulting Contract. SDRC Inc. is required under the Consulting Contract to indemnify the State for any and all costs, including attorney?s fees, and further including costs and attorney?s fees for prosecuting this action. Despite written demand by GOED, as of the date of the ?ling of this complaint, SDRC Inc. continues to hold itself out as a regional center by maintaining a website with a top banner claiming it is the ?South Dakota Regional Center Inc.? SDRC- Inc.?s website also includes metadata content indicating that SDRC Inc. continues to Operate a regional center. Speci?cally Perform the Consulting Contract and Pay into Indemni?cation Fund 22. One all Amounts Due Under the Amended Consulting Contract Pursuant to paragraph 7 of the Consulting Contract, SDRC Inc. has an obligation to remit payments into Indemni?cation Fund One. 23. SDRC Inc. has failed to make all of the payments into Indemni?cation Fund One required by the Consulting Contract. Speci?cally Perform the Consulting Contract and Execute a Deposit Account Control Agreement 24. Pursuant to Paragraph 9 of the Consulting Contract, SDRC Inc. has a contractual duty to execute such documents, including but not limited to a Deposit Account Control Agreement, to perfect the State?s lien upon Indemni?cation Fund Two. 25. SDRC Inc. has failed and refused to execute the documents necessary to perfect and protect the State?s interest in Indemni?cation Fund Two. Speci?cally Perform the Consulting Contract and Provide Records to the State 26. Pursuant to Paragraph 14 of the Consulting Contract, SDRC Inc. has a contractual duty to provide books, records, and reports to the State. 27. SDRC Inc. has failed to provide books, records, and reports to the State, including but not limited to business records relating to the sources and uses of immigrant investors funds. 28. SDRC Inc.?s books, records, and reports are necessary in order for the State to respond to certain allegations made by the United States Citizenship and Immigration Services. Duty to Indemnify the State 29. Pursuant to Paragraph 15 of the Consulting Contract, SDRC Inc. has a contractual duty to indemnify the State for any and all costs, including attorney fees, expended as a result of the investigation conducted into the program administered by SDRC Inc. 30. Pursuant to Paragraph 15 of the Consulting Contract, SDRC Inc. has a contractual duty to indemnify the State for any and all costs, including attorney?s fees, associated with this action. Speci?cally Perform the Consulting Contract and Cease Any and All Representations by SDRC Inc. as the Administrator or Marketer of the South Dakota Regional Center Following Termination of the Consulting Contract 31. Following termination of the Consulting Contract, SDRC Inc. continued to refer to itself on its website by the name ?South Dakota Regional Center Inc.? and included other website elements suggesting continued status as the Regional Center. A. 32. Following termination of the Consulting Contract, SDRC Inc. was required to cease its representations that it was in any way associated with the Regional Center. PRAYER FOR RELIEF WHEREFORE, Plaintiff prays that this Court grant judgment in favor of the State and against SDRC Inc. as follows: For SDRC Inc. to account for and pay into Indemni?cation Fund One all amounts due and owing into that fund, For SDRC Inc. to execute such documents as may be necessary to perfect and protect the State?s interest in Indemni?cation Fund Two, which document may include but not necessarily be limited to a Deposit Account Control Agreement; In the alternative, for SDRC Inc. to execute a bond payable to the State in an amount totaling all funds required to be in Indemni?cation Fund Two, For SDRC Inc. to provide any and all records to the State regarding SDRC Inc.?s involvement in carrying out the Amended and Restated Consulting Contract, including but not limited to the following: a. A list of all EB-S projects under the regional center designation, the associated limited partnership or other entity (if applicable), the project?s status, and the amount and status of the LP investment(s) or loan(s); A list of LPs created by SDRC, Joop Bollen, a subsidiary, or af?liate for purposes of investment, including any that ultimately did not accept immigrant investor funds; A list of the aggregate investment of immigrant investor funds made by each A list of all 1-526 petitioners for an EB-S visa, regardless of status, the amount of investment, the associated LP, contact information for that petitioner?s immigration counsel, and their application status; A list of all 1-829 petitioners for an EB-S visa, regardless of status, the amount of investment, the associated LP, contact information for that petitioner?s immigration counsel, and their application status; Contact information for all EB-S petitioners associated with the regional center, whether their applications are pending or were previously approved; All books, records, or reports from each LP evidencing the investment or loan of immigrant investor funds to a project, to include bank statements, loan agreements, promissory notes, or other documentation of the uses of investor funds; h. All books, records, or reports relied upon by SDRC to complete required I-924A reporting to USCIS, or relied upon by SDRC to provide GOED with information to be used in completing required I-924A reporting to i. Loan documents; j. Records of receipts and eXpenditures; k. Business records of any and all entities, LPs and the like in which SDRC Inc. was involved as a general partner, partner, agent or the like which were in any way involved in the receipt or expenditure of immigrant investor funds; and 1. Any other records necessary to adequately respond to any request by the United States Citizenship and Immigration Services. E. For costs and attorney?s fees incurred by the State as described above, as well as the State?s coSts and attorney?s fees expended in this action; and F. For SDRC Inc. to cease and desist any representation that it is connected to the Regional Center and the State of South Dakota. G. For such other relief as the Court may deem appropriate. Dated this 16th day of October, 2015. I\?kwlgig?mn P.C. BY: M7 52/ Paul E. Bachand Special Assistant Attorney General 206 W. Missouri Ave. PO. Box 1174 Pierre, SD 57501-1174 (605) 224-0461 pbachand@pirlaw.com Exhibit F Correspondence from GOED asking SDRC, Inc. to cease representing itself as having any ongoing responsibility for the South Dakota Regional Center Timothy M. Engel From: Timothy M. Engel Sent: Friday, September 05, 2014 4:28 PM To: 'Jeff Sveen' '1 Subject: SDRC, MAGT file: 6001 Jeff: As you will recall, at the time the consulting contract was terminated, we asked oop to take down all web pages relating to the Regional Center. When conducting a search earlier today on an unrelated matter, I came across the following page: id=37 Please ask 00p to take down this page immediately, along with any others that may still be active. Thank you. Tim Tim Engel May, Adam, Gerdes 81 Thompson LLP 503 S. Pierre St. PO Box 160 Pierre, SD 57501 ph: (605)224-8803 lax: (605)224-6289 This e-mail is a transmittal from May, Adam, Gerdes 8: Thompson LLP and may contain information which privilegedI confidential, and protected by attorney-client or attorney work-product privileges. This tnulsmission is only for the intended- recipient named in this e- mail. 11' you me not the recipient indicated in this e-mail (or responsible for delivery ol? this message to the intended recipient), you may not copy or deliver the e-mail to anyone. In such case, you should destroy this e-mail without retaining an archive copy, and notify the sender immediately. Unauthorized use or distribution is prohibited and may be unlawful. Viewing or sending electronic mail to the sender of May, Adam, Gerdes Thompson LLI3 does not by itself create an attorney-client relationship. Internal Revenue Service regulations require that certain types of written advice include a disclaimer. To the extent this contains advice relating to a Federal Tax Issue, unless expressly stated otherwise, the advice is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer, for the purpose of avoiding Federal tax penalties, and was not mitten to support the promotion or marketing ol' any sneh transaction or matter discussed herein. Timothy M. Engii From: Timothy M. Engel Sent: Monday, September 08, 2014 9:58 AM To: 'Mary Haar' Cc: Joop Bolien; Jeff Sveen Subject: RE: SDRC, MAGT ?le: 6001 Thank you. From: Mary Haar Sent: Monday, September 08, 2014 9:47 AM To: Timothy M. Engei Cc: Joop Bollen; Jeff Sveen Subject: SDRC, MAGT file: 6001 Dear Tim, The page you found when searching is not on the current SDRC Website. That page was taken down when the contract was terminated last year. i have asked our iT person to check into the matter. Let me know ifl can be ofany further assistance. Mary Haar Accountant SDRC, INC- 416 Production St. Aberdeen, SD 57401 Phone 001-605-725?3253 Fax 001-605-725-3255 Exhibit GOED October 2015 Letter to SDRC, Inc.; SDRC, Inc.?s response; GOED reply THE. LAW FIRM OF MORENO, LEE BACHAND, RC, A PROFESSIONAL CORPORATION 206 West Missouri Avenue - PO. Box 1174 Pierre, South Dakota 57501?1174 Telephone: (605) 224-0461 0 Fax: (605) 224-1607 Mark A. Moreno Charles P. Schroyer (Ret) Thomas E. Lee Paul E. Bachand . Edward s. I-Iruska October 16, 2015 A150 admitted in NE VIA E-MAIL U.S. MAIL Jeffrey T. Sveen Siegel, Barnett Schutz PO Box 490 Aberdeen, SD 57402 RE: State of South Dakota v. SDRC Inc. Dear Jeff: Find enclosed a courtesy copy of the Summons and Complaint in the above-entitled matter. These have been sent to the Brown County Sheriffs of?ce for service. In addition, ?nd enclosed a copy of the US. Department of Homeland Security US. Citizenship and Immigration Services? Notice of Intent to Terminate the South Dakota Regional Center dated September 28, 2015. You will see that all of the allegations in the Notice of Intent to Terminate relate to actions by SDRC Inc. and speci?cally oop Bollen. The Governor?s Of?ce of Economic Development has retained counsel with immigration law expertise in order to craft a response as required in the Notice of Intent to Terminate. You may be contacted by a representative of that law ?rm and I will provide you a speci?c name before you are contacted. It is in best interest to provide all of the necessary documents and speci?c explanations necessary in order to respond to the Notice of Intent to Terminate. As you can see, a response is due on or before October 31, 2015. It will be necessary for you and your client to timely reSpond to any request by GOED counsel in order to fully respond to the US. Citizenship and Immigration Services. The following documents need to be provided immediately: _o A list of all projects under the regional center designation, the associated limited partnership (LP) or other entity (if applicable), the proj ect?s status, and the amount and status of the LP investment(s) or loan(s); A list of LPs created by SDRC, oop Bollen, a subsidiary, or af?liate for purposes of BB- 5 investment, including any LPs that ultimately did not accept immigrant investor funds; A list of the aggregate investment of immigrant investor funds made by each LP A list of all 1-526 petitioners for an EB-S visa, regardless of status, the amount of investment, the associated LP, contact information for that petitioner?s immigration counsel, and their application status; A list of all 1-829 petitioners for an EB-5 visa, regardless of status, the amount of investment, the associated LP, contact information for that petitioner?s immigration counsel, and their application status; 0 Contact information for all petitioners associated with the regional center, whether their applications are pending or were previously approved; 0 All books, records, or reports from each LP evidencing the investment or loan of immigrant investor funds to a project, to include bank statements, loan agreements, promissory notes, or other documentation of the uses of investor funds; 0 All books, records, or reports relied upon by SDRC to complete required I-924A reporting to USCIS, or relied upon by SDRC to provide GOED with information to be used in completing required reporting to and Any and all other documents referenced in the Notice of Intent to Terminate, Provide a copy of these documents on or before Wednesday, October 21, 2015, to GOED Deputy Commissioner Aaron Scheibe Further, include a copy to me and attorney Engel. Those documents should be electronically submitted to us. Many of the prior requests for documents have been ignored or met with resistance, and the actions of SDRC and your client have not only damaged the State, but also jeopardized with federal authorities the continued status of the Regional Center and the-associated foreign investors. As such, it was necessary to commence the enclosed civil action in order to protect the State of South Dakota and the Regional Center?s interests. Should you timely provide all necessary documents, the State will agree to strike those portions in this lawsuit. 1 look forward to your prompt response. Please contact me or attorney Engel if you have any questions. aul E. Bachand Enclosures cc: Timothy Engel Aaron Scheibe James Seward, General Counsel PEBzrh JEFFREV JOSEPH BARNETT STAN SIEGEL (lemmas) JOSEPH IE BARN ETT UTZ MAIN STREET - 400 CAPITOL BUILDING TELEPHONE (605) 225?5420 ?Atso licensed in North Dakota 13.0. Box 490 oAlso licensed in Montana .Also licensed tn ABERDEEN: SOUTH DAKOTA 5740930490 Web Site: October 22, 2015 VIA E-MAIL CONFIDENTIAL Moreno, Lee Bachand, PC. 206 West Missouri Avenue PO Box 1174 Pierre, SD 57501-1174 pbachand@pirlaw.com Re: State of South Dakota v. SDRC, Inc. Dear Paul: I am writing this letter in response to your letter dated October 16, 2015. First and foremost, I take exception with most, if not all the claims set forth in your letter. You indicate that my client has ignored previous requests for documents from GOED or that your client has been met with resistance. This is simply incorrect. As you are aware, the Consulting Agreement between SDRC, Inc. and GOFD and was terminated with no cause in September 2013. Shortly thereafter, on October 3rd, five boxes of documents and materials were provided to GOED. These include the speci?c documents and information that you requested in your letter of October 16th. Either GOED has not reviewed the information that was provided to them by SDRC, Inc. or simply does not understand the information and documentation that it has. See attached table of contents of documents for each box, as well as pictures of each box. SDRC, Inc. has never refused any request by the State of South Dakota to provide Regional Center records, which the State is entitled to receive. In centrast, the State has failed to assist SDRC, Inc. in its attempts to assist the investors in obtaining their permanent visas. The State has refused in any manner to assist SDRC, Inc. or the investors in their quest. This obviously has severely damaged the ability of the investors to obtain their Green Cards and the State?s action of non?compliance has damaged SDRC, Inc?s reputation. As stated by the attached e-mail from Mr. Berez, the ineffectiveness and inability of the State to operate the Regional Center will severely damage the investors. As you know, Mr. Berez was the former head of the EB-S Program with the USCIS. The Notice to Terminate does not indicate actions solely related to SDRC, Inc. or Mr. Bollen. The Notice to Terminate is for failure to submit required information and failure to CONFIDENTIAL Mr. Paul Bachand October 22, 2015 Page 2 promote economic growth. Since the State terminated management of the Regional Center by SDRC, Inc. in September 2013, the State has been required to ?le reports with USCIS, which evidently, USCIS feels were either not filed at all or filed imprOperly. Furthermore, the State?s Regional Center has failed to promote any Projects in South Dakota, several of which had been approved at the time of termination of SDRC, Inc?s contract It is my understanding that no further action was undertaken by the State toward any of those projects. I am providing with this letter an answer to your requests in your October 16, 2015 letter, as well as a 39 page document listing of all investor information which you requested and are entitled to, All of the above information GOED has in their possession and was previously provided by SDRC, Inc. I ?nd it especially troublesome that either the State of South Dakota or your office provided information to the press for publication about a lawsuit prior to my having been informed of the same, a lawsuit filed, or any public record or notice thereof, It is obviously the State?s intent to carry on a public relatiOns campaign to cast blame for its inability to operate the Regional Center on SDRC, Inc. and Mr. Bollen. Furthermore, your letter and the Complaint include false statements. As several audits have shown, all of the money to be received by the State, was properly deposited into Indemni?cation Fund One; hereinafter referred to as ?Fund One.? There is an additional approximate $375,000 which is to be received by SDRC, Inc. to go to the State from recent payments. During the recent negotiations, it was the understanding of SDRC, Inc. that the State wanted these funds paid directly to GOED and not to be placed into Fund One; however, as a result of the lawsuit, SDRC, Inc. has deposited said funds into Fund One. The State?s refusal to previously assist the Petitioners in their request to obtain visa approval and a continued lack by the State of South Dakota to assist investors is very concerning to SDRC, Inc. and unfortunately will, in all probability, result in future litigation due to the failure of the State to properly conduct such activities or to assist SDRC, Inc. in assisting the investors. It is also troublesome that the State received notice of intent to terminate on September 28, 2015. Yet, no noti?cation was provided to SDRC, Inc. until late Friday, October 16, 20] 5. Yet, your demand requires information be provided by SDRC, Inc. to GOED only two and a half working days later. You furthermore, indicate that an ?immigration attorney? will be contacting either SDRC, Inc. or me, as counsel for SDRC, Inc., which has not been done as of the date of this letter. It is my understanding that all of the ?les, which were part of the Regional Center when SDRC, Inc. ran the same, were previously provided to GOED. No indication or requests have been made about any incomplete information 0r documentation. Likewise, USCIS has never indicated to SDRC, Inc. that anything was amiss in any ofthe information that was submitted. CONFIDENTIAL Mr. Paul Bachand October 22, 2015 Page 3 The existence of the South Dakota Regional Center is extremely important to the investors? success. Termination would be a disaster for hundreds of people. PleaSe let SDRC, Inc. know if the State intends to contest the termination of the Regional Center. As always, SDRC, Inc. is more than willing to work with the State to protect the investors? interest and has been doing so even though its contract was terminated. If you desire such assistance, please contact me immediately. Very truly yours, jsve't?n?b?bslaw. net TS :kls Attachments pc w/attachments via e-mail: SDRC, Inc. RESPONSE TO OCTOBER l6, 2015 LETTER Re: State of South Dakota v. SDRC, Inc. 1. List of EB-S Projects under South Dakota Regional Center. It is unclear what you are seeking; however, the Projects existing when SDRC, Inc. was administering the Regional Center are as follows: Project EB-S Loan Status of Loan Dakota Provisions SDIF LP 1 $55,000,000 and SDIF LP 2 Tentexkota SDIF LP 2 $32,500,000 - Basin Electric SDIF LP 3 and $105,000,000 SDIF LP 7 - Florida Power a Light SDIF $50,000,000 -- LP 5 Northern Beef Packers SDIF Approximately $69,000,000 Discharged in Bankruptcy LP 6 and SDIF LP 9 All of the EB-S ?les associated with management of the Regional Center were turned over in their entirety to the Gdemor?s Of?ce of Economic DeveIOpment (GOED) in 2013 when the contract with SDRC, Inc. was terminated by the State. Updates were timely provided by Hanul Law Firm, immigrant attorneys, for the majority of invest0rs. A list and photographs of said boxes is'attached. 2. This information has been provided previonsly to GOED. The are public record and consist of LP 1, Dakota Provisions; LP 2, Tentexkota; LP 3, Basin; LP 4, Dakota Provisions; LPS, Florida?Power and Light; LP 6, LP 7, Basin; LP 8, [berdrola (not funded); LP 9 and LP 20, Dakota Provisions (not funded). 3. Provided as part of the poor 1?924 infomation to the State in 2013. CONFIDENTIAL 4. A list of all 1-526 Petitioners for an EB-S Visa regardless of status, the amount of investment, associated LP, contact information and petitioner?s immigratiOn counsel and their applicable application status are attached and was previously provided to of?ce in October 2013. Updates were provided by Hanul Law Firm. Each investor invested $500,000 in a project. It is our understanding that Hanul Law Firm is counsel for most of the petitioners and the State is in contact Hanul Law Firm directly for the current status. 5. See above. 6. This information was already provided to the State in 2013. SDRC, Inc. does not have updated information because it is no longer SDRC, Inc?s reSponsibility nor is SDRC, Inc. able to communicate with USCIS because it no longer has Regional Center status. It is the respOnsibility of the State to update all of this information. SDRC, Inc. is not authorized to release individual contact information to the State. 7. LP rec0rds are not part of the management of the Regional Center. 8. You have been provided all books, records, or reports SDRC, Inc. used to ?le l?924A repon's. 39 Pages Redacted (Client List) See SDCL SDCL and/or SDCL 1-53-6 ?ew/#20 r854 .. ?dew/lift ?a I 137213 ?inch . w-on 8 5:485?Mu?u?H??MW?uni." .5 a. mm? M. ?c ou?ww-w am. J?s?somega"), . .. Wh-?wanth-? a: . .. . my W07 Maui Mreb? 1111wxmza Dwarf I w-lxw m?v at. 'vw?i?II? 'iAAJ-uwII-wl .-- v-m? I-th-tI?I t- h. "y .. . --. yWamhv-?unnmr? - ..- .. NM. u, .4- Mwm? mm . uww?v. . xm?m-wv- v. an: fumd?u-n-u1_ uwum?-. . m. man-aux .: -. .m I 1 mm . "?Ir - w-w?vw . o- 9 -- 'ijI?.an-uu"wow-m - . . Mu.? a. x'Jmur -. m. . - .. mm. W. .-.. w. -- v-u- an" ?wane.? mij (n ., ?(W-th .uoq . -.-. ..M-?mmhr. 150 2,507 9990 Lew, Md; ??151.7- yma?' a. ?39. mmzowbu . slvaIw-I" 'rm ?mum -. w.y ~14"qua-rm. .-. - WW a- olmmn .. u. .. 'm ?Wu. .. .. . .417?? . Ham?1.- . _u (-.. .. .. WuHun-rum?. .. w' ?mun-umm?m. . m_ -v tu?HV?v?Il?-?dvI-II?m nun?.- - .- -. e. a? .m - H. yr, u?n? .ml'g ?an "upwmmaw. I "an, 4 . ma- {ya-Meaw m] - - vw-Aa . n? um." . ?mu ?g?I-Hu? ma. .. w. .mmuu?pua?i?fnm vu-w?v -- .o -- a w? .-.. -. um 'N-umw MW, n. . of?lwnt . .- . .- . ?mum-A km?; mm- Mm 09/4244 cu:- I yearn?omen 6?7" 3% 7%?3 fr :Qannifcv Lamtym? 51mg avyw'ww?a 3mm VRN U11}ka 9mm LP Qua/15$; PW WW bumble .D?nw (SW/dag II . =2st (swam ?pmty can:sz Pow 3RD wwrge Bz?'lkl?i Ewweas 6716/ N-Qms?mu 024?va va? fw/ mum'? Mum?? byway up Bern/am MW 911+ ?445 Mm ?aws; emu sfwiga Bier/av ELI?(wag PW G'Loa/rz. 031.2%} LP Gamma? firm} Saba-:19? ,omw 1.19 smug 6w Uegwn) Le 93am?: PLAN ?12: .13 0 Q. 31 3 . 159% (mew. . {we ?121.55% .. 9:99., a geosrum 57; 1? a, LLme'x/u; {Mm . 6?wa .. 951.101. M39 amucwe .bqvwerrw mar/w. Mme, (RSI Mammal? ?i3; 1.32113?me 9% .. . .. .. .Lij??i?gi m; Elf":I{face m, if . ?6452an 59?" lam/10 ?(iammHK-Lamwm? ,g/ng' BM \oh'rs VA,an Wad [Wu Ema cucwv? 40/ch lines before assembly. Lid - R?jr?mv'a at perforalfons - 5613-01-.?lb Hello loop and Austin: Today I learned that USCIS had issued a Notice of intent to Terminate the State?s Regional Center, which was apparently issued in late September for which a rebuttal response back to USCIS is due by October 31SI to address the factors cited by in its Notice of Termination by USCIS. The effect of any termination of the State?s Regional Center will have a very serious adverse impact on any South Dakota EB-S investor and their derivative spouses and children who are ?still? in conditional resident (CR) status, in that they will stand to have their CR status also terminated by because they no longer are eligible for CR status based on credit for "indirect/induced? job creation. The regulations (copy attached} on this are clear wherein the EB-S regulations at 8 CFR state that ?any alien? investor who has not had his/her conditional lifted via an approved will ?lose? their CR status. This would be because these investors will no longer qualify or be eligible on basis of having created jobs due to the fact that credit for ?indirect and induced job creation? can ONLY be accorded to investors who have invested, and have sustained their investment into a job creating project ?through? a "regional center.? it the regional center-based umbrella of indirect/induced job creation is no more due to the regional center?s termination, then the investors and their family members are eligible to continue in CR status. That means the balance ofSouth Dakota EB-S LP-6 investors still with pending I~829s, as well as all of the LP-9 investors; and any and all other SDRC investors whose l~829$ have not been granted from Basin Electric, Deadwood Casino, Dakota Provisions, Nextera, etc., would stand to have their CR status terminated as well. Specifically, the regulation concerning this may be found at 8 CFR which states as follows: (9) Effect of termination of approval of regional center to participate in the immigrant investor Pilot Program. Upon termination of approval of a regional center to participate in the immigrant investor Pilot Program, the director shall send a formal. written notice to any alien Within theregional center who has bean granted lawful permanent'resialence on a conditionalbesls under the Pilot Program, and'whe-has not. yet removed thereonditional basjset suCh lawful pennanent residence, of the. termination of the alien'spermanent resident status, unless the alien can establish continued eligibility for alien entrepreneur classification under section of the Act, So, for the interests of the several hundred South Dakota EB-5 investors at risk here, it is critical that the State of South Dakota prepare an effective response that addresses, clarifies and otherwise mitigates each of the factors cited by USCIS as its basis for issuance of the Notice of intent to Terminate. Thanks, Morrie This message contains confidential information and is intended only for the individuai named. If you are not the named addressee you should not disseminate, distribute or copy this e-mail. Please notify the sender immediately by e-mail if you have received this e-maii by mistake and delete this e-mail from your system. E-mail transmission cannot be guaranteed to be secure 0r error-free as information could be intercepted, corrupted, iost, destroyed, arrive late Dr incomplete, or contain viruses. The sender therefore does not accept liability for any errors or omissions in the contents of this message, which arise as a result of e-n-iaii transmission. If veri?cation is required please request a hard-copy version. THE LAW FIRM OF MORENO, PC. A PROFESSION AL CORPORATION 206 West Missouri Avenue - PO. Box 1174 Pierre, South Dakota 57501-1174 Telephone: (605) 224-0461 0 Fax: (605)224-1607 Mark A. Moreno Charles P. Schroyer (Ret) Thomas E. Lee Paul E. Bachand Edward S. Hruska October 9 5 Also admitted in NE VIA EMAIL U.S. MAIL Jeffrey T. Sveen Siegel, Barnett Schutz PO Box 490 Aberdeen, SD 57402 RE: State of South Dakota v. SDRC Inc. Dear Jeff: This is in response to your letter of October 22, 2015, received via email at 4:58 pm. While my client believes its efforts are best directed toward reSponding to the Notice of Intent to Terminate we feel we must correct at least some of the incorrect statements in your letter. I First, the State of South Dakota (the "State") has not "failed'to assist SDRC, Inc, in its attempts to assist the investors We are not aware of any such attempts other than SDRC requesting that the State contact USCIS. Further, the State has in fact consulted with immigration law Specialists from time-to-time since the Amended and Restated Consulting Contract was terminated and wrote to USCIS demanding some action on the pending petitions. Second, the only rationale conclusion to be drawn from the language of the NOIT is that acts and omissions directly led to the issuance of the NOIT. Third, the claim on page 2 of your letter that you weren't notified before suit was ?led is blatantly false. You were provided with both a courtesy call and a courtesy copy of the Complaint before the Complaint was ?led and before anything was otherwise made public. In fact, your letter refers by date (October 16) to my letter providing you with a courtesy copy of the Summons and Complaint. Fourth, as to the timing of the response to the NOIT, it was mailed on September 28 it was not received until several days later. Furthermore,- as with your response to my letter of October 16, it took some time for the State to review the allegations, consult with immigration law experts and formulate a plan for a response. Next, it is important to point out that your client has not provided the documents needed to respond to the if it had already done so, we would not have made the demand. Without limiting the generality of the foregoing statement, speci?cally, your client has not provided the following: 1. Contact information for all petitioners associated with the Regional Center; 2. All books, records, or reports from each LP evidencing the investment or loan of immigrant investor funds to a project 3. All books, records, or reports relied upon by SDRC to complete required I-924A reporting to USCIS, or relied upon by SDRC to provide GOED with information to be used in completing required I-924A reporting to or 4. The other documents referenced in the NOIT. Among other concerns, it should be obvious to your client that the State cannot provide a factual response to, for example, the allegations on page 11 of the NOIT concerning the payment of certain expenses for purposes other than job creation without an explanation and supporting documentation provided by your client. Similarly, your client has not provided any explanation to rebut the allegations on page 17 of the NOIT concerning the 1-829 petition for Ziming Xu. These omissions are clearly inconsistent with your statement that your client "is more than willing" to assist with the response to the NOIT. Finally, your letter and all of the attachments are marked "con?dential." Do you intend that to mean that your client would object to the State providing a copy of your response to If so, that position would again certainly be inconsistent with your client's statement that it is "more than willing to assist." The State again requests that your client immediately provide ALL of the requested documents. sump ul E. Bachand cc: Timothy Engel Aaron Scheibe James Seward, General Counsel Exhibit Screenshots from SDRC, Inc.?s website Exhibit Screenshot (accessed 10/16/2015) Regional Inc Wm M. . a Wc'lt'unw SDRC lln? inuxmum um- 07! Exhibit Screenshot (accessed 10/26/2015) - I SDRC Welcome to SDRC Inc Contact Us MOUNT nusme sm?e [Important News Secure Access Online Deadwood Casino 2015 AFALZ 3:5 FOSYSC Secure ACCESS On?lr?e ?ash-oat Vote ?4 i5 Fuzzu'es aostecl *2011 Faster: L35 U37 L51 _ette's Fa?iners Letter szs?ed .55 L39 BEN-JUNE. Uzvcates Telephone 4605-7253251 Fm +1505?725?3255 E-Mall ccnlact@sdrc-eb5 corn Address 416 Productlon SkreetNonh Aberdeen SD 57401 USA 2010 SDRC Inc All Rights Reserved Yukon Wordpress Theme by Wordpress Plugm Exhibit Screenshot (accessed 10/19/2015) . And Regional Center Inc looin to access your account inlommlion Yum Hum 10 x5 may-mun! LIV (hr: BDRC who: .me-I yuu haw, the reaguslmhun pm- was New 3D Pussmm (gun hm: {Mssn?mzf Inn/r4 .arw u."wr 9!"er '(uNIi-n? 1' out)?! v.24: Lu Jod'cs's o" OI lnC' f1" I 9] ?J'v 12". u. Lisa-v. HI. frpi41- 'J'nt Km? Hulda? a" Ill-wt: Kn'nh.? Exhibit Screenshot (accessed 10/26/2015) 1% Client St Not logged in Login to access your account information Your User ID is assigned by the SDRC of?ce after you have completed the registration User ID rocess. Password Forgot your password or have any other problem logging in? Contact our office at the emaff address below. 525112 West: Telephone: +1?605-725?7251 - Fax: +1-605-725-3255 - E?Maii: Address: 416 Prod Ic-n Street North. Aberdeen, SD 57401 USA Copvright 2015 :3ch Inc? All Rights Reserved Exhibit I Communications between GOED and H & H law firm, formerly Hanul Professional Law Corp., regarding access to investors’ files. Mark A. Moreno THE LAW FIRM OF MQRENQ, LEE dz. RC. 206 WesAt 1174 Pierre, South Dakota 57501-1174 Telephone: (605) 224?0461 0 Fax: (605) 224-1607 Charles P. Schroyer (Ret) Thomas E. Lee 1 Paul E. Bachand Edward s. Hruska - October 23, 2015 Also admitted in NE Austin Kim and Law 2677 N. Main St. Suite 1070 Santa Ana, CA 92705 RE: State of South Dakota v. SDRC Inc. Dear Mr. Kim: I represent the South Dakota Governor?s Of?ce of Economic Development. It is my understanding that you previously worked with the SDRC, Inc, in its role as contract administrator of the South Dakota Regional Center, regarding the processing of investor visas under the EB-S program. As you are likely aware, the State of South Dakota previously terminated its contract with SDRC Inc, and SDRC no longer acts as the administrator of the Regional Center. Enclosed is'a copy of a Notice of Intent to Terminate received from the United States Citizenship and Immigration Services The State is in need of certain documents that are likely in your possession in order to respond to USCIS. Speci?cally, as soon as possible, please provide me with the following: 0 Contact information for all petitioners associated with the South Dakota Regional Center (to include address, telephone number and email address), along with a list of the status of all I-526 and I-829 petitions ?led on their behalf; 0 All books, records, or reports your ?rm provided to SDRC to complete required I-924A reporting to USCIS, or were relied upon by your ?rm or SDRC in providing GOED with information to be used in completing required I-924A reporting to 0 Any and all other documents referenced in the Notice of Intent to Terminate that are available in your ?les. I look forward to your prompt response. Sincerely, Paul E. Bachand Enclosure cc: Aaron Scheibe, Deputy Commissioner S.D. Governor?s Of?ce of Economic Development PEB :rh Scheibe, Aaron From: Sent To: Subject: From: Austin Kim Sent: Monday, October 26, 2015 11:44 AM To: 'Paul Bachand? Cc: srobey@pirlaw.com; Timothy M. Engel Subject: RE: Letter from Paul Bachand Hi Paul, My understanding is that SDRC Inc. already received a similar request from your office. We have been coordinating with SDRC Inc. to come up with appropriate responses which will be forwarded to your office and to the state's GOED from SDRC, Inc. Thank you. Austin Kim Attorney At Law mm?m.miwa LAW, A Professional Law Corporation 2677 N. Main St., Suite 1070 Santa Ana, CA 92705 Tel: (714) 347?0008 Fax: (714) 347-0088 CONFIDENTIAL 81 PRIVILEGED This e-mail message is intended for the sole use of the named recipient(s) and may contain confidential and privileged information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please immediately destroy all copies of the original message and contact the sender by reply e-mail. From: Paul Bachand Sent: Saturday, October 24, 2015 5:51 AM To: Austin Kim Cc: Timothy M. Engel Subject: Re: Letter from Paul Bachand Thank you for the prompt response. I?ve included attorney Engel on this email. Please include him on any response. Thanks Paul Sent from my iPhone 9? On Oct 23, 2015, at 6:09 PM, "Austin Kim? wrote: Hi Paul, We will coordinate with SDRC, Inc. and get back to you on Monday. Thank you. Austin Kim Attorney At Law LAW, A Professional Law Corporation 2677 N. Main St., Suite 1070 Santa Ana, CA 92705 Tel: [714) 347-0008 Fax: (714) 347-0088 CONFIDENTIAL 8i PRIVILEGED This e-mail message is intended for the sole use ofthe named recipientis) and may contain confidential and privileged information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please immediately destroy all copies of the original message and contact the sender by reply e?mail. From: srobey@pirlaw.com Sent: Friday, October 23, 2015 2:41 PM To: Paul Bachand Subject: Letter from Paul Bachand Good afternoon, Please see the attached copy of a letter from Paul Bachand and the Notice of Intent to Terminate included with the letter which were sent out by U.S. Mail on this date. Please let me know if you have any problems opening the attachments. Thank you. Samantha Robey Moreno, Lee 8; Bachand, P.C. PO. Box 1174 Pierre, SD 57501 Phone: (605] 224-0461 Fax: (605) 224-1607 This communication and the information contained therein is privileged and con?dential and intended for the sole use of the intended recipient. If you received this communication in error, please reply to the sender indicating that fact and delete the copy you received and any attachments. In addition, you are hereby notified that any dissemination, distribution or copying of the communication is strictly prohibited and may be a violation of law. LSME- "tiff/f ROBERT B. ANDERSON OF COUNSEL TIMOTHY M. ENGEL DAVID A. GERDES CHARLES M. THOMPSON MICHAEL SHAW - t. C- BRETT KOENECKE 20 1 9 GLENN W. MARTENS 1881-1965 KARL GOLDSMITH 1885-1966 HRISTINA . LINGER BRENT A. WILBUR 1949-2006 JUSTIN L. BELL TELEPHONE DOUGLAS A. ABRAHAM 605 224?8803 KARA C. SEMMLER FAX AJ. FRANKEN 605 224-6289 Email: VIA EMAIL FIRST CLASS MAIL Austin Kim Attorney at Law Law 2677 N. Main St, Suite 1070 Santa Ana, CA 92705 RE: SDRC MAGT File: 6696 Dear Kim: As you are aware, I am one ofthe lawyers representing the South Dakota Governors Office of Economic Development I am in receipt ofyour email ofOctober 26, 2015, at 11:53 am, responding to an October 923, 2015 letter request from GOED through another ofits attorneys Paul Bachand for investor information and other files you maintain in order to assist GOED in responding to a USCIS Notice oflntent to Terminate the South Dakota Regional Center. In your email you decline to provide the requested records directly to GOED and indicate you instead "have been coordinating with SDRC Inc.? on a response that SDRC will provide to GOED at some unspeci?ed date. Your response is unacceptable. Your lack of cooperation with reasonable requests has substantially diminished its ability to respond effectively to the USCIS Notice, and puts injeopardy the regional center's designation and therefore your clients? pending petitions before USCIS. GOED hereby renews its demand for all records and documents outlined in Paul Bachand?s October 23 letter to you. GOED further demands copies ofany and all information and correspondence you and your firm supplied to SDRC Inc. for use in preparing the response to GOED noted in your email. Please immediately forward those copies electronically to GOED Deputy Commissioner Aaron Scheibe at aaron.scheibe?matesdns, with a copy to me at tme@rnayadam.net. MAY, ADAM, GERDES THOMPSON LLP 503 SOUTH PIERRE STREET - PO. Box 160 PIERRE, SOUTH DAKOTA 57501?0160 Austin Kim October 9-8, 22015 Page 22 cite) As you are no doubt aware, COED terminated SDRC Inc?s contract to administer the South Dakota Regional Center For cause on September 19, 2013, after which time SDRC Inc. was to cease representing itselfas a regional center and turn over all books, records, or reports relating to the regional center to GOED. Your clients? petitions pending before USCIS are affiliated with the South Dakota Regional Center, managed by COED, not with SDRC Inc. As Such, you have a duty both to your clients and to the regional center to respond directly to requests for Failure to do so will force us to consider seeltingjuclicial relief recognizing status and orclm-ing you and your firm to turn Over all records related to South Dakota Regional Center applicants. Sineerely[If ?If. . 3 r" ENoi-ze' THOMPSON LLP TNI Ed rm cc: client (email only) Exhibit GOED January 2015 letter to USCIS -ii SOUTH DAKOTA OFFICE OF ECONOMIC DEVELOPMENT I- ?hhuv?v?b January 22, 2015 VIA EMAIL AND FIRST CLASS MAIL TO: Nicholas Colucci Chief, Immigrant Investor Program US Citizenship and Immigration Services 1 I 1 Massachusetts Ave. NW. MS 2260 Washington, DC 20529 RE: Adjudication Delay Affecting South Dakota Regional Center Petitions Dear Mr. Colucci: I write today to request your assistance in concluding adjudication offour 1-526 and 270 1?829 petitions submitted by applicants under the Immigrant Investor Program dating to as early as 2012. The petitions, the details of which are attached herewith as ?Exhibit were based on alien investor participation in a number of projects af?liated with the South Dakota Regional Center, which my of?ce has operated on behalfofthe State ofSouth Dakota since 2013. I am concerned the processing delays USCIS has created threaten the ongoing administration of the regional center and undermine the reputation of the EB-S program within the alien investOr community. According to website, the current processing timelines for 1-526 and 1829 petitions are 13.8 months and 10.5 months, respectively. Based on information provided to my of?ce, 100 percent ofthe 1-526 petitions and 96 percent oft11e1-829 petitions noted above have already exceeded processing timeframes. Fully 60 percent ofall the pending 1-829 petitions have exceeded processing timeframe by six months or more. On average, USCIS has had each 1-829 petition for adjudication for 1.4 years without making a determination. I trust you will agree the situation I describe above is unacceptable and ultimately inconsistent with the orderly administration of the program and its long?term sustainability. If there are 605 Ti?) 3361 I7 800 872 6190 SDREADYTOWORKCOM 711 EAST WELLS AVENUE PIERRE SOUTH DAKOTA S7501 reasons for these delays speci?c to individual petitions, such as incomplete documentation or concerns over eligibility criteria, I would ask that USCIS notify my office and provide the petitioners timely notice and an opportunity to correct any alleged de?ciency using the appropriate channels within your agency. I look forward to a prompt resolution of this issue and stand ready to respond to any questions you may have. I can be reached by telephone at 605473?3301, or by email at aaron.scheibe@statersd.us. Thank you for your attention to this matter. Sincerely, 4 m4. Aaron P. Scheibe Deputy Commissioner Govemor?s Of?ce of Economic Development Director, South Dakota Regional Center - Exhibit 4 Pending I I with $00th 04 kota' Regio?na? center Fem-ding? I I . 1 lam-Receipt Date I .. . -. .. . Hg204/19/2013' - .?204/25/2013' 14329 Receipt-Issue . . 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'03/10/2013 08/15/2013 08/15/2013 08/21/2013-- 03/21/2013 -=08/21/2013. . 08/21/2013 09/17/2013 10/13/2013. 11/06/2013 11/06/2013 11/14/2013 _12/03/2013f 12/05/2013 12/20/2013 01/30/2014 03/13/2014_ ".03/27/2013 [04/04/2013' 04/03/2013. - .I?h . ?931%. 00/20/2013 - '06/20/2013- 07/11/2013 07/23/2013 03/15/2013-- 12/20/2013 12/21/2013 08/02/2012 01/04/2013. .?01/15/2013 02/04/2013- 02/03/2013 02/14/2013 '02/14/2013 03/12/2013 0 "03/12/2013; -:03/20/2013 .04/03/2013: 04/19/2013- 05/03/2013 :05/15/2013- . -T 05/24/2013 -00/13/2013 ;06/13/2013_ ."i00/20/2013j '106/20/2013- "=06/20/2013 :06/20/2013 .- 03/23/2013 - _j.07/11/2013 . 07/11/2013 '-07/23/2013 . :43 50f? _07/30/2013' 07/30/2013 . 03/15/2013 . 03/21/2013 - 03/21/2013 509/19/2013 09/20/2013- 10/30/2013 10/30/2013- 11/14/2013 12/12/2013- 1'12/12/2013' .12/12/2013- 01/24/2014 03/05/2014 . 05/15/2013 05/23/2013 06/07/2013 - 06/20/2013_ 03/23/2013 - 05/23/2013 07/03/2013 07/03/2013 - 07/08/2013 3 07/11/2013 07/30/2013 03/15/2013 03/15/2013 03/21/2013 09/17/2013 103/17/2013 010003 09/19/2013 09/20/2013 . :10/07/2013 - 10/07/2013 10/16/2013 . 11/12/2013*' . 211/13/2013? _11/23/2013: 11/23/2013 '11/27/2013 12/03/2013 12/03/2013 _12/03/2013 12/05/2013 I 601?? 12/11/2013 12/12/2013 '12/12/2013 . 12/12/2013 12/12/2013' 12/12/2013 12/12/2013" 12/12/2013 312/12/2013 12/19/2013.. 12/19/2013 _.12/19/2013- _12/19/2013 -712/19/2013 .-12/19/2013 12/20/2013_ 12/20/2013 1 _12/21/2013 01/03/2014 01/03/2014 01/03/2014 01/03/2014 01/03/2014 '01/03/2014 '01/10/2014 01/10/2014 01/10/2014' 01/10/2014 01/10/2014 01/10/2014 01/15/2014j-- 01/21/2014 01/21/2014 02/11/2014; '02/11/2014 02/11/2014 02/11/2014 03/05/2014- _.03/05/2014/ '03/05/2014 0- 03/21/2014- 03/24/2014_ [08/19/2013 -03/20/2013- 103/25/2013 04/10/2013 . ., 06/25/2013 08/09/2013 . 11/22/2013_ 01/10/2014 Exhibit USCIS March 2015 response letter U.S. Citizenship and Immigration Services Immigrant Investor Program Office Washington, DC 20529 SENT VIA U.S. MAIL AND EMAIL TO AARON.SCHEIBE@STATE.SD.US March 4, 2015 Mr. Aaron P. Scheibe Deputy Commissioner Governor’s Office of Economic Development Director, South Dakota Regional Center 711 East Wells Avenue Pierre, SD 57501 Dear Mr. Scheibe: We have received your letter dated January 22, 2015 relating to pending I-526 and I-829 petitions affiliated with the South Dakota Regional Center. Our office has also received the attachment to your letter, Exhibit “A” containing the names, receipt numbers and priority dates of certain petitioners. Thank you for your letter and attachment and for expressing your concerns. Although various legal restrictions, including the Privacy Act and DHS policy requirements regarding the disclosure of information, prevent us from responding to you with regard to any specific petitions, we can confirm that at least a portion of these petitions are actively being reviewed by a USCIS officer. Petitioners may check the status of a pending Form I-526 at any time through My Case Status (https://egov.uscis.gov/casestatus/landing.do). In addition, individuals who have filed petitions and would like to request expedited processing may submit a request for expedite processing and provide supporting evidence. All expedite requests are reviewed on a case-by-case basis, and are granted at the discretion of the Director. The burden is on the applicant or petitioner to demonstrate that one or more of the expedite criteria have been met. Please see the USCIS Expedite Criteria page (http://www.uscis.gov/forms/expeditecriteria) for additional information. While our processing times of certain cases are currently beyond what we would like, USCIS has taken steps to increase capacity and is striving to ensure our commitment to our customers is being met. Our goal at USCIS is to administer the Immigrant Investor Program in a fair and efficient manner that maintains the integrity of the program, and thus realize Congress’s intent to promote the immigration of people who invest their capital in new commercial enterprises that create or preserve jobs in the United States. Thank you again for your letter and for your interest in the Immigrant Investor Program. Sincerely, Nicholas Colucci Chief, Immigrant Investor Program Exhibit Screenshot from website Exhibit Screenshot (accessed 10/26/2015) South Dakota. FederalEg_m SOUTH DAKOTA OFFICE OF ECONOMIC DEVELOPMENT 50 State Certi?ed Find Find Public Media Contact Comparison Ready Sites Communities Manutacturers Records Center lnlormation About Us Financing 8. Incentives Key Industries Burld Your Business Site Selection Data Find Properties Why South iakota?? My Favorites G) Add Page 6-) Print (-9 Share (13 PU BLIC RECORDS Federal EB-5 Program Downloads The Immi rant Investor Pr ram also known as the Pro ram." was authorized the United . Board Members 9 09 I Dy Download Now Add To Favorites States Congress in 1990. to stimulate the US. economy through Job creation and capital investment De'v'e?opmem by foreign investors The United States Citizenship and Immigration Service (USCIS) administers L?W'ial i: 0 Black grant the EB-5 Program. which provides a method for foreign investors to obtain a green card by investing H3 1 1 9? I, .o r.I. "i Dakota Seeds Program $1,000.000 and creating or preserving at least to fulletime jobs for qualifying 0.8. workers. Economic Development Finance ALth only] Agricultural F'roces rig and Export Loan Frogr The Regional Center Pilot Program, which was enacted in 1992, provides for a minimum foreign investment of $500000 under the EB-5 Program for investments made in Targeted Employment Areas (high unemployment or rural area). in addition to counting both direct and indirect JDD creation for purposes of meeting the requirement 01 creating or at least 10 full?time jobs. A "rural area? is de?ned as any area outside a metropolitan statistical area (as designated by the Of?ce of Management and Budget) or outside the boundary otany city or town having a population of 20.000 or more according to the decennial census. Revolving Economic Development 8. Initiative Fund South Dakota WORKS The Governors Of?ce of Economic Development (GOED) manages the South Dakota Regional Center. which has been approved and designated by the USCIS as a Regional Center, within the Eiham' Infrastructure immigrant Investor Pilot Program since 2004. GOED is responsible for approving qualifying Incenm?e F?mgram projects within the Regional Center's geographic boundaries and for ?ling documentation required Research and under the Program with the USCIS. Future Fund Corn mercializatir (REC) Proof of Concept Fund Reinvestment Pay me Program South Dakota Jobs Grant Program Local Infrastructure improvement Program Econ ornic Developme nt Partnership Program GOEE: Extemal Reviews