More than two dozen foreigners who took part in an investment-for-green-cards immigration program had their $500,000 contributions transferred to a South Dakota beef plant after initially committing their funds for other projects, according to state records.
Federal officials say such transfers are legal if certain conditions are met.
Northern Beef Packers, which filed for Chapter 11 bankruptcy protection in July, is one of a handful of large projects in South Dakota to solicit funds from the federal EB-5 program, which allows foreigners to get visas if they invest $500,000 to $1 million in projects or businesses that create jobs for U.S. citizens. Approved investors can become legal permanent residents after two years and can later be eligible to become citizens.
Six foreigners who contributed to the Dakota Provisions turkey processing plant in Huron had their investments transferred to Northern Beef, according to documents released by the South Dakota governor's office on Monday. Another 21 people who invested in an Iberdrola wind farm, which eventually took another financing route, wound up investing in the failed beef plant.
Chris Bentley, a Washington, D.C.-based spokesman for the U.S. Citizenship and Immigration Services, said he can't comment on specific investment projects, but in general, once an immigrant investor puts money into a project a regional center can move the money around to other projects If certain conditions are met.
"It is possible, and it's completely legal," Bentley said Monday.
In September, the South Dakota Governor's Office of Economic Development ended its contract with SDRC Inc., the private regional center administering the federal EB-5 immigration program in the state, "for cause." Officials have not specified the cause, but Tony Venhuizen, a spokesman for Gov. Dennis Daugaard, has said it became clear that SDRC needed better oversight.
Venhuizen said Monday that any transfers from one project to another would be an issue between the investors and SDRC Inc., which would have managed the process. He said investors are required to sign I-526 forms, which identifies the commercial enterprise being funded, when they make their investments.
"If an investor's I-526 is denied, or they otherwise decide to invest their funds elsewhere, the investor would have to sign a new I-526 indicating the commercial enterprise in which their funds are being invested to receive consideration under the EB-5 program," Venhuizen said in a statement.
Gov. Daugaard said last month that an investigation was underway into the Office of Economic Development involving possible financial misconduct prior to his administration. Daugaard said there has also been a federal investigation, but declined to provide details of either.
Attorney General Marty Jackley has said that former Gov. Mike Rounds is not the subject of the state investigation.
On Monday, the South Dakota Democratic Party called on Jackley to recuse himself and his office from the investigation, saying his political ties present conflicts of interest.
"The Rounds-Daugaard Administration granted the lucrative EB-5 contract to SDRC President Joop Bollen," Zach Crago, the party's executive director, said in a statement. "It simply defies belief that a real investigation would not look into the circumstances surrounding that decision."
Jackley said that because the alleged financial misconduct did not relate to the attorney general's office there is no direct or indirect conflict of interest. He said the EB-5 program is a federal immigration program run and controlled by federal immigration authorities.
"While state authorities should have the ability and the opportunity to assist our federal partners in the enforcement of immigration law and programs, I respect that the United States Supreme Court has significantly limited state authority over federal immigration law," Jackley said in a statement Monday.