The South Dakota Democratic Party is calling upon Attorney General Marty Jackley to recuse himself from an ongoing investigation into the Governor's Office because of his close ties with former and current officials.
Jackley is leading a state investigation into the Governor's Office of Economic Development following allegations of misuse of a federal program called the EB-5 visa program. The EB-5 program grants green cards to foreigners who invest in American business projects.
Zach Crago, executive director of the South Dakota Democratic Party, said Monday that Jackley should step aside from the investigation due to a clear conflict of interest. Jackley was appointed to his position in 2009 by the administration of former Gov. Mike Rounds and former Lt. Gov. Dennis Daugaard, who both oversaw the state's use of the EB-5 program.
The EB-5 program has been around for decades and offers green cards to foreigners who loan $500,000 to U.S. business projects. After years of running the program within a state agency, Rounds chose to contract it to a private company in 2009.
The company, SDRC Inc., was headed by Joop Bollen, a state official who formerly oversaw the state's EB-5 program. In 2010, Bollen's company hired Richard Benda, the state's former economic development secretary, who was also heavily involved in state management of the EB-5 program.
The Argus Leader recently reported that SDRC Inc. charged additional fees on each foreign investor they attracted to the program, potentially adding up to millions of dollars in profit for the company.
Federal and state authorities began investigating the arrangement between the state and SDRC this spring. Daugaard, who took office as governor in 2011, terminated the state's contract with SDRC in September.
Because former governor Rounds made the decision to privatize the EB-5 program, Crago said it was particularly concerning that Jackley told reporters earlier this month that he would not be investigating Rounds.
“The Rounds-Daugaard Administration granted the lucrative EB-5 contract to SDRC President Joop Bollen,” said Crago. “It simply defies belief that a real investigation would not look into the circumstances surrounding that decision.”
In addition, Crago said Jackley faced another conflict of interest because his largest campaign contributor in 2012 was Harvey Jewett, a partner in the law firm that represents Bollen.
"Clearly, Jackley's ties to his political patron and benefactor present conflicts of interest that preclude Jackley from fairly investigating financial misconduct at the (Governor's Office of Economic Development)," Crago's statement added. "That's why we're calling on Jackley to recuse himself and the Attorney General’s Office from this matter immediately."
In a statement sent to media later Monday, Jackley's office said there was no conflict of interest.
"Because the alleged financial misconduct did not relate to the Attorney General’s Office there is no direct or indirect conflict of interest," the statement said. "Because the alleged individual financial misconduct did not relate to Mike Rounds, he is not a subject of the ongoing review."