A Nashville powerbroker has paid a Chinese investor group $32.5 million plus interest that the group was owed by the owners of the Deadwood Mountain Grand, thereby resolving a lawsuit related to South Dakota's immigrant-investor scandal.
Haven Stuck, a Rapid City-based attorney for 65 Chinese investors, said Friday that Morris wired enough money for the Chinese investors to receive their "entire principal back, plus some interest." Two mortgages on the Deadwood Mountain Grand that were held by the Chinese investor group have been reassigned to Morris' ZCN LLC, which was formed earlier this month.
"It's kind of nice to get it over with," Stuck said of the litigation. "I think everybody feels that way."
The settlement agreement itself was not released and is not part of the public court file. Kasey Olivier, one of the attorneys who represented the Deadwood Mountain Grand's corporate owner, Tentexkota LLC, declined to divulge any financial details of the arrangement between Morris and other partners in Tentexkota.
People are also reading…
"I can’t tell you about the inner workings of the company," said Olivier, of Sioux Falls.
In a news release issued Friday by Deadwood Mountain Grand, Lee Harstad, director of the Deadwood Chamber & Visitors Bureau, said, “We’re grateful for Dale Morris stepping in and leading Deadwood Mountain Grand's charge into the future.”
Morris will now become the managing member of Tentexkota, according to the release, which describes him as “a legend in the Nashville music industry and long-time investor in the Deadwood Mountain Grand.”
According to a story in The Tennessean newspaper, Morris founded a booking agency and management company during the 1970s "and became a first-of-its-kind executive who could both guide an artist's career and oversee their touring." The Tennessean reported that Morris also launched his own concert production company and, while representing country music acts including Alabama, Kenny Chesney and Barbara Mandrell, Morris "became a Nashville powerbroker with immense clout." Last November, Morris' booking agency, Dale Morris & Associates, was acquired by the international Paradigm Talent Agency.
The Deadwood Mountain Grand lawsuit dates to 2016. The Chinese investors were seeking repayment of $32.5 million in loans they collectively made to Tentexkota in 2010 and 2011. Tentexkota used the money to help finance the redevelopment of a former gold-mining slime plant into the Deadwood Mountain Grand, which has a concert venue in addition to its gambling and hotel operations.
The loans were made through the South Dakota arm of a federal government program known as EB-5, which is shorthand for the employment-based fifth preference visa. At the time of the Deadwood Mountain Grand deal, foreigners who invested at least $500,000 in a U.S. project that supported at least 10 jobs could earn the EB-5 visa and eventually a permanent residency green card for themselves and their families.
Among the 65 Chinese investors involved in the Deadwood Mountain Grand loans, one withdrew a residency application, but the other 64 were awarded permanent residency.
In earlier proceedings in the litigation, a judge said the Chinese investors were entitled to a judgment of $32.5 million, plus interest. Last fall, Stuck filed a memorandum stating that the balance would grow to $43.71 million by Oct. 8, 2018, and would continue to accrue at $10,685 per day afterward.
The only pending issue in the lawsuit just prior to the settlement was whether a judgment would be imposed solely against the Deadwood Mountain Grand’s corporate owner, Tentexkota, or also against eight individual members of the LLC who signed personal loan guarantees. The eight guarantors were Morris, Kenneth "Big Kenny" Alphin (who is one-half of the country music duo Big & Rich), Timothy J. Conrad, Michael R. Gustafson, George D. Mitchell, Marc W. Oswald, Ronald W. Wheeler and Dwight P. Wiles.
South Dakota's EB-5 program has been a source of public controversy since 2013, when Richard Benda, a former state government official who worked closely with EB-5 projects, was found dead of what was ruled a suicide. It was later revealed that he had been facing a potential indictment for his alleged theft of $550,000 in state grant money that was intended for a meatpacking plant supported by EB-5 investments in Aberdeen.
In 2017, the man who formerly managed South Dakota's EB-5 program, Joop Bollen, pleaded guilty to the felony crime of unauthorized disposal of personal property subject to a security interest, for which he was sentenced to two years of probation and a $2,000 fine. The case stemmed from Bollen's illegal use of EB-5 funds that his company shared with state government.
Contact Seth Tupper at email@example.com