UPDATED 10 a.m. Oct. 2: One day after a newly unearthed document conflicted with his earlier written testimony to state lawmakers, former Gov. Mike Rounds wants to change that testimony.
Rounds sent a letter Thursday to state Sen. Larry Tidemann, R-Brookings, the chairman of the Legislature’s Operations and Audit Committee. In the letter, Rounds seeks permission to amend one of his earlier written responses to the committee’s questions about state involvement in the federal EB-5 immigrant-investor program.
In answers sent to legislators last week, Rounds wrote that “the governor’s office was not served” with papers regarding an EB-5 related lawsuit against the state.
Wednesday, the Rapid City Journal was given a document indicating Rounds’ office had in fact been served with EB-5 litigation papers in July 2009. The newspaper published a Thursday story in which a spokesman for Rounds said the former governor had never seen the document and was not aware the office had been served.
Following publication of the story, Rounds’ U.S. Senate campaign spokesman Mitch Krebs notified the Journal of a letter from Rounds to Tidemann.
In Rounds’ Thursday letter, he reiterates and expands on points that his campaign made in a Wednesday statement to the Journal.
“It has come to our attention that the governor’s office was indeed secondarily notified of the Board of Regent’s petition order,” reads Rounds’ proposed amended response, in part. “An assistant in the governor’s office had received the notification. As a clerical function, we assume the document was simply forwarded to the Board of Regents, the attorney general’s office or the general counsel. I had not seen that particular document until yesterday, October 1, 2014.”
ORIGINAL STORY: A newly unearthed legal document conflicts with written statements that former South Dakota Gov. Mike Rounds submitted to state lawmakers last week.
Rounds, the leading candidate in a suddenly close U.S. Senate race, wrote to lawmakers on the Government Operations and Audit Committee that "the governor's office was not served" with lawsuit papers regarding the state’s handling of a federal immigrant-investor program known as EB-5.
But a document supplied to the Rapid City Journal on Wednesday shows that Rounds’ office was in fact served with those papers.
Furthermore, the document shows the papers were served to the governor's office on July 14, 2009. In his written statement, Rounds told lawmakers he did not learn of issues involved with the administration of the EB-5 program until October 2013.
The Journal on Wednesday afternoon sought an interview with Rounds, who was campaigning in Faulkton. Mitch Krebs, Rounds' spokesman, declined the request and instead arranged for an emailed statement from campaign manager Rob Skjonsberg.
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Skjonsberg did not dispute the validity of the document served on Rounds' office in 2009 or its contents. But he said Rounds "doesn't recall ever seeing the document."
"State government is sued frequently and the governor, any governor, would not necessarily see every summons delivered to the state," Skjonsberg wrote. "This is a clerical, process issue and Mike wasn't a party to this petition. If anything, this document confirms that it was a Board of Regents issue, not a governor's office issue."
The entity named as a defendant in the lawsuit, the South Dakota International Business Institute, was under the authority of the state Board of Regents. But the document served on Rounds in 2009 identifies him as the person "authorized to receive service of process."
The EB-5 lawsuit and other questions about the program have become an issue of contention in the U.S. Senate election. Rounds, a Republican, is leading the polls in a four-way race for the seat being vacated by retiring Democrat Tim Johnson.
The document supplied to the Journal on Wednesday is a “proof of service of summons.” It was supplied to the Journal by a tipster on condition of anonymity, but the Journal viewed an email chain tracing the document to a source involved in the EB-5 litigation.
The EB-5 lawsuit was filed by Darley International, which claims former state employee Joop Bollen broke an agreement to share profits with Darley from the recruitment of EB-5 investors. A state filing in the lawsuit says the state potentially faces "millions of dollars of potential liability."
The proof of service document indicates Darley’s lawyers at the Blecher and Collins firm in California hired American Legal Support Services Inc., also of California, to serve the papers on Rounds. American Legal Support Services appears to have contracted with Bob Duncan, a former Hughes County sheriff’s deputy, to carry out the delivery of the paperwork.
Duncan, the documents show, was apparently unable to serve Rounds himself and instead left the documents with Nila Novotny, whom Duncan described on the document as an assistant to Rounds. The proof of service also says the documents were “thereafter mailed” to Rounds at his office. Novotny, according to the state's website, still works in the governor's office.
The EB-5 controversy surfaced after Richard Benda, former head of the Department of Tourism and State Development under Rounds, committed suicide last October. At the time, he was about to be charged with stealing $550,000 of state grant money to pay his own future private-sector salary with Joop Bollen's company.
Zach Crago, executive director of the South Dakota Democratic Party, said the newly revealed document is damning for Rounds.
“It’s clear to me that Mike Rounds is withholding information from the press, from the public and from state legislators that were tasked to look into the state’s bungled mismanagement of the EB-5 program,” Crago said. “And even though he had over a week to write his responses, he wasn’t capable of telling the full truth.”
When asked if Rounds lied to legislators, Crago said Rounds “certainly didn’t tell the truth.”