ABERDEEN, S.D. - South Dakota Attorney General Marty Jackley filed criminal charges against South Dakota Regional Development Center head Joop Bollen over the use of funds from the state's now-defunct immigrant-investor program to purchase bonds and Egyptian artifacts.
The state's Department of Tourism and State Development handed the EB-5 program, a federal immigrant-investment scheme, over to the South Dakota Regional Center for management in 2009.
In January 2011, department cabinet member Richard Benda went to work for the development center. It was later discovered that Benda was embezzling funds from the EB-5 program, and he committed suicide in October 2013 before any charges were filed.
But Joop Bollen and the development center remain under scrutiny over the program, which the feds shut down in September for ongoing corruption.
Back in 2010, the state instructed Bollen to set up three accounts to handle fees for EB-5, two of which would be used to indemnify the state against any claims that arose out of the center's management of the program, according to a criminal affidavit filed by Special Agent Jon Bierne with the South Dakota Division of Criminal Investigation on Thursday. The third account would be funded by one of the indemnification reserves and used for expenses.
Bollen is charged with five counts of "unauthorized disposal of personal property subject to security interest" for dipping into the second indemnification account "on several occasions to personally benefit," according to the affidavit.
Between February and June 2012, the state says Bollen moved $1.2 million from the second indemnity fund - which was supposed to contain at least $1 million by December 2011 - into the center's primary account.
From there, the money was used to purchase bonds in the Northern Beef Project, a now-bankrupt immigrant investor-funded meat-processing plant; transferred to center vice president, Pyush Patel; or used to purchase Egyptian artifacts from the London-based Christie's Fine Art and the Harer Family Trust Collection, the affidavit says.
Although Bollen repaid all but $166,000, these transfers still resulted in the indemnity account remaining "underfunded" until September 2013, which "subjected Department of Tourism and State Development to a risk that it could not be indemnified under the terms of the contract," the affidavit claims.
Although Bollen has been embroiled in the ongoing civil litigation, this is the first time criminal charges have been filed.
Bollen is currently out on bail. A trial date has not been set although a preliminary hearing is scheduled for May 13, according to court documents. If found guilty, Bollen could face two years in prison and a $4,000 fine.
After Bollen's initial court appearance on Friday, his attorney Reed Rasmussen told local media outlet The Argus Leader, "The state has decided to transform what should be at most a breach of contract case into a criminal proceeding in an apparent attempt to make Mr. Bollen a scapegoat for problems encountered with the EB-5 program. There is absolutely no missing money. Mr. Bollen denies all the allegations and looks forward to clearing his name in court."
Rasmussen declined to provide further comment when asked by phone Monday morning.
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