The Beef with Those Chinese Visas in South Dakota Senate Race

A dead guy. A bankrupt slaughterhouse. Red Chinese Communists. An open U.S. Senate seat.

No, it isn’t a 21st-century All the King's Men but rather the facts and innuendo swirling around prohibitive favorite Mike Rounds’ attempt to turn a blue Senate seat red in South Dakota—and maybe return control of the U.S. Senate to Republicans.

As of late July, former Governor Mike Rounds is the shoo-in to replace retiring Democratic U.S. Sen. Tim Johnson. Other national publications have rated it the most likely seat to change parties.

Rounds is running against two former Republicans turned independents—left-turning former U.S. Sen. Larry Pressler and hard-right former S.D. Sen. Gordon Howie—and a twice statewide losing Tom Daschle acolyte, Rick Weiland.

Despite the unusual independent antics and Weiland’s visits to every burg in South Dakota, most observers in and outside the Land of Infinite Variety believe the never-defeated Rounds has an easy trek to D.C.

But then there is the developing Dakota thriller of death, beef, visas, and the Chinese. The likely author of the final chapters of that story is none other than Sen. Tim Johnson’s son, South Dakota U.S. Attorney Brendan Johnson. The younger Johnson could deliver an “October surprise” of indictments in a sordid case of screwed-over foreign investors, missing state money, a failed beef plant, and the suspicious death of the globe-trotter who put it all together.

Our story begins not in Pierre, S.D., but Washington, D.C. In 1990, Congress authorized the EB-5 visa program. While more complicated than this, EB-5 essentially invites foreigners to invest a half million dollars in rural areas like South Dakota in economic development projects. If those projects create a certain number of jobs, the investors receive a “green card” granting them permanent residency in the United States.

On its face, the program looks like a good way to encourage foreign investment, particularly in off-the-beaten-path and investment capital-poor places like South Dakota.

As governor, Rounds embraced the program, using it to help Brits and others establish large dairies. While locals complained of being squeezed out of the business, the controversy centered more on “those people” coming to South Dakota, a very “white” state traditionally suspicious of outsiders.

In 2005, Gov. Rounds created the South Dakota Certified Beef Initiative. With millions of acres of grass and a cowboy history of hard work and pride in their cattle, Rounds believed South Dakota had a competitive advantage nationally with its beef.

But with the decline of beef processing in the state, much of the raw product was being shipped out of state, with the subsequent loss of the “value added” aspects of packaging the meat.

So the idea was to slaughter, process, and package South Dakota’s prime beef here, then sell it to profit from nicely marbled T-bones instead of feeder calves.

But how to fund such an undertaking?

Enter EB-5. As they had done with dairy farms, Rounds and his administration believed EB-5 would garner the investment the state lacked internally. Coupled with other state and local incentives, EB-5 gave birth to Northern Beef Packers in Aberdeen.

From 1994 to 2009, the state administered the EB-5 program through the international business program at Northern State University in Aberdeen. When that proved too unwieldy, the state “spun off” the loan oversight and recruitment program to a private company called South Dakota Regional Corporation.

Overseeing the SDRC was Rounds’ secretary of tourism and economic development, Richard Benda. A South Dakota native, Benda had left the state and made his reputation in economic development in New York state. Upon his return to his home state, friends commented that he seemed “different,” and chalked it up to having played in the “big leagues “out East.

Benda, now divorced and known as a “player,” spent a lot of time away from Pierre traveling the Far East, particularly China and South Korea, recruiting EB-5 investors.