Update on EB-5 Scandals in South Dakota

By David North on October 26, 2015

In an earlier blog on the extremely serious, but confusing, EB-5 scandals in South Dakota, I managed to conflate two of the controversial activities. I said that the payments from the EB-5-financed, bankrupt cattle slaughterhouse in Aberdeen, S.D., to the Cyprus entity owned by a Russian railways oligarch, Ultracare Holdings, were made through a British Virgin Islands company that had been chartered in the Cayman Islands. Not so. The mysterious payments totaling $1.7 million were made directly to Ultracare.

In a separate, more than puzzling transaction, the slaughterhouse borrowed $2,850,000 from Epoch Star, Ltd. That firm was incorporated in the BVI and owned by another firm, Pine Street Special Opportunity Fund, which was incorporated in the Caymans and was "based out of Hong Kong" to quote the USCIS document. The slaughterhouse (Northern Beef Packers) repaid the loan at a cost of $7,447,335 — no wonder it went out of business!

The British Empire may be dead, but four of the five entities noted above (BVI, Caymans, Cyprus, and Hong Kong) were all under the Union Jack until 1960, when Cyprus became independent; BVI and the Caymans remain British territories.

For the full text of the 16-page, extremely-detailed, and sometimes hard-to-follow notice from USCIS that it was contemplating terminating the South Dakota regional center, see here.