That Whisking Sound – It's EB-5 Investigations Being Swept Under the Rug

By David North on December 18, 2013

That whisking sound you hear, that's the quiet little noise being made as at least three EB-5 (immigrant investor) investigations are being swept under three different rugs.

Whisk One. The Department of Homeland Security (DHS) announced yesterday that Charles K. Edwards, long the deputy and acting inspector general of the department, had (apparently at his request) taken a different job in the technology section of that giant department. The AP story on the subject is here.

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That will solve a nasty personnel problem for the incoming DHS Secretary, Jeh C. Johnson, who was confirmed by the Senate on Monday. Edwards was both under investigation for nepotism and other matters while he was, separately, investigating USCIS director Alejandro Mayorkas for bowing to political pressure while administering the EB-5 program. Mayorkas, in turn, was nominated by the White House to be the DHS deputy secretary and, after a long delay, the Senate Homeland Security Committee voted on party lines to send his name to the full Senate for confirmation.

Johnson no longer faces the question of what to do with Edwards. Meanwhile, on a longer-term basis, the White House has appointed — but the Senate has not yet confirmed — John Roth, currently of the Food and Drug Administration, to be the permanent IG of the department, as we noted earlier.

The acting IG's investigation, apparently about political pressure on USCIS staff to accept some questionable EB-5 petitions, will have less urgency and top-level support now that Edwards is gone. Edwards and Mayorkas had a feud going, as we noted in an earlier blog. Chances are the long-awaited report, when it does come out, will be pretty bland.

Whisk Two. Meanwhile, just to show that the problems with EB-5 are not confined along party lines, it is the Republicans who are sweeping aside requested investigations on the immigrant investor program in South Dakota. There the questions relate to what happened to tens of millions in EB-5-funding of a bankrupt slaughterhouse and what caused the shotgun-death of Richard Benda, a former state government cabinet officer, an EB-5 middleman, and a one-time financial monitor of the bankrupt firm.

In South Dakota state government plays a much larger role in the on-the-ground administration of the investor-visa program than it does in any other state except Vermont (where the state role has not been a controversial matter). In South Dakota, the statewide elected officials are Republicans, and that party controls both houses of the legislature. The opposite is now true in Vermont, though it recently had a Republican governor.

South Dakota State Representative Kathy Tyler (D-Big Stone City) requested that the state legislature go into special session to investigate the disappearing EB-5 funds and the apparent use of governor's office funds to support the state's only EB-5 regional council (an unheard of practice elsewhere).

But according to the local press the GOP leaders of the legislature said that several other investigations were ongoing so a new one was not needed.

Whisk Three. The most macabre of the investigations deals with South Dakota EB-5 middleman Richard Benda and why he shot himself in the stomach with his own shotgun, an unusual suicide technique. The state's elected attorney general ruled that this was what had happened. (The AG, just to complicate things, is an old ally of former Governor Michael Rounds, now a U.S. Senate candidate, who had appointed Benda to his state cabinet.)

It took AG Marty Jackley a month to conclude that Brenda had, indeed, killed himself, and he released only a summary of the forensic findings. Fortunately, the state has several assertive reporters and one of them, Bob Mercer, requested that the full report on Benda's death be released. The AG at first said that he would consider such a request, but only if Benda's family agreed.

Cathy Benda, identified by Mercer as the ex-wife of Benda, refused her consent, and the state's report on the death was quashed.

For more on EB-5 in South Dakota see here.