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Sunday, February 26, 2012

Trouble keeps dogging Northern Beef Packers

 Because I have written about Northern Beef Packers on this blog and elsewhere, I have received telephone calls from people who have been probing for information.  The last two calls mentioned the EB-5 through which investments are being made in the company.  Both of those callers suggested that the EB-5 situation might prove interesting.  I haven't been paying much attention of late, so I started asking and looking. Yes, it is interesting.

The EB-5 Program is an immigrant investment program through which foreign investment is invited into community projects that will help to create jobs.  For a $500,000 long-term investment, an investor and family receive a green card which allows residency in the U.S.  It gives the investor and the family conditional permanent resident status, which becomes unconditional after two years.

The current owner of Northern Beef Packers is listed as Oshik Song from Korea and 69 other Korean investors under the EB-5 Program.  Oshik Song is an electronics manufacturer who currently lives in the Twin Cities.  Northern Beef Packers has been six years in the making and has been mired down in  financial troubles.   At one point, the company had $8 million in contractors liens field against it.  However, with the influx of EB-5 investments, the company has settled the liens and is finishing construction on the facility.  It was scheduled to open this past December,  but that has been delayed with no specific time set, although plant officials say it will open early this year.  

The EB-5 Program has rescued and revived the plant, but it also poses the latest threat to the plant's opening.  A group of Chinese EB-5 investors have filed a law suit against the man and his organization which have handled the EB-5 investment contracts.  The lawsuit filed October  18, 2011, in the US District Court in Sioux Falls states the complaint:

1. This dispute relates to a limited partnership that was formed for the purpose of investing in a project by Northern Beef Packers Limited Partnership ("NBP") to build a beefprocessing plant here in the State of South Dakota (the "Project"). Specifically, the Investors,along with dozens of others, paid $530,000 dollars each to invest and become limited partners in SDIF Limited Partnership 6 ("SDIF LP 6"), a South Dakota limited partnership, which was created and promoted by Defendants SDRC and Joop Bollen, and is managed by SD Fund 6(through Joop Bollen) as the sole general partner.
2. As further discussed below, SDIF LP 6 was an investment vehicle designed and promoted by SDRC (through Bollen) under a federal program known as the immigrant investment program (the "EB-5 Program") which is designed to facilitate foreign investment in certain communities in the United States for projects that will significantly benefit those communities by creating needed jobs. See generally I U.S.C.$ 1 153(bX5). In exchange for making such long-term investments, the foreign investors, their spouses, and any children under 2l years of age, are granted conditional lawful permanent resident status, which can become unconditional after two years.
The entire complaint can be read in PDF form here

The law suit does not involve the Northern Beef Packers corporation directly.  It is not a defendant in the suit.  The suit is directed at the person and the organization contracted by the state to handle the recruiting and processing of investors under the EB-5 provisions.  It lists the defendants as:

SDRC, INC., a South Dakota corporation;
Dakota limited liability company; and
JOOP BOLLEN, an individual resident of South
 SDRC is the South Dakota Regional Center which describes itself as "the overarching management company that operates and manages the regional center on behalf of the SDTSD(South Dakota Department of Tourism and State Development). Additionally, SDRC Inc. operates as the general partner for the South Dakota Investment Fund Limited Partnerships (EB-5 entities) to assure that the interest of the limited partners are met, including the creation of necessary job credits needed for the I-829 process and the repayment the loans."  The SDTSD was reorganized under Gov. Daugaard so  that now economic development activities fall under the Governor's Office of Economic Development.  The i-829 process referred to in the description is the process through which conditions are removed from the visas given to the foreign investors as they qualify for permanent residency.  

The SD Investment Fund LLC 6 is where the funds contributed by the investors were deposited and held for eventual distribution to Northern Beef Packers.  The Plaintiffs allege that the Investment Fund was mismanaged in contradiction to the agreements signed onto by the investors.  

Joop Bollen is listed as the sole originator and manager of the SDRC and the SD Investment Fund 6, so the suit specifies him as the actual sole defendant.  

The plaintiffs are listed as:

 Plaintiff Zhang Zhenis a Chinese national with conditional lawful permanent resident status. currently resides in New York City, New York, and is thus a citizen of New York.   
Plaintiff Feng Wei is a Chinese national with conditional lawful permanent resident status. Feng Wei currently resides in Walnut, California, and is thus a citizen of California.  
 Plaintiff Ma Yirong is a Chinese national. Ma Yirong currently resides in China,and is thus a citizen of China.  
 Plaintiff Yao Xiao Ping is a Chinese national. Yao Xiao Ping currently resides in China.
A web site which tracks EB-5 transactions throughout the country offers a perspective on the lawsuit.  It contends that the instigator of the lawsuit is an organization named  Henry Global Consulting Group.  According to the post, Henry Global was the organization that was contracted to do the actual recruiting of EB-5 investors for Northern Beef Packers.  Henry Global did not come up with the agreed number of investors, and Northern Beef Packers determined that Henry Global had not fulfilled the contract and declined to pay a 10 percent commission fee,  amounting to $50,000
Joop Bollen posing for a photographer at NBP.
per investor, to Henry Global.  Henry Global is nowhere mentioned in the law suit filing. 

According to the website, Bollen contends that the deficiencies in performance cited in the lawsuit against him were the responsibility of Henry Global.  Prior to his current business,  Bollen was the director of the South Dakota International Business Institute which was headquartered at Northern State University. 

Bollen further claims that he was not involved in the contract between NBP and Henry Global, and that Henry is trying to obtain the commissions which NBP does not think it earned through him.  

The most recent action on the lawsuit was on December 21, 2011, when Bollen and his attorneys filed a motion in the US District Court to dismiss the lawsuit on the basis that it had been improperly amended when plaintiffs in the original suit dropped out and were replaced.  Judge Karen E. Schreier denied the motion. 

Concern about the project seem to have been raised by the announcement Tuesday that two Tax Increment Finance bonds of $250,000 issued through the county were purchasedJoop Bollen bought one, and Pyush R. Patel bought the other.  About $8 million in TIF bonds are authorized.  According to a newspaper report the  "Korean investors, vested in the plant through the EB-5 program, wanted a show of local support in the plant. He [County Commissioner Duane Sutton] said the sale of the bonds should satisfy them."

1 comment:

Anonymous said...

Amazing, when you posted this Richard Benda was still alive.

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Aberdeen, South Dakota, United States