- Associated Press - Friday, October 31, 2014

The South Dakota Board of Regents said Friday that a California arbitrator has denied its attempt to recover attorney fees and costs in a lawsuit related to the state’s EB-5 investment-for-green card program.

The board said the ruling brings the case to a close, and it released legal documents in the case to the public, at www.sdbor.edu .

Arbitrator Robert Baines in early October dismissed the breach-of-contract lawsuit filed against the state in 2008 by California-based Darley International. The company once had an agreement to recruit investors in China for EB-5 projects in South Dakota. Baines ruled that a public business institute at Northern State University that ran the EB-5 program in South Dakota at the time was legally justified in ending the contract.

“After a positive resolution on the case’s merits, the Board of Regents earlier this month directed its attorneys to pursue recovery of attorney fees and costs,” Jack Warner, Regents executive director and CEO, said in a statement. “The board felt strongly it should seek whatever reimbursement might be available to offset legal costs and expenses incurred by the state. However, the arbitrator has now denied all claims for recovery, which effectively closes out this case.”

Warner said in an interview that the amount being sought was about $510,000. The money came from the business institute and from a state litigation fund, he said.

The EB-5 program and the lawsuit have become a key political issue in the state over the past several months as the midterm elections near. Democrats have criticized former Republican Gov. Mike Rounds, who is running for the U.S. Senate and was governor at the time of the lawsuit, for his management of the visa program.

Rounds has defended the program as a job-creating mechanism, and has said his opponents are “trash talking” to avoid discussing real issues.


Follow Blake Nicholson on Twitter at: https://twitter.com/NicholsonBlake



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