- Associated Press - Friday, September 26, 2014

RAPID CITY, S.D. (AP) - Of the many questions that linger concerning the saga around Richard Benda, the late Governor’s Office of Economic Development secretary, these two now have answers:

How did Benda get his hands on the state’s $1 million check that he allegedly used to criminally extract $550,000 from its recipient, and has the state taken steps to prevent such a situation in the future?

The answer to the first: Before Benda left state government, he asked a state employee to give him the check so that he could deliver it personally. Days after Benda’s state employment ended, the employee, Dale Knapp, gave it to Benda.

“What happened is that Benda gave him instructions on how he wanted the check cut and delivered,” Aaron Scheibe, deputy commissioner of the Governor’s Office of Economic Development told the Rapid City Journal (https://bit.ly/1rq8Q8T ). “And there was no reason for Dale to think there was anything but ordinary motives for that.”

Scheibe spoke on Knapp’s behalf after Knapp declined an interview request. Knapp is still employed by the Governor’s Office of Economic Development as a loan/finance specialist.

The answer to question No. 2: No.

Despite the black eye that the Benda scandal has given state government, no new policy has been enacted to specifically prohibit a repeat of the kind of handoff Knapp made to Benda.

Scheibe said he’s certain that a number of safeguards and procedures put in place because of the Benda scandal will prevent such a handoff from happening again.

But when asked to say how it will be prevented, he acknowledged he does not recall any policy that specifically addresses a state employee’s giving a check to someone who is not a state employee or a representative of the check’s recipient.

Tony Venhuizen, director of policy and communications for Gov. Dennis Daugaard, said most payments are now sent electronically and a policy addressing handoffs of paper checks may be unnecessary.

However, he said such a policy “is worth looking at and considering.”

Venhuizen defended Knapp’s motivation but acknowledged Knapp made the wrong choice.

“In hindsight, he should have just mailed the check,” Venhuizen said. “But at the time, nobody had any reason to be suspicious or question Richard Benda’s motives.”

Benda’s allegedly criminal actions of nearly four years ago did not become public knowledge until after his suicide in October. The burgeoning scandal is an issue in South Dakota’s U.S. Senate race because the candidate who is leading in the polls, former Gov. Mike Rounds, a Republican, appointed Benda and was his boss for four years until they both left state government in 2011 at the end of Rounds’ two terms.

The path to unearthing the details of the check handoff began Tuesday when former Gov. Rounds met with the Rapid City Journal Editorial Board.

While answering general questions related to Benda, Rounds said this: “I don’t even know if you’re aware of this, but he modified a letter that I sent to Northern Beef where I had told them that I would honor a commitment to provide them with a $1 million Future Fund grant to pay for construction costs they had incurred in the construction of their plant.”

Rounds said the letter set a deadline of one year for Northern Beef Packers to submit construction receipts to receive the $1 million grant. Sometime later, Rounds said, Benda changed the deadline to 90 days without Rounds’ knowledge.

Rounds said he did not learn of Benda’s modification until September 2013 when Rounds was working in the private sector, Benda was under investigation and authorities showed Rounds the modified document.

Asked why the modified deadline was important, Rounds speculated that it may have quickened the submission of receipts so the grant could be issued in time for Benda to carry out his alleged scheme.

“That’s the only thing I can think of,” Rounds said. “Wouldn’t it be easier to ask for the check if you’re just leaving, or you’re within a couple of weeks of it?”

Tuesday night after meeting with Rounds, the Rapid City Journal obtained a copy of the letter from South Dakota Attorney General Marty Jackley.

As Rounds had described, the letter’s original receipt submission deadline of Dec. 31, 2011, had been crossed out by hand and a new deadline of March 31, 2011, was written in and initialed by “RB,” the initials of Richard Benda.

The letter had two other handwritten notations.

One was dated Jan. 6, 2011, two days before Benda’s state employment ended, and said “OK to pay $1,000,000” with the initials “DK.”

The other notation appeared to be written on a sticky note that was affixed to the letter when it was copied. That notation said, “Please return check to me,” and was signed “Dale.” Presumably, that instruction was meant for the state auditor’s office, which would have printed and signed the check and then returned it to the signer of the notation.

A search of the state phone book for employees with the first name “Dale” and a last name beginning with “K” turned up Dale Knapp in the Governor’s Office of Economic Development. Scheibe and Venhuizen acknowledged Knapp is the one who signed “DK” and “Dale” when they were questioned about it Thursday.

Had Knapp not handed over the $1 million check to Benda, it’s possible the entire scandal never would have happened.

Benda delivered the check to Northern Beef Packers, a large new packing plant in Aberdeen that he, Rounds and other state officials had long supported.

It eventually went bankrupt.

When Benda delivered the check, he allegedly told Northern Beef he was authorized to withhold the check unless Northern Beef paid $550,000 to the South Dakota Regional Center, even though he had no such authorization.

The regional center managed a U.S. government program that allowed investments in Northern Beef’s plant by foreigners seeking visas. Benda planned to work as the center’s loan monitor assigned to the Northern Beef project, and the $550,000 was to cover two years of Benda’s salary. It was also the exact amount by which Benda had helped increase a separate state aid package to Northern Beef in December 2010.

Benda came under investigation last year and committed suicide in October before a criminal complaint was filed against him. The complaint, which has since been made public, accused Benda of four counts of theft for his alleged use of the $1 million check to divert $550,000 to pay his own salary.


Information from: Rapid City Journal, https://www.rapidcityjournal.com

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