SIOUX FALLS, S.D. (AP) — A longtime critic of a U.S. immigration program that attracts foreign investment in exchange for green card qualifications says it tends to draw marginal business opportunities that would have trouble securing regular financing.
Construction of the idled Northern Beef Packers plant in South Dakota was spurred by funds from the EB-5 program, in which foreign investors can secure permanent residency for as little as $500,000. Former plant officials say federal investigators have been asking questions about the financial dealings and EB-5.
David North, a fellow with the Center for Immigration Studies, a nonprofit based in Washington, D.C., that examines immigration policies, said many projects that turn to EB-5 have had trouble getting backing from traditional banks.
"These tend to be sort of second-class investments because they don't make it with the banks or they don't make it with the people who tend to fund these sort of things," North said Friday, noting some of the projects lack sound business plans and simply shouldn't be pursued.
Northern Beef Packers opened its $109 million state-of-the-art facility on a limited basis in 2012 after years of delays. Its owners filed for Chapter 11 bankruptcy protection in July, saying they did not have enough money to buy cattle for slaughter.
Once a locally owned project, Northern Beef Packers is 41 percent owned by businessman Oshik Song with 69 Korean investors who each gave at least $500,000 under EB-5.
Dennis Hellwig, who stepped down as Northern Beef Packers' general partner more than four years ago, and Bob Breukelman, the plant's former construction engineer, told the AP this week that they've been questioned by federal investigators about the plant's finances and how the EB-5 funds were used.
The privately owned South Dakota Regional Center in Aberdeen handles the state's EB-5 projects on behalf of the governor's office. A telephone message for Joop Bollen, the center's president, was not returned Friday.
On Wednesday, Gov. Dennis Daugaard acknowledged that an investigation was underway into the Governor's Office of Economic Development involving possible financial misconduct prior to his administration.
Daugaard said there has also been a federal investigation but declined to provide details of either.
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