The underlying transactions in the Darley Commercial, LLC v. Hanul Professional Law Corporation v. South Dakota Board of Regents arbitration are convoluted almost beyond explanation.

However, the third party neutral arbitrator in the matter, Robert A. Baines, a retired California Superior Court judge, made some interesting findings of fact about the public South Dakota International Business Institute, which later morphed into the privately held SDRC, Inc. and its director then owner, Joop Bollen.
First, Baines notes what the purpose of the EB-5 visa program was — to attract foreign investment — and what it became.
“Although Congress may have had lofty intentions when creating the EB-5 program,” Baines wrote, “Our evidence revealed that it quickly became a magnet for entrepreneurs and lawyers seeking to profit from it.”
Baines also believed that SDIBI was a joint creature of the South Dakota Board of Regents and the Governor’s Office. And Bollen was working without much oversight.
“Funding for his (Joop Bollen’s) position came from both NSU and the Governor’s Office,” Baines concluded. “He (Bollen) received administrative support through the School of Business, and although he reported to both the university and the Governor’s Office, it appears that he operated without significant supervision from either.”
The arbitrator noted in a footnote to the above paragraph that he “was not asked to rule on whether NSU or the Governor’s Office exercised proper supervision over Bollen’s activities.”
Baines also lumped SDIBI and SDRC, Inc. together in another footnote.
Baines found that Hanul worked closely with SDIBI, with Hanul collecting securing “hundreds of investors, who collectively invested over $150,000,000 in SDIBI-DEDR projects.”
The arbitrator also found that Bollen turned the BOR/NSU SDIBI, a public entity, into a private entity he controlled.
“(Bollen) transfer(red) its operations to a private entity that could operate it without the constraints imposed on a public Regional Center such as SDIBI-DEDR.”
Further, the arbitrator found that Bollen apparently did not tell the U.S. Customs and Immigration Service that the once public SDIBI was now his own company, SDRC, Inc. Baines appeared to quote Bollen testimony that SDRC, Inc. “’will be controlled by Hanul Professional Law Corporation.’”
The arbitrator also found that Jan. 15, 2008, Bollen executed the agreement with SDIBI and his new company, SDRC, Inc. Baines found, “It (SDIBI) transferred to SDRC, Inc. the bulk of the Regional Center’s functions.”
Baines then found after January 2008, all new EB-5 money was “coming into SDIBI’s Regional Center, although ostensibly still under the umbrella of a public Regional center (SDIBI-DEDR at first, and later SDIBI-SDRC).”
“And, the operations of the Regional Center itself were now being handled by Bollen’s new private company, SDRC, Inc., of which he was the owner, President, and CEO,” Baines found.
Finally, Baines found that Hanul assisted SDIBI (and Bollen) in “resisting arbitration.” “Specifically, Hanul helped Bollen prepare communications to JAMS (the arbitration entity) and pleadings in the Federal Court challenging Darley’s right to force SDIBI (a non-signatory of the Agreement) to arbitration,” Baines found.
On this point, later in the opinion, Baines noted in another footnote, “Whether the Hanul Professional Law Corporation, when providing legal services to, and engaging in business transactions with, SDIBI, Bollen, and SDRC, Inc., complied with the code of Professional Responsibility with regard to those claims, and is not an issue presented to the undersigned for resolution.”
In other words, the arbitrator did not rule on whether Hanul was wrongly providing legal advice to Bollen and SDRC, Inc. in the litigation.

While the full record has not yet been made public in the arbitration, it is likely voluminous. There were three days of depositions, namely Joop Bollen and Austin SuKi Kim, Esq., “a number of exhibits” and written closing statements.

The complete decision is available at www.sdbor.edu/ArbitrationDecision.pdf

 

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