Rounds' struggles increase attention on SD race

AP News
Posted: Oct 10, 2014 2:54 PM
Rounds' struggles increase attention on SD race

PIERRE, S.D. (AP) — Right about now, Mike Rounds is supposed to be coasting into the Senate.

Instead, the former governor is taking flak over a program that allowed foreigners to get visas in exchange for promising to invest in rural South Dakota. And that's opened a path for a Democrat, an independent and a tea party candidate to turn what ought to be an easy pickup for the GOP into a race whose outcome isn't as sure.

At stake, potentially, is control of the Senate.

Needing to pick up six seats to regain control of the chamber, Republicans have banked on winning conservative South Dakota, where Democratic Sen. Tim Johnson is retiring, and where voters have twice voted overwhelmingly against President Barack Obama.

Neither Democrat Rick Weiland nor independent Larry Pressler, a onetime Republican senator who changed his registration last year, has kept pace with Rounds' fundraising. But Rounds has failed to pull away, dogged by fresh attention to his tenure as governor from 2003 to 2011. Also running is Gordon Howie, a former state senator with tea party support.

This week, the Senate Democrats' campaign arm signaled it would drop $1 million into the race, a sign the party sees some hope of derailing Rounds. That came after an outside group, Mayday PAC, announced it would spend $1 million on ads supporting Weiland.

Reliable polling in South Dakota has been sparse. Republicans say Rounds is comfortably ahead but Democrats say the race is now in play.

Rounds has faced criticism for a state-run, federal visa program called EB-5 that was administered while he was governor. The program was built on conservative political principles, encouraging private investment by foreign nationals to create jobs in rural parts of South Dakota. In exchange, investors received a visa that allowed them to live in the U.S.

Democrats say the program didn't create the promised jobs and was run poorly by a Rounds appointee. They say it threatened to become costly to the state when a California company sued South Dakota in 2008, alleging a breach of its contract to recruit Chinese investors.

The program has also seen at least one high profile failure: Northern Beef Processors, a processing plant in Aberdeen that filed for bankruptcy and has since been sold to investors who say they hope to reopen it. Three other dairy projects tied to the program failed. Both state and federal authorities have conducted investigations.

The onetime leader of Rounds' office of economic development, Richard Benda, who helped oversee the program, committed suicide last October after a state audit questioned $550,000 diverted to his new employer. The state Division of Banking said it is now considering trying to collect back taxes related to the deals.

State officials have defended the visa program, saying most of the 26 businesses created are still operating and that it has led to more than $642 million in investment.

This week, the South Dakota Board of Regents announced that the California company's lawsuit had been dismissed. And Rounds' campaign quickly put up an ad called "The Truth."

Rounds declined an interview request. His campaign manager, Rob Skjonsberg, said of the criticism, "Outside groups are coming in to South Dakota in an attempt to attack the governor's character, lie and distract from the competition's support of (President Barack) Obama."

Weiland and Pressler have both highlighted problems with the program, and national Democrats may make the issue a focus of their upcoming ad blitz.

Some voters say they've been trying to understand the controversy.

Candace Whittet, a registered Republican, said she's gone from being undecided to supporting Pressler, largely because of what she's learned.

"When the EB-5 (news) came out, I leaned more towards Pressler," the 61-year-old said, speaking by phone from Leo's Good Food, a cafe in Redfield

Even some voters who back Rounds said they found the reports of mismanagement in the EB-5 program troubling. Ken Shay, of Pierre, said he preferred Howie but would reluctantly vote for Rounds because he is "the most conservative person who I think will win."

"This stuff's so convoluted," Shay, 55, said. "Do we know the whole story yet?"

Pressler has relied on the name identification from serving three terms in the Senate in the 1980s and 1990s and two terms in the House of Representatives before that. He's poured more than $200,000 of his own money into the race, running a nostalgic ad that includes footage of legendary CBS newsman Walter Cronkite highlighting Pressler's role in Congress during the Abscam bribery scandal and calling him a "hero" for refusing a bribe offered.

Weiland, a businessman and former aide to Sen. Tom Daschle, has focused on a populist message.

"I heard it everywhere, people are tired of greed," he said in one folksy spot.