PIERRE, S.D. — Last January, a crowd gathered before the normally quiet Senate commerce committee inside the South Dakota Statehouse to hear about an economic game-changer for the state: $100 million for rural broadband.
Before that, senators only had to quickly sign off on another bill that would provide "clean-ups" to the state's law on trusts.
"In the past I've described the process of the trust task force as tending a garden," said Pat Goetzinger, a Rapid City estate planning attorney who serves on the governor's trust task force.
Months later, it's now looking more like a secret garden.
Earlier this week, The Washington Post reported that a trove of leaked documents dubbed the Pandora Papers reveals "tens of millions of dollars from outside the United States" is being sheltered in South Dakota's $350 billion trust industry. "[S]ome of it," the Post reported, is "tied to people and companies accused of human rights abuses and other wrongdoing."
While the reporting has spotlighted ties between Sioux Falls trusts and the super-rich, including some with alleged connections to stolen labor or drug cartels, the reaction in the Rushmore State has been little more than a shrug. The state's all-GOP federal delegation has, so far, said nothing publicly. There's also been no statement or tweet from Gov. Kristi Noem.
And it's not merely relative quiet from Republicans.
Although the industry's headquarters sit in downtown Sioux Falls, a politically safe district for the state's progressives, few Democrats have publicly criticized the local tax shelters. Moreover, campaign finance documents filed with the secretary of state reveal SDTC PAC, run by the South Dakota Trust Company's founder Pierce McDowell, gave thousands to Noem and her 2018 gubernatorial opponent, Democratic state Sen. Billie Sutton.
One reason could be the industry's perceived influence in the state's largest city. In a statement released to Forum News Service earlier this week, the South Dakota Trust Association pointed to the economic development spurred by their clients, noting they were "proud" of the "visionary financial sector" the state has created.
Similarly, State Senate Pro Tempore Lee Schoenbeck, a Watertown Republican, said he "hadn't had any complaints about the careers and opportunities the trust industry has created in our state."
According to backers of the industry, the bounty of the trusts props up hundreds of jobs in the state worth $30 million in salaries. The state also picks up fees for services, as well as charitable donations, such as a trust run by family members of deceased New York City billionaire Leona Helmsley, which has helped fund rural health care to a bison corral in Custer State Park.
But it's not been universal silence in Pierre.
In January's senate commerce committee hearing, Sen. Red Dawn Foster, a Pine Ridge Democrat, cast the lone vote against SB 78 (though she later voted for the measure in the chamber). And just three years earlier, then-State Rep. Susan Wismer, D-Britton, argued South Dakota had "broke the social contract" when engineering its tax haven that allowed, in her words, the perpetuation of "fiefdoms from generation to generation."
Wismer says her criticism of South Dakota's protected trust industry put her on the trust industry's target.
"They're just so used to yes men they can hardly stand it when someone questions their business model," Wismer said by email.
Records with the secretary of state show that in August of 2018, months after Wismer's remarks, leadership of the South Dakota Trust Co. established their own statewide PAC and took in a gift of $10,000 from Jack Binion, a Las Vegas casino owner.
Last year, SDTC PAC donated $2,000 to then-candidate Mike Rohl, an Aberdeen Republican challenging Wismer. The rural Democrat also drew negative mailers paid for by Pac'n Heat, a campaign fund run by former Republican legislator Deb Peters.
Reached by email, Peters wrote of her funding against Wismer, saying, "The opposition was due to her politics and nothing to do with trusts." Rohl, who defeated Wismer last November, also defended his candidacy in a message to Forum News Service, noting he was backed by a "multitude of industries and individuals" and has been an "independent voice" in the legislature.
Still, other politicians candidly say the playbook against Wismer keeps some wary to speak out on bills, such as SB 78, which was passed unanimously in the Senate and in the House of Representatives.
That measure, crafted by the governor's trust task force, codified a 2019 South Dakota Supreme Court opinion — highlighted by The Washington Post's reporting — that upheld a wealthy oil executive's daughter shielding herself from paying $8,000 a month in child support to her ex-husband and two children living in California by relocating her trust to Lincoln County, South Dakota.
Trust law, say legal experts, is convoluted and sometimes arcane. And over the years, the trust fund "clean-up" bill has drawn few queries.
On that January day in the senate commerce committee, Sen. Wayne Steinhauer, R-Hartford, gingerly asked whether the bill would violate U.S. law.
"We're kind of saying to the United States, that ... you can't overrule us without coming to our courts?" posed Steinhauer, who expressed "surprise" by the bill's language.
Sen. Timothy Johns, R-Lead, a prime sponsor, who'd noted South Dakota hadn't become the "premier trust jurisdiction in the United States" by accident, told Steinhauer he'd misread the bill.
"We want to ensure that it's a valid judgment before we're going to recognize any foreign judgement, whether it's from a federal court or another state or another jurisdiction," said Johns. "It's existing law."
Steinhauer then said he had no other questions, and committee chair, Sen. Casey Crabtree, R-Madison, joshed him for being "feisty" in asking even the one.
Another day in the garden for South Dakota.