From territorial-era embezzlement to modern credit card controversies, South Dakota’s $7.3 billion government operation faces recurring questions about accountability despite new reform efforts.
While recent allegations of fraud are in the news, the state’s history is peppered with controversies over stolen money and gubernatorial behavior.
Dakota Territory had its Fraudsters
Historical documents show that the roots of South Dakota’s financial oversight challenges trace back to its earliest days. One of the first major scandals, from 1870 to 1890, involved a group known as the “Indian Ring”—contractors, politicians, and government workers who systematically embezzled funds intended for Native Americans, according to South Dakota history books.
“Almost since the beginning of the United States, people have been cheating when it comes to Indian affairs,” wrote historian George H. Phillips in 1972 in South Dakota History.
Some notable cases included Dr. Walter A. Burleigh at the Yankton Agency, whom officials accused of fraud in 1861, and the William Welsh Investigation of 1871, which found that many people stole money meant for Native Americans, historical records indicate.
Early State Financial Controversies
According to historical accounts, when South Dakota became a state in 1889, financial controversies continued. Two significant cases stand out:
Historical records show that W.W. Taylor, South Dakota’s treasurer, ran away to Mexico in January 1895 with approximately $367,020.59 in state money (worth over $11.5 million today), almost 20% of the state’s budget.
“He lost $232,000 through failed businesses, mining, wheat buying, and real estate,” South Dakota Magazine reported in 2014.
The state hired detectives to find him. According to historical documents, the state’s lawyer asked for a $2,000 reward for information about Taylor’s whereabouts.
The Farm Loan Program—Unintended Financial Consequences
Historical accounts show that Governor Peter Norbeck started a program in 1917 to provide cheap loans to farmers. By July 1922, more than 12,000 farmers had received loans totaling nearly $38 million, according to state records.
“In his first big speech in 1917, Norbeck said the farm loan program was ‘one of the most important things’ lawmakers needed to do,” according to a 1985 South Dakota History article.
However, historical accounts indicate that political meddling, poor business practices, the farm depression of the 1920s, and economic factors beyond state control turned the program into a financial disaster.
A particularly notable case involved A.W. Ewert, who, according to state records, worked as both the treasurer of the Farm Loan Board and president of the National Bank of Commerce in Pierre. When his bank failed in February 1925, the state sued to recover $263,093.21 in excess deposits, court documents show.
A 1985 South Dakota History article notes that the farm loan program ultimately cost South Dakota taxpayers about $57 million to rectify, making it one of the state’s most expensive mistakes ever.
The Video Lottery Legal Challenge
In 1994, court records show that the South Dakota Supreme Court ruled that video lottery was unconstitutional. Governor Walter Dale Miller had to make budget cuts to deal with the money shortage. Still, counties sued him, and another court said the Governor’s actions violated the law, according to legal documents. Miller then called a special meeting to address the financial crisis, state records indicate.
Various news accounts show that the video lottery case also led to allegations against former Governor William Janklow. According to a November 7, 1994, news report, a lawyer said Janklow profited by knowing ahead of time about the court’s decision that video lottery was illegal. Janklow vehemently denied these claims, and officials never filed charges.
The EB-5 and State Airplane Controversies
According to government records and media reports, during Governor Mike Rounds’ administration (2003-2011), South Dakota faced questions about the EB-5 visa investment program and state aircraft usage.
The EB-5 program came under scrutiny after the 2013 suicide of program administrator Richard Benda amid a state investigation into financial irregularities, official reports show. The federal program allows foreign investors to receive U.S. work visas when they invest in American businesses that create jobs.
Rounds has consistently maintained he had no involvement in any program mismanagement.
“Mike Rounds maintains he played no part in the mismanagement of the federal EB-5 program in South Dakota,” the Black Hills Pioneer reported in 2014. In campaign statements, Rounds emphasized that EB-5 was a federal program that “creates thousands of jobs across South Dakota” and noted that over $600 million had been invested in South Dakota companies through the program, according to his campaign website.
“What the EB-5 program says is, if a person will invest $500,000 in a project in a rural area which is at risk, then they will receive a green card to work in the United States,” Rounds told the Pioneer.
According to state audit reports, questions about Rounds’ use of state airplanes for personal travel also emerged during this period. Rounds defended all travel as official state business, with his office stating that all flights complied with state policy and served legitimate government purposes. South Dakota voters later weighed in on the issue of state airplane usage through ballot measures aimed at increasing transparency and limiting personal use of state aircraft.
Recent Cases Among the State Workforce
According to court records, prosecutors have charged several former South Dakota state employees with financial crimes in the past year. These cases represent a small fraction of the state’s approximately 14,095 full-time employee workforce, which serves a $7.3 billion state government operation, according to South Dakota Searchlight.
Attorney General Marty Jackley emphasized this point when announcing charges in December 2024, stating, “I believe we do have about 14,071 hardworking state employees, it’s unfortunate that a select few have really lost some of the public’s trust,” according to KOTA-TV.
Court documents show that officials have charged at least five former state workers with stealing or misusing state funds since July 2024.
Legal records indicate that in January 2025, a court fined Amalia Escalante Barrientos, 28, a former state worker from Brookings, for misusing a grocery voucher for needy people. According to The Brookings Register, she received a suspended jail sentence and had to pay $400 in fines and $449.98 in restitution.
“This is another example of someone using their power to cheat, hurting those in need, and making honest state workers look bad,” Attorney General Jackley said, according to a press release.
Court records show that in December 2024, Lynne Hunsley, 64, of Pierre, admitted to forgery and theft charges. According to investigators, “she purchased a new vehicle, and to avoid some of the excise tax, indicated that there was a trade-in when there wasn’t,” Jackley explained to reporters, as reported by NewsCenter1.
The most prominent case involves Lonna Carroll, 68, whom prosecutors accuse of stealing approximately $1.8 million from the Child Protection Services program while working as a state employee between 2010 and 2023, court records indicate. According to the court calendar, her trial begins in April 2025.
Credit Card Spending Disputes
Former Governor Kristi Noem’s credit card spending became a focus of media attention in early 2025, with differing accounts of responsibility for the expenses.
According to the publication, records obtained by The Dakota Scout showed charges totaling about $650,000 on state credit cards issued to Noem’s office during her time as governor. However, Noem’s legal team has vigorously disputed the characterization of this spending as personal expenditures by the governor herself.
In a cease-and-desist letter obtained by Fox News Digital and sent to The Scout, Noem’s attorney stated that Noem personally made only about $2,000 of the total charges. The letter stated that in 2019, Noem did not have a government-issued credit card and that she spent $55.44 on her card in 2020, $841.21 in 2021, $730.19 in 2022, $429.88 in 2023, and $0 in 2024, according to Fox News Digital.
According to Noem’s representatives, staff members incurred the majority of expenses for official state business. The dispute highlights ongoing questions about credit card policies for elected officials in South Dakota.
Legislature Passes Anti-Corruption Bills in 2025
In response to recent cases, the South Dakota Legislature passed a package of anti-corruption bills in the 2025 session, which Gov. Larry Rhoden signed into law in March. The four bills, initially proposed by Attorney General Marty Jackley, strengthen the state’s ability to prevent, detect, and prosecute government corruption.
“Protecting taxpayer dollars and restoring the public’s trust in government should be given high priority,” Jackley said in January 2025, according to South Dakota Searchlight.
Senate Bill 60 expands the state auditor’s access and investigatory authority to review agency financial records, which the auditor didn’t previously have. Senate Bill 61 enhances the authority of the state’s Board of Internal Control, with Rhoden’s office playing a key role in developing this legislation.
Media reports indicate that Senate Bill 62 establishes mandatory reporting requirements for state employees who discover improper government conduct and criminal activity. A sticking point during legislative debate was whether supervisors who fail to report misconduct should face felony charges, with the Governor’s office advocating for lesser penalties.
“Failing to report a crime is not the same as committing the crime itself,” said Sen. Tamara Grove, R-Lower Brule, during a floor debate, according to South Dakota Searchlight.
Senate Bill 63, which passed the Senate unanimously, establishes protections for state employee whistleblowers who report improper governmental conduct and crime, according to Dakota News Now.
“This is about protecting both taxpayer money and those State employees who have the courage to report criminal behavior,” Jackley said after Gov. Rhoden signed the bills, SDPB reported.
Sen. Tom Pischke, R-Dell Rapids, supported Jackley’s approach to accountability.
“I applaud the attorney general for not backing down,” Pischke said, according to South Dakota Searchlight. Pischke argued that employee misconduct is serious, and the recent cases demonstrate that the state’s current laws need strengthening.
In addition to these bills, lawmakers passed legislation expanding the authority of the Legislature’s Government Operations and Audit Committee to issue subpoenas compelling testimony about potential wrongdoing in state government, according to South Dakota Searchlight.
South Dakota as a Financial Center
While not the State of South Dakota’s financial actions, the state has passed trust laws that critics say are not transparent.
International investigations show that South Dakota has developed into a significant financial center through trust laws that attract wealthy individuals and corporations. The 2021 Pandora Papers identified South Dakota as a destination for financial assets due to laws that protect money from creditors and taxation, according to the published investigation.
“Over the past decade, the amount of money in trusts in South Dakota has more than quadrupled to $360 billion,” PBS Frontline reported.
Defenders of these laws argue they bring significant economic benefits to the state through jobs and tax revenue from financial services. Supporters say the trust industry has contributed to economic diversification in a state traditionally dependent on agriculture and tourism, supporters maintain. They also point to South Dakota-based financial institutions’ high regulatory standards and compliance requirements.
However, critics question whether these laws enable tax avoidance and excessive secrecy, potentially facilitating money laundering or other illicit financial activities. They argue that the benefits may be concentrated among a few financial professionals while doing little for the average South Dakota resident.
Reform or Repeat?
Attorney General Jackley’s anti-corruption package now faces its ultimate test: breaking a financial oversight cycle that has entrapped the state since its founding days. As new whistleblower protections take effect and state auditors gain expanded powers, South Dakota stands at a pivotal crossroads between meaningful reform and merely adding another chapter to its lengthy history of financial scandals.
