Mike Rounds is facing a much tougher race than he expected. (AP Photo/DIrk Lammers)

10/24: Clarification: The Argus Leader has since reported that Rounds did not sign off the state aid that went to to Northern Beef Packers and was not aware of it. This post has been updated to reflect this information. 

A maze-like scandal that has complicated the Senate campaign of former South Dakota governor Mike Rounds (R) acquired a new twist Wednesday with a report that Rounds knew a former cabinet member at the center of it all was headed for a private sector job in connection with a beef plant around the time the official increased state aid to the plant.

Rounds was not aware of the new money going to the plant and says he did not sign off on it.

The news, reported by the Sioux Falls Argus Leader newspaper, is the latest development in a scandal involving Rounds appointees and an immigration investment program known as EB-5.

Attention to EB-5 has made Rounds's Senate bid much tougher than expected: it's forced him to spend time explaining what he did and did not know -- time that would otherwise be spent on making his case to voters. It has also given opponents fodder for attack ads. The new developments could direct even more voter attention toward EB-5 and Rounds.

According to the Argus Leader:

U.S. Senate candidate Mike Rounds as governor knew his Cabinet secretary, Richard Benda, was going to work for an investor in the Northern Beef Packers plant about the time Benda approved a proposal to give the plant more state aid — or found out immediately afterwards but was not alarmed.

Benda, then the Secretary of Tourism and State Development, authorized an extra $600,000 in loans to Northern Beef on Dec. 23, 2010. That was a little more than two weeks before both he and Rounds left office.

A state audit later found Benda didn't "disclose his future employment plans" and should have been required to "remove himself from involvement in subsequent matters relating to (Northern Beef.)"

But Rounds said Tuesday he knew before leaving office that Benda was going to work in connection with the beef plant.


Rounds says he didn't approve $600,000 in state aid for an Aberdeen beef plant authorized by a cabinet secretary in the final days of his administration -- or even know about it.

Richard Benda, then Secretary of Tourism and State Development, increased a pair of existing loans to the Northern Beef Packers by $600,000 on December 23, 2010, just weeks before leaving office. That increase happened after Benda had already discussed going to work for a private company monitoring Northern Beef's loans.

Benda's signature appears on the loan documents, along with the then-head of the South Dakota Development Corporation -- a nonprofit corporation run by the Governor's Office of Economic Development.

Rounds' signature does not, though he did sign his approval for a separate $1 million grant for the beef plant effective Dec. 8, 2010. That grant reimbursed Northern Beef for documented construction costs.

Benda was a Rounds appointee who promoted EB-5, a program which offered immigrants green cards in exchange for investing in U.S. job-creating enterprises. Problems with way the state operated the federal program -- which has since been shuttered -- during Rounds's tenure have become a flashpoint in the Senate race, with opponents using them to question Rounds's credentials.

Benda died last year in what authorities said was a suicide. After his death, word surfaced he was facing an arrest for allegedly funneling state money to himself. Some people have even questioned that conclusion, and suggested the possibility he was killed by someone else.

South Dakota is one of about a dozen races that could determine which party controls the Senate. Long viewed as a safe pickup for Republicans, the race has grabbed Democratic attention as some speculated that the EB-5 scandal could sink Rounds. Throw in the fact that South Dakota is a relatively inexpensive place to campaign, and the idea of an 11th-hour cash infusion became even more appealing.

Rounds is in a three-way race against Democrat Rick Weiland and former GOP senator Larry Pressler, an independent who is not saying which party he would caucus with. National Republicans have also pumped late money into the race aimed at blunting support for Weiland and Pressler.

A Rounds spokesman did not immediately respond to an e-mail asking whether he wanted to comment on the Argus Leader report.