‘Should we turn away a trust from Bill Cosby?’: Official says trust industry brings high-paying jobs to the state

KELOLAND.com Original

SIOUX FALLS, S.D. (KELO) — Once again under the microscope of investigative journalism about hiding wealth, an official who knows South Dakota’s trust industry well has his own questions. 

Tom Simmons, a University of South Dakota law professor focused on trusts, serves on the Governor’s Task Force on Trust Administration Review and Reform. He’s helped USD law school graduates land jobs in South Dakota’s growing trust industry, which drew the ire of a Washington Post story on findings from the Pandora Papers. 

The main culprit cited in the Washington Post story was a South Dakota licensed trust company called Trident Trust. The Pandora Papers leak ties a number of trusts from some men and families located in Colombia (money laundering for Colombia’s drug dealers), Brazil (accused of collusion to underpay local farmers) and the Dominican Republic (accused of exploiting workers) to Trident Trust’s South Dakota location. 

Simmons said Trident Trust hasn’t done anything wrong and questioned why South Dakota’s entire trust industry is being heavily-scrutinized from the Pandora Papers leak. 

He said it’s “one thing to say you are managing a trust for someone who has been accused of doing something wrong or has maybe even done something wrong, then (to say) you administrated a trust that you shouldn’t.” 

Simmons cited Bill Cosby as an example. 

“We know that he’s done some horrible, horrible things. Criminal things,” Simmons said, adding Cosby made his money from TV shows and books. “Should we turn away a trust from Bill Cosby? I’m not really sure that’s really the right answer. I don’t think that we should have a rule that Bill Cosby can’t bank anywhere.” 

“Should we turn away a trust from Bill Cosby? I’m not really sure that’s really the right answer. I don’t think that we should have a rule that Bill Cosby can’t bank anywhere,”

Tom Simmons, member of the Governor’s Task Force on Trust Administration Review and Reform.

South Dakota’s Division of Banking, a branch of the South Dakota Department of Labor and Regulation, oversees South Dakota’s financial entities, including trust companies, which manage numerous trusts.  

The 81 trusts tied to South Dakota in the Pandora Papers leak are a small number of the hundreds of thousands of trusts in the state. While there’s more than $350 billion in public and private trust assets, the total number of trusts in the state is not publicly known. 

“I don’t know if anyone knows how many bank accounts are open in South Dakota either, or they just know the total amount of deposits,” Simmons said. “I suppose more information is better. I don’t think there’s anything really confidential on the number of trusts under management in South Dakota.” 

Simmons said the bad publicity from bad people who have created trusts in South Dakota is a concern “because it affects the trust industry and it jeopardizes all the good things that the trust companies are doing.” 

“When you connect someone that’s maybe done some bad things and that they have an account somewhere, I’m not sure that in itself presents something that needs to be corrected,” Simmons said. 

An official with Transparency International’s U.S. Office told KELOLAND News many trusts, like charitable trusts, have tremendous benefits. 

“The problem is not trusts,” Gary Kalman said on Monday. “The problem is not the corporate form that is the trust. The problem is when they become anonymous and people begin to use that anonymity in ways that are harmful.” 

South Dakota law allows trust companies to be “subject to an annual supervisory fee” and trust companies pay the costs of “on-site examination” as well as any additional costs that would come from “operating under an enforcement action.” State lawmakers have touted how the trust industry regulation pays for itself as an added perk. Simmons cited the high-paying jobs in the industry as a big benefit for South Dakota. In 2020, there were 390 employees tied to trusts in South Dakota and the number of examiners was 12 in 2019. 

Simmons said he hasn’t done a study on the effectiveness of South Dakota’s current regulators and examiners in the trust industry but he believed they’ve worked hard. 

“As far as I can see, they’re very comprehensive. They’re thorough; they’re methodical,” Simmons said. “Conservative in what they are requiring of trust companies to do business here and the way that they supervise them in an on-going basis.”

Angie Kuiper with the South Dakota Trust Association sent KELOLAND News an industry report that says 450 South Dakota residents are employed by South Dakota-chartered trust companies and banks with trust powers. 

The South Dakota Trust Association, which will hold its fifth annual Fall Forum on Oct. 28 and 29., sent an emailed statement.

We’re proud of the visionary financial sector we’ve created and all the advantages it brings to South Dakota. For more than thirty years, our state and community leaders have worked diligently to create a responsible, regulated financial industry that provides unmatched benefits to South Dakotans. Banks and trust companies in our state are held to extremely high standards with strict state and federal requirements to guard against any potential misuse of otherwise lawful activities.

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