South Dakota legislator says he’s comfortable that his business received COVID-19 funding

Capitol News Bureau

PIERRE, S.D. (KELO) — A South Dakota legislator who took office in January said Friday he remains comfortable that the family’s business qualified and received state COVID-19 grants that his wife sought for the business last year while he was running for election.

Representative Mike Derby is president of Derby Advertising Inc., a Rapid City-based company that owns and operates Canyon Lake Resort in Rapid City.

State government paid COVID-19 grants to Derby Advertising of $73,996.00 on January 1, 2021, and $98,049.00 on January 8, 2021.

Governor Kristi Noem established a variety of COVID-19 grant programs for businesses, organizations and renters after a special session of the Legislature on October 5, 2020.

She then asked the South Dakota Supreme Court for an advisory opinion whether then-current legislators could enter contracts with state government to receive COVID-19 grants for their businesses.

The South Dakota Supreme Court issued an advisory opinion October 22, 2020, stating that then-current legislators weren’t eligible to receive payments under the programs.

At the time Derby was still a candidate for the state House of Representatives. He won election November 3 and took office when the regular legislative session opened January 12, 2021.

In response to questions Friday from KELOLAND News, he wrote in an email that Derby Advertising Inc. doing business as Canyon Lake Resort applied for round 1 and round 2 grants under the Cares CRF Grant/ Small Business Grant program. Those applications were made October 23, 2020, and December 15, 2020.

“Our resort and family reunion lodge were in the especially hard hit hospitality sector and this program was a blessing and has allowed us to bridge the timeline until this year’s tourism season,” Derby wrote.

“My wife Carmen made the applications with the guidance of Ketel Thorstenson CPAs and Consultants. I was aware of the (South Dakota) Supreme Court advisory opinion and how it ‘precludes a current state legislator from contracting directly or indirectly with the State to receive funds from CRF Grant Programs.’ 

“So, I am comfortable with the fact that everything was done prior to me being sworn into office,” he wrote.

He added, “This was a great program that helped many businesses in South Dakota get through the tough times this past year.”

State records show members of the governor’s family received more $600,000 through the program. Noem wasn’t involved, according to her spokesman. State government paid Racota Valley Ranch Partnership $500,000 on February 19, 2021. A business operated by her brothers, Arnold Bros. Water Management Inc., was paid $7,253 on January 6, 2021, and $94,216.18 on January 20, 2021.

An outside firm, Guidehouse, oversaw distribution of grants from the various South Dakota COVID-19 programs.

Steve Westra, the governor’s commissioner of economic development, reportedly took a leave of absence from Hegg Companies when he came in as part of Noem’s new administration in January 2019. State government paid the Sioux Falls business group $184,288 on January 15, 2021, and $390,137 on January 22, 2021. Westra was still listed as vice president and secretary for Hegg Companies on the 2019 and 2020 annual reports filed with the South Dakota secretary of state.

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