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South Dakota Business owners told to return COVID funds due to processing error

Published: Oct. 19, 2021 at 7:00 PM CDT
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SIOUX FALLS, S.D. (Dakota News Now) - Everyone has their pandemic story to share. For Dr. Nichole Cauwels, shutting down her dental practice during the pandemic was heart-wrenching.

“The governor said we had to follow the CDC, instead of using them as a guideline, but actually as an authority. Then we were forced to shut down,” said Dr. Cauwels.

An SBA-backed Paycheck Protection Program, or PPP, loan was a lifesaver.

The business also qualified for the second round of the South Dakota COVID Grant Program, for $23,000. Dr. Cauwels moved forward with the spending she had put on hold.

“As soon as I got that project done, here comes the email. I actually thought it was a scam, saying that I had to return all of the funds. I thought it was being punked,” said Dr. Cauwels.

She started asking questions through her accounting firm, then a state legislator. She was shocked.

“It is real. You do have to give the money back. This company has been a disaster and I totally understand why you felt like it was a scam because they just don’t present themselves very professionally,” said Dr. Cauwels.

She was given an explanation by Guidehouse, the firm chosen by executive decision in the state of South Dakota.

“That this outside firm had actually messed up on the website, and they had fixed it the next day,” said Dr. Cauwels.

Dr. Cauwels was told she was among approximately 100 businesses in the state who had to give COVID funding back.

“But they knew about the error within the first 24 hours, and they waited months and months and then distributed the money anyway. And then they waited months and months to tell us about the error. I would have never made those financial commitments if I had known that I didn’t have that money available to me,” said Dr. Cauwels.

Adding insult to injury are claims of large amounts given to businesses that may not have qualified. Bart Pfancuch, Content Director of South Dakota News Watch, researched Brush Country Studios, and its owners.

“Chris Cammack, the son of Senate Majority Leader Gary Cammack, he received the $709,000 in COVID relief money for a business that he says, operates out of Union Center in eastern Meade County,” said Pfancuch.

Neighbors say there was no activity at the company, which had moved out of state.

“Now that business is listed on the Cammack business website, as the Cypress Texas address, and property and tax records also confirm,” said Pfancuch. “Rules for the state COVID Relief grant program say that a business must be physically located in the state in order to receive money.”

The state will not comment on particular cases.

“So there’s no way at this point to know whether this particular grant is or is not being audited by the state,” said Pfancuch.

Pfancuck is not the only one asking questions.

“Why does an out-of-state company get 700,000 and an in-state company that was actually truly affected by the pandemic and the government shutdown, not qualify and has to return everything,” said Dr. Cauwels.

A spokesperson for Governor Noem says Guidehouse was contracted out of state to avoid a conflict of interest and there wasn’t an in-state firm that could do every aspect of the grant process in the short timeframe necessary to get grant dollars to businesses.

We reached out to the taxidermy business in Texas to inquire about the South Dakota PPP loan and did not receive a response.

The audit and financial distribution firm Guidehouse also did not respond to our request for an interview.

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