This is a developing story.
PIERRE, S.D. (KELO) — A probe into alleged financial malfeasance in the South Dakota Department of Revenue is meeting resistance.
The Legislature’s Government Operations and Audit Committee issued subpoenas calling on two department officials to testify.
But the department is fighting back.
A lawyer representing the department has asked a state judge to quash the subpoenas.
In other words, the department doesn’t want Revenue Secretary Michael Houdyshell and the director of the motor vehicles division, Rosa Yaeger, to have to testify.
The legislative committee’s chair, Republican Rep. Ernie Otten, on Monday responded to the quash request by cancelling the December 11 meeting where Houdyshell and Yaeger had been scheduled to appear.
Otten told KELOLAND News that the meeting would be rescheduled for a later date, depending in part on the judge’s ruling regarding the subpoenas.
The Legislature has rarely issued subpoenas compelling testimony. This appears to be the first time that the executive branch has sought an order to quash a legislative subpoena.
The current situation has now become a showdown between the legislative branch and the administration of Republican Governor Kristi Noem.
She has been tapped by President-elect Donald Trump to serve as the federal Homeland Security secretary in his new administration. He takes office on January 20.
Different lawyers from the South Dakota Office of Attorney General are representing each side in the subpoena matter.
That situation raises the “inevitable question” of how that can be, according to Republican Senator Lee Schoenbeck, a lawyer. He chairs the Legislature’s Executive Board that ratified the Government Operations and Audit Committee’s decision to issue the subpoenas.
“Short answer is it’s their job. They’ll have to use a Chinese wall to keep communication separate in the office,” Schoenbeck said, referring to the practice where one part of a firm or business operates independently of the other.
Governor Noem already has a history with the Legislature’s investigative committee.
An earlier version of the legislative panel spent months looking into Noem’s role regarding the state office of real-estate appraiser certification.
The office’s former director Sherry Bren received a $200,000 settlement from the Noem administration after her forced retirement.
One of Noem’s daughters had been trying to get her appraisal certificate upgraded. The legislative committee in 2021 issued subpoenas to Bren and state Labor Secretary Marcia Hultman.
The legislative committee has recently been looking into allegations that several Department of Revenue employees had engaged in wrong-doing involving vehicle-ownership titles.
One of those employees, Sandy O’Day, has since died, while two others have lost their jobs with the department and currently face criminal charges.
Cancellation of the December 11 meeting affects investigations into two other state departments.
Also scheduled to testify to the committee that day had been officials from the state Department of Social Services and the state Department of Human Services.
The committee sent letters to the two departments last month. One went to Social Services Secretary Matt Althoff.
A former Department of Social Services employee is criminally accused of stealing more than $1.7 million from the state Office of Child Protection Services. The alleged crimes were discovered after Lonna Carroll retired. Carroll has pleaded not-guilty and remains in jail.
The committee also wanted to hear from Human Services Secretary Shawnie Rechtenbaugh regarding closure of senior nutrition sites in western South Dakota.
The latest development comes just weeks after legislative elections and the leadership fights and committee appointments that immediately followed.
Otten, for example, won election to the Senate. Last week, he was named as Senate chair for the Joint Committee on Appropriations that will oversee assembly of state government’s budget for the 2025-26 fiscal year. On Monday night, Otten was part of the appropriators group that Noem hosted to discuss the budget plan she plans to unveil this afternoon to the full Legislature.
Just as significantly, the GOAC committee will go through a major reshuffling. Eight of the current members won’t be returning when the new term starts in January. All five of the House members will be new to the panel, as will several of the senators.
