UPDATE: South Dakota Attorney General Marty Jackley has now assigned attorneys from his office to separately represent the state Department of Revenue and the Legislature because of a dispute over how state legal-ethics rules apply to this matter and issued a statement explaining his views on how those rules apply in criminal cases.

PIERRE, S.D. (KELO) — The South Dakota Legislature’s Executive Board has approved a request from the Government Operations and Audit Committee to issue subpoenas to Revenue Secretary Michael Houdyshell and the head of the state motor vehicles division to appear and testify in executive session.

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The 14-0 vote during a Tuesday morning special teleconference came a week after Houdyshell on October 21 had refused to disclose to the legislative committee some of the internal controls that the Revenue Department is taking regarding allegations that now-former state government employees issued fictitious ownership titles for motor vehicles.

Houdyshell cited a legal-ethics rule restricting what lawyers can publicly say about investigations they are involved in. The Executive Board’s chair, Republican Sen. Lee Schoenbeck, said that would be a dangerous precedent.

“That concerns me anybody would attempt to restrict a legislative committee based on that rule,” Schoenbeck, a lawyer, said.

State law gives GOAC authority to issue subpoenas but the panel must first receive approval from the Executive Board, whose members oversee the Legislature’s activities outside of the annual regular session each winter. The motion to approve GOAC’s subpoena request came from Republican Rep. Hugh Bartels, the House speaker, who serves on GOAC and is vice chair of the Executive Board.

Republican Rep. Ernie Otten chairs GOAC. He explained that the panel is looking into allegations of financial deception in several departments of state government and expects the Legislature during the 2025 session will receive funding requests from Governor Kristi Noem’s administration to strengthen internal controls.

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Otten said Houdyshell, a lawyer, publicly laid out to GOAC an assortment of internal steps that Revenue has taken or is planning to do, such as bringing in a new registration and titling system for motor vehicles. The committee then went into closed session where Houdyshell could go into further details and answer questions outside the public’s view, but Otten said the legislators “found out very quickly” that Houdyshell wouldn’t, citing the ethics restriction.

Republican Sen. David Wheeler, a lawyer who serves on GOAC, then called for the subpoenas to be issued against Houdyshell and Rosa Yaeger, the motor-vehicle division director. “I believe the department was taking that (legal ethics) rule too far in its application and scope in refusing to answer questions,” Wheeler said Tuesday.

At least one of the former employees allegedly used the fictitious titles to secure loans. Wheeler noted that Houdyshell and the department’s chief legal counsel, Kirsten Jasper, made reference to receipt of a legal notice regarding that, saying it was another reason to not further discuss details.

Wheeler said offering the privacy of executive session to Houdyshell and Yaeger “substantially reduces or almost completely negates” the risks that the legal-ethics rule is intended to prevent. “I just think the rule simply does not apply to us when we’re investigating these matters, especially in executive session,” Wheeler said.

According to Wheeler, the Legislature needs first-hand knowledge of what happened and what is needed to remedy it as lawmakers prepare for the 2025 session that starts January 14. Wheeler found troubling that Houdyshell wouldn’t reveal other internal corrective actions. “I thought that was concerning that the Legislature didn’t have that information about what they’ve done to correct it.”

No one from outside the Executive Board testified as an opponent to issuing the subpoenas. Republican Rep. Randy Gross, an Executive Board member who had served as GOAC chair in previous years, said he understood the point of issuing a subpoena for a document, because what a document says is non-debatable, but questioned whether requiring the appearance of a person who doesn’t want to testify would produce anything beyond “a word salad.”

GOAC met privately with state Attorney General Marty Jackley for 30 minutes before opening the October 21 meeting to the public. Otten said Jackley provided guardrails as to what the committee members could or couldn’t ask. On Tuesday, Republican Rep. Will Mortenson asked whether Jackley had also cited the legal-ethics rule.

Wheeler answered, “He did believe it had application, but we could ask about process all we wanted to.” Wheeler then added, “But he cited it as one reason his office would not be able to respond,” and described Jackley as saying the rule would apply to others such as Houdyshell.

That answer brought a sharp comment from Schoenbeck. “That’s BS,” he said. Yes, the restriction applies to the attorney general, according to Schoenbeck, but it shouldn’t interfere with a separate branch of government’s operations.

“It is a rule of ethics that applies to attorneys in a case,” he said. 

Republican Sen. Jim Bolin asked, as a non-lawyer, what a subpoena compels. Schoenbeck said it requires attendance. Bolin asked what happens if the subpoenaed person refuses to talk. “You could seek to hold them in contempt, that would be the next step,” Schoenbeck said. But he acknowledged that words can’t be forced out a person’s mouth. “You don’t see things go that far usually. It would be a rare situation where you see contempt,” Schoenbeck said. 

Republican Sen. Steve Kolbeck said he was confused about why one government employee such as Houdyshell couldn’t speak freely and openly with other government employees such as legislators. “I think the answer is they are unwilling to testify and the subpoena is to compel them to testify,” Schoenbeck said, noting they weren’t co-workers because this was for the purposes of lawmakers gaining information. “This is the Legislature doing its job,” Schoenbeck said. 

Republican Rep. Mike Stevens, a lawyer, noted that someone acting on behalf of the Revenue officials could attempt attempt to quash the subpoenas or limit the scope. Republican Rep. Rebecca Reimer asked whether GOAC should have more tools beyond a subpoena. Schoenbeck said that issue would be up to the full Legislature to decide.

Mortenson noted, “It sounds like the advice that came out put the department in a pretty difficult position.” He observed the legal-ethics rule hadn’t prevented the attorney general from holding several press conferences on the various allegations. He described a subpoena as a “pretty extreme” measure.

“But I think it is warranted, given they were acting on that advice,” Mortenson said.