Attorney General Marty Jackley is investigating potential constitutional violations by a Rapid City senator.
The lawmaker, who owns a preschool business, received well over half-a-million dollars in COVID relief payments.
Jackley said payments to Sen. Jessica Castleberry are in violation of the state constitution.
The letter comes after Gov. Kristi Noem’s office requested a formal investigation into the payments on Monday, once they were discovered by the Department of Social Services.
Castleberry owns and runs the Little Nest Preschool, with two locations in Rapid City.
“Payments were found by department fiscal staff who recognized the senator’s name on a recent grant application for Little Nest Preschool to receive another $4,000,” Noem said in a letter to Jackley. “At that point, further review into Little Nest Preschool turned up over a dozen payments since 2020."
In total, Little Nest Preschool applied for and received COVID-19 federal stimulus funds totaling what the state believes is over $603,000.
"These federal stimulus funds where [sic] appropriated by various General Appropriations Acts that Senator Castleberry voted on in 2020 Special Session (HB 1001 and SCR 601), 2021 Regular Session (SB 64 and SB 195), 2022 Regular Session (HB 1340 and SB 60), and 2023 Regular Session (SB 210)," Noem's letter continued.
In 2020, Noem asked the state supreme court to clarify whether legislators could receive money from the COVID Relief Fund, which was federal money funneled through the state.
The court said lawmakers are prohibited from receiving such funds.
The payment announcement from the governor’s office came hours after holding a press conference in Sioux Falls to announce her workforce recruitment campaign is sponsoring a NASCAR stock car.
Five minutes after Noem announced the investigation, Castleberry responded with an email to the press. She said she hired a lawyer to determine whether her company was eligible to receive the funding.
“After consulting with legal counsel, I believed my company was eligible,” Castleberry wrote. “Upon several occasions, I communicated directly and transparently with DSS staff regarding grant applications. I am committed to resolving the issue with the State and will work with them to ensure I acted in compliance with the state constitution. “
In his letter to Castleberry, Jackley said the full amount, $603,219.79, must be returned by Aug. 7.
"We do intend to pursue this matter in court," Jackley wrote. "Thank you for your attention to this significant matter."
Noem appointed Castleberry in 2019, when Sen. Lyndi DiSanto resigned her seat just before the 2020 session.
During 2022 state of the state speech, Noem lauded Castleberry as a small business owner.
"No group is succeeding in higher numbers than women in South Dakota. During the pandemic, South Dakota was top 3 for smallest negative impact on female workers," Noem said.
She called Castleberry's story "inspirational." Noem noted over a decade ago, Castleberry found herself a single mother with three children.
"And only $3 in her checking account," Noem said. "She went to visit with a credit counselor to get some advice on what she might do to improve her situation."
Castleberry shared her dream of getting a business degree and becoming a small business owner. The counselor said there's no magic want to make her dream come true.
"Well, that didn’t sit well with Jessica. She went and bought herself a magic wand and kept it close to remind herself that she could make her dreams come true," Noem said. "This year [2022], she celebrated the 11th anniversary of her business in Rapid City, which has three commercial locations. To this day, that magic wand sits in her office as a reminder of all that is possible."
