WILLIAM E. COESTER Attorney at Law PO Box 66 Milbank, SD 57252-0066 www.coester.com

As many of you know I represent R. Duane Beals and Richard Sprenger specifically as well as the other 45 (total 47) defendants in a law suit brought against them by the Pickerel Lake Sanitary District (DISTRICT) which is discussed below. The purpose of this memorandum is to appraise you of the activities of the Pickerel Lake Sanitary District in which I have been involved and to provide those of you who are registered voters within the Pickerel Lake Sanitary District information I think important to you to allow you to make an intelligent choice in the upcoming election for District Trustee wherein incumbent James Porter is being opposed by Richard Sprenger. I have posted additional information on my internet web site which you may access if you wish at www.coester.com and I invite you to visit that site to better inform yourself.

During the spring of 1995 the S. Dak. Department of Environment and Natural Resources (SDDENR) held a public hearing to determine whether the Pickerel Lake Sanitary District (PLSD) should receive a $400,000 grant for the construction of a sewer project at Pickerel Lake (LAKE). Dr. S. W. Allen appeared at that public hearing and I believe he testified to the effect that he did not believe adequate studies had been done to warrant a sewer project at considerable expense, and a letter was sent to the SDDENR by Robert Butterbrodt in opposition to the grant. The grant was not approved and it was suggested that a survey be conducted by the DISTRICT as recommended by SDDENR in its letter to the DISTRICT of April 3, 1995 advising of the rejection of the grant. Trustee Jim Porter moved to have the DISTRICT attorney "correspond with Dr. S.W. Allen, Jr. addressing the problem he is and has caused to the Sanitary District including the loss of funds of the recent funding by the SD Department of Environment & Natural Resources, and address the potential of legal liability." Emphasis Mine. Minutes of March 29, 1995. The motion carried. Jim Porter then seconded a motion to have the DISTRICT’s attorney write Mr. Butterbrodt and request a "list of property owners in the Pickerel Lake Sanitary District that he represents and the capacity in which he represents them." That motion also carried. Minutes of March 29, 1995. I believe one must conclude from this that any attempt to speak publicly against the project the PLSD Trustees favor will bring the wrath of the DISTRICT’s attorney and potential legal action against them.

The voting records of the Day County Auditor show that between August 19, 1996 and October 1, 1996 forty-seven persons registered to vote in the DISTRICT and an additional seven persons registered to vote but are considered as inactive because they did not vote after registering. Of the forty-seven persons registering to vote during this time period, forty-two of them were named as a defendant in a law suit brought by PLSD against Margaret Bennett and forty-six others. The law suit claims to challenge the defendant’s voting registration; alleging that the defendants are not "residents" of PLSD. This law suit, funded by PLSD tax dollars, alleges that each of the defendants committed perjury in swearing they were Day County residents residing within PLSD, and that each had "recently registered to vote" in the PLSD. As a direct result, twelve of the defendants changed their voting registrations elsewhere and presently can not vote in PLSD. This lawsuit prompted a counter-claim alleging a violation of civil rights, specifically the unhampered right to vote, and the action was removed from State to Federal Court. The Federal Court determined the complaint failed to state a cause of action and removed the action back to State Court where it is still pending in Day County. Case number 97-52. It is interesting to me to note that even though the PLSD legal council Jerome Lammers knows this complaint does not state a cause of action, he has failed to dismiss or amend his pleadings and has not dismissed from this action even those defendants who are no longer registered voters in the PLSD, although he has agreed to do so. Most, if not all of the twelve, have pleaded in writing with Mr. Lammers to be dismissed from this lawsuit and have stated they do not wish to participate any longer in the counterclaim, but the PLSD chooses not to dismiss them, at least as of this time. It is also interesting to note that the seventy-three voters who all registered to vote on October 21, 1997, are not included in this lawsuit and that Mr. Lammers has declined to add them as party defendants. Could this be because as Chuck Chilson testified under oath these seventy-three are pro District and pro Porter voters? There is certainly nothing wrong with being pro Porter, but shouldn’t all persons who "recently registered" be treated equally, or are a majority of the PLSD Trustees using the DISTRICT tax dollars to fund litigation to hamper the right and privilege of certain persons to vote in PLSD elections, especially those whose views apparently differ from the majority of the District Trustees? All of the defendants in the lawsuit brought by PLSD signed the petition to dissolve the PLSD in September, 1996, because they were unhappy with the manner in which the District is being managed.

The PLSD held its first ever trustee election in 1996 between candidates R. Duane Beals (BEALS) and Stan Rhinehart. BEALS won but was not seated as a trustee until February 1997 because, as the minutes of the trustee meeting of November 23, 1996 state: "the seating of Richard D. Beals as a member of the Board of Trustees be delayed until the court action initiated involving Mr. Beals and others is resolved." Shortly after BEALS was seated, PLSD, at taxpayer expense, sued BEALS stating he did not "live" within the PLSD and asked the court to disqualify him as a trustee. After a court trial on June 25, 1997, the court, Honorable Eugene Dobberpuhl presiding, found, determined and ordered that BEALS is a duly elected, qualified and acting trustee of PLSD. Even after this court decision, which was not appealed, BEALS was not dismissed as a party defendant to the Day County lawsuit brought by PLSD and described above. Both BEALS and his wife Melva are defendants in this frivolous law suit today, maintained by PLSD at taxpayer expense.

At the March 29, 1997 meeting of PLSD Trustees the low bid of Dahme Construction Co. in the amount of approximately $1.2 million dollars was accepted. Trustee BEALS, and possibly all trustees have never seen a copy of the construction plans for this project, either Phase I or Phase II, yet contracts have been signed and payment has been made for work done. Within twenty days of the publication of the minutes of the meeting accepting the bid of DAHME, referendum petitions were filed seeking a vote of the electors of the PLSD to determine whether the DAHME bid should be accepted and the project approved or not. A majority of the Trustees (Porter and Svare, not BEALS) refused to set an election. As a result, Melva Beals asked the court to issue a Writ of Mandamus ordering the PLSD to set an election according to the petition and state law. The South Dakota Constitution provides at ARTICLE III, § 1, that acts of the legislature are referable, and it says that this provision also applies to municipalities. The legislature has narrowed the generic definition of municipality (a political subdivision of state government) to only include cities and towns but no other political subdivision. SDCL 9-1-1(6). If the PLSD is not a municipality for constitutional purposes it is not entitled to the privilege of referendum. The legal question is whether the legislature can restrict by definition the application of a constitutional provision. The law is that the Constitution is the mother law and cannot be restricted by legislation. Judge Dobberpuhl refused to grant the Writ of Mandamus stating "… The Petitioner [Melva Beals] takes the position that this provision of state law is unconstitutional. Legislative enactments are presumed to be constitutional. It is the burden of the Petitioner to show that the statute is unconstitutional. This court believes that burden has not been met." Memorandum Decision of July 3, 1997. Melva Beals appealed this decision to the South Dakota Supreme Court and asked that Court to expedite the appeal (shorten the time to respond and decide) and PLSD opposed the expedited appeal and won, so the appeal will be heard in the ordinary course of appeals which usually take from ten to fifteen months to obtain a decision. The appeal is pending with the Supreme Court, case number 20161. The court entered its order denying the Writ of Mandamus on July 21, 1997, the appeal was filed on July 24, 1997, a Motion to Expedite Appeal was served on July 25, 1997, and Melva Beals’ Appellate Brief was served and filed August 1, 1997, all demonstrating her eagerness to get this matter resolved.

Relative to this demand for an election to determine whether the sewer project should proceed as bid and whether the bid of DAHME was to be accepted which was brought to the Trustees by the referendum petitions filed by Melva Beals, the facts are these: On March 29, 1997 the Trustees accepted the bid of DAHME in the amount of approximately $1.2 million. That resolution was published along with the District Meeting Minutes in the Reporter and Farmer on April 14, 1997. On April 24, 1997 referendum petitions were mailed to the District Clerk who received them on April 25^th. The DISTRICT had a meeting of trustees on May 15, 1997 and the minutes reflect: "Podoll advised the Board that he had received three petitions signed by 27 individuals to refer the motion to award the low bid of Dahme Construction to a vote. A copy of the petitions had been provided to legal counsel and signatures had not been checked. It was moved by Porter and seconded by Svare that the three Referendum Petitions filed with the Clerk of the District be rejected, on advice of counsel, and that the Clerk be instructed to notify the attorney for petitions that all three petitions were rejected. Vote: For: Porter and Svare. Opposed: Beals. Motion carried." Because Howard Dahme is a friend of mine and as a courtesy to alert DAHME to this referendum demand, I placed a telephone call to DAHME and learned that Howard was gone but that Gary Dahme was running the company so I asked to speak with him. At the time he was in a meeting but he returned my call later and I told him I had some legal matters involving the Pickerel Lake project and asked if I could discuss them with his legal counsel. He said I could and the next morning I had a telephone conversation with Jay Gellhaus, DAHME’s attorney, relative to the referendum. I told Gellhaus that I was going to seek a Writ of Mandamus from the court to require the election, that pending the election, the governing body may take no action with respect to the subject matter of the petition that would alter or preempt the effect of the proposed petition, and I faxed copies of the Referendum Petitions and the Mandamus pleadings to him for review and information. I believe it was the next morning that Jay and I had another telephone conversation during which I was asked what I would do if I were him. I told Jay that "he was getting the big bucks" to make those decisions, not me, and that he should decide what advice he would give his client. Jay Gellhous was in the audience at the trial on the Writ of Mandamus on July 2, 1997, in Webster. Judge Dobberpuhl’s decision denying the Writ of Mandamus and his refusal to set an election on this bid is under appeal to the South Dakota Supreme Court as explained above. If the Supreme Court decides, as I think it will, that an election is mandated by the state constitution, the Phase I contract is void and any payments made thereunder are, in my opinion, an expenditure of public money without authority.

At the October 25th meeting of the Trustees the Phase II bid of Dahme Construction Co., in the amount of approximately $900,000.00 was accepted subject to the review and approval of SDDENR. On Monday, October 27^th PORTER signed the Phase II contract and I believe Gary Dahme signed the contract on October 28^th. It seems impossible that a bid accepted on Saturday, October 25^th, can be reviewed and approved by SDDENR so that a contract could be signed on Monday, October 27^th. Even with fax machines that’s fast for a state governmental department to react. The awarding of this bid was also referred to a vote of the electorate by the timely filing of a Referendum Petition with the District Clerk and the Trustees handling of that Petition at the November 24, 1997 meeting is discussed below. If the Supreme Court decides the people of PLSD are citizens entitled to the provisions of ARTICLE III, §1 of the South Dakota Constitution, this contract is void and another election will determine whether the bid of DAHME will be accepted for Phare II of the project. The validity of both the Phase I and Phase II contract with DAHME rests initially with the South Dakota Supreme Court and at this point is outside the control of the Board of Trustees. If the Supreme Court decides the people are entitled to the right of referendum both contracts are void. If the Supreme Court decides the people are not entitled to the right of referendum the Phase I contract is possibly valid, and the Phase II contract is probably void because of the contingency not taking place prior to signing the contract and other technical problems such as the bond being filed a few days after the contract was signed. Payments of taxpayer dollars cannot be made by District Trustees to the extent of approximately $2,000,000.00 if there are no valid contracts to support those payment. The illegal spendature of tax dollars by government officials very well may subject them to personal liability regardless of their "good faith purpose" if a taxpayer should bring at taxpayer suit against them. This is the reason BEALS is not voting to pay project bills.

In October, 1997, Richard Sprenger (SPRENGER), one of the residents who is a defendant in the Day County lawsuit brought by PLSD at taxpayer expense, filed a Nominating Petition to be a candidate for District Trustee. The instructions that pertain to the first part of the Nominating Petition were removed by someone other than the present District Clerk and the words "NOMINATING PETITION FOR DISTRICT TRUSTEE" were placed in that area. The removed instructions stated that part I of the petition was to be completely filled in prior to circulating the petition for signatures. SPRENGER did not have his signature notarized prior to circulating this petition, although he signed it prior to circulation. After the signatures were obtained by him he had his signature notarized and filed the petition with the District Clerk. A few days later the District Clerk called SPRENGER and told him his petitions were insufficient because he had not notarized his signature in Part I of the petition prior to circulation. SPRENGER had one day to redo and file his Nominating Petition and on the last day to file SPRENGER filed a new Nominating Petition with the District Clerk. This time Trustees PORTER and SVARE determined the petition of SPRENGER was not valid because where the petition asked for the candidates mailing address and business address SPRENGER used a Sioux Falls address, as he had done on his original petitions. After declaring the petition void PORTER and SVARE cancelled the election scheduled for November 4, 1997 for District Trustee and declared PORTER the "winner" by default. Meeting minutes of October 25, 1997. SPRENGER asked the Circuit Court on October 27, 1997 to issue a Writ of Mandamus ordering the PLSD to hold the District Trustee Election between himself and PORTER on November 4, 1997, and to otherwise determine he was and is a viable candidate for the office of District Trustee. PORTER and SVARE, using taxpayer money, are defending this court action to prevent an election between PORTER and SPRENGER. The court issued an Alternative (Preliminary) Writ of Mandamus and scheduled a show-cause hearing for October 28, 1997 before Judge Myles DeVine if the PLSD did not intend to obey the court’s Alternative Writ of Mandamus. Trial was held on October 28, 1997 and Judge DeVine found, determined and Ordered that SPRENGER was a voting resident of PLSD, his Nominating Petition was sufficient , timely filed and valid, and ordered the trustees to hold the scheduled election on November 4, 1997 between SPRENGER and PORTER. At this trial PLSD, using tax dollars, hired Jerome Lammers to try to prevent the election for trustee from being held. The court signed its Peremptory (Permanent or final) Writ of Mandamus on October 29, 1997, and ordered the election between PORTER AND SPRENGER to be held on November 4^th. On October 30, 1997, PLSD held a special meeting of Trustees (BEALS objected stating proper legal notice was not given) and at the meeting PORTER and SVARE authorized legal counsel to appeal the court’s decision and judgment, and conducted other unnecessary business. A Notice of Appeal was mailed to the clerk of courts on October 31, 1997 (a Friday) and the appeal was perfected on Monday, November 3, 1997. In the afternoon of November 3, 1997 the Trustees again held a special meeting over the objection of BEALS and this time they again declared the Nominating Petitions of SPRENGER to be void notwithstanding the court order, cancelled the election, determined PORTER to be the election winner by default and swore him into office. As a result no election was held on November 4, 1997.

On November 20, 1997 the Pickerel Lake Homeowners Association (PLHA), Robert D. Johnson, Doris Slinden, Chuck Chilson, Dave Bozied, Mark Rathbun and W. F. Kungel started a law suit against Beverly Bachman, Day County Auditor and G. Todd Garry, PLSD Clerk, seeking to obtain a court determination from the court as to whether 73 persons who had completed voter registration cards would be eligible to vote in the event the November 4, 1997 election was rescheduled. Richard Sprenger intervened in this lawsuit as a party defendant by agreement of counsel and order of the court. Between September 28, 1997 and October 21, 1997, Robert Rohl, Chuck Chilson, Harold Slinden, Robert Johnson and David Bozied solicited and obtained a total of 73 voter registrations from persons claiming they were PLSD residents and registering to vote in PLSD and Day County. These voter registration cards were funneled to Chuck Chilson who, in reliance upon the published notice of voter registration required for the November 4, 1997 election, filed all of the registrations at approximately 4:00 o’clock p.m. on October 21, 1997. The legal notice was wrong and should have stated the voter registrations would close for the November 4, 1997 election at 5:00 o’clock p.m. on October 20, 1997. Because the Auditor relied upon the statute to determine when the Auditor’s office would stop voter registrations for the November 4, 1997 election the Auditor refused to certify the 73 additional registrants for the November 4^th election. That issue was tried by the court in Webster on January 7, 1998, and Judge Dobberpuhl ordered those 73 be allowed to vote in the rescheduled November 4^th election, now scheduled for January 27, 1998 at Clausen’s Steak House. In preparation for this trial, Cluck Chilson signed an affidavit under oath that he was the secretary of the PLHA and that 73 residents of Pickerel Lake entrusted their voter registration cards to him, that he had possession of each of the 73 voter registration cards on or before October 20, 1997 (even though four of the cards were dated October 21, 1997), and that he chose to file the voter registration cards on October 21, 1997, the day he thought was the last day to register voters, because he did not want to alert the other factions to the registration of those new voters. Chuck Chilson testified at the trial that the 73 persons named on the questioned voter registration cards were "pro-project and pro-PORTER." No one has denied that these 73 voters are not entitled to vote in PLSD elections, but whether they could vote in the canceled November 4^th, election when it is rescheduled was at issue because they would not have been able to vote in the election had it taken place on November 4^th. Again the court determined the 73 could vote in the rescheduled election.

After Trustees PORTER and SVARE cancelled the November 4^th election for the last time in apparent violation of the court order, SPRENGER moved the South Dakota Supreme Court for Special Relief: to issue a restraining order restraining and enjoining PORTER from holding the office of District Trustee until he is duly elected and qualified; to reschedule the November 4, 1997 election on two weeks notice; to find PORTER and SVARE in contempt of court for canceling the election; and to determine whether the PLSD was entitled to an automatic stay of the circuit court’s Judgment and Writ of Mandamus. On December 17, 1997 the Supreme Court responded to SPRENGER’s Motion for Special Relief and filed its ORDER OF REMAND to the Circuit Court stating the court shall conduct a contempt hearing to determine whether PORTER, SVARE and BEALS are in contempt of court for canceling the election scheduled for November 4^th, and further to order that an election for District Trustee be held upon two weeks notice. The trial court scheduled the contempt hearing to be held on January 7, 1998 and ordered the election to be held on January 27, 1998.

Because PORTER and SVARE had not obeyed the court’s order to hold the election on Novmeber 4^th, the Day County States Attorney Jack Hieb brought a lawsuit in the name of the State of South Dakota against PORTER to determine PORTER’s right to hold office as a District Trustee after November 4^th and until he is duly elected and qualified. Case #97-155. This time David Gerdes and Bob Sahr, lawyers from Pierre who also represent the PLHA, appeared at trial to represent PORTER. This trial was held on December 17, 1997 and at the trial an obviously angered judge told PORTER that he probably belonged in jail rather than sitting before this court asking it to allow him to sit in public office after he had cancelled the election creating the very vacancy he was now requesting the court to allow him to fill! The court entered its restraining order restraining and enjoining PORTER from serving further as a District Trustee until he was duly elected to that office by a properly conducted election. As a result PORTER was defrocked and the Board of Trustees of PLSD has only two legal members, SVARE and BEALS. SVARE assumed ledership of the Board although he was neither appointed or elected to that position and the Board is now having difficulty deciding anything.

The first meeting of two trustees was held on November 24, 1997. The minutes of the October 25^th meeting were read and approved. BEALS refused to approve the minutes of the October 30^th meeting because the meeting was conducted in his opinion without legal and proper notice, so these minutes were not approved. BEALS also refused to second the motion to approve the November 3^rd meeting minutes for the same reason and the minutes were not approved. The District financial report was approved by BEALS and SVARE and then SVARE moved the payment of all bills of the District. BEALS did not second the motion and it failed for lack of a second. Then there was a motion by BEALS "to pay the bills to the following: Reporter and Farmer, Day County Register of Deeds, Richard Sprenger, G. Todd Garry, Pickerel Lake Lodge and Clausens’." That motion failed for lack of a second. SVARE stated that he would approve all bills, but would not pay some of them if they all were not paid. Melva Beals had again timely filed a Referendum Petition with the Board to refer the awarding of the Phare II bid to DAHME and that matter was considered next. "Motion by Svare that the referendum petition filed with the clerk of the district in reference to the award of bid on Phase II of the sanitary sewer project to Dahme Construction Company be rejected on advice of counsel, the Day County Circuit Court having ruled that a previous referendum petition was unlawful, and that the clerk be instructed to notify the attorney for petitioners that said referendum petition was rejected. No second was made and motion died for lack of a second." BEALS then made the opposite motion to schedule the referendum election and that motion died for lack of a second. BEALS then moved that the canceled election, scheduled originally for November 4^th be rescheduled for December 16, 1997 and there was no second to the motion. The two trustees finally agreed to adjourn the meeting. Some of the bills presented for payment at the November 24^th meeting included Lammers Law Firm in the amount of $3,535.66 for October services; Wilmer Kungel in the amount of $1,149.22 and Duane Podoll $1,098.22 for fencing the lagoon.

The two trustees again met on December 13, 1997 in regular session and after approving the minutes of the preceding meeting and the financial report, the clerk reviewed the outstanding accounts payable and SVARE moved all of them to be paid. His motion died for lack of a second. The bills now included a bill from Lammers totaling $3,671.10, and, in addition to the foregoing November bills, DAHME, $60,925.00; Helms and Associates, $5,815.15; DAHME for Phase II, $24,107.00; and Helms and Associates for Phase II, $3,000.00. Total construction bills for which payment was requested is $94,945.37. SVARE then moved that he or the clerk be authorized to sign the request for reimbursement forms for the SRF loan and SDDENR grant papers. Motion died for lack of a second. After letters from Helms and Lammers were read, SVARE moved "to authorize a shutdown of the Phase I construction work effective November 12, 1997 as requested by Dahme Construction Co. and approved by Helms & Associates." Motion died for lack of a second. BEALS then moved that the canceled election of November 4^th be rescheduled for January 6, 1998 and that motion died for lack of a second. At the end of this meeting "Bob Johnson of the Pickerel Lake Homeowners Association was present and talked to the board members regarding the way the association was dismayed with the way the project was progressing." The next meeting was scheduled for January 10, 1998, but it appears that SVARE will be out of town until spring and BEALS will be in Florida so no meeting will actually be held.

I have tried to be objective and give you a synopsis of the activities of the Trustees of the Pickerel Lake Sanitary District so far as I have been able to determine them and as they pertain to the sewer project being undertaken by the PLSD and involving property in which each of you are involved. I believe my mailing list contains all of the persons in the PLSD that are listed on the tax rolls of Day County as they currently stand. I am not sending this information only to voters, or only to voters that appear to favor the position of my clients. Everyone, taxpayer, voter, and citizen, needs to be exposed to the corrupt manner in which the PLSD Trustees have operated over the past years and the efforts the Trustees have gone through to prevent elections from being held, to prevent taxpayers from registering to vote, and when they did register, to sue them in a partially successful attempt to persuade them to reregister outside of the District, and to ignore direct and specific orders issued by the Circuit Court of South Dakota. I have tried to give you places where you can go to verify my information and its accuracy so that you will be able to form an opinion based upon facts, not rumors and innuendo. To those of you who are registered voter, I hope you will review and verify this information and form your opinion based upon facts before you vote on January 27, 1998 for District Trustee. To those of you that are taxpayers and not registered voters I am trying to appraise you of the manner in which your tax dollars are being used in the hope that perhaps you will become actively involved in the operation of this governmental unit. If you feel the information in this document is worthy, please see that other persons interested in the Pickerel Lake Sanitary District, and Pickerel Lake as a recreation location, have an opportunity to review it. I will try to place some of the materials I have verifying the above stated events on my internet web site, www.coester.com , and I invite anyone to visit my web site at any time to view the information there. Within reason I will try to answer questions should any of you wish to ask. I am not sending this information to you on election eve (or within one hour of the deadline so the "other factions" cannot respond) and I invite the PORTER or SVARE, or both, to respond sufficiently before election day so the voters can make an informed decision based upon facts.