The former Republican State Senator accused of inappropriately receiving federal COVID funds through her child care business has defaulted on repaying the state.
In July of 2023, then-Gov. Kristi Noem accused Republican State Sen. Jessica Castleberry’s business, Little Nest Preschool, of unconstitutionally receiving over $600,000 in federal pandemic relief funds.
Castleberry, who represented District 35 out of Rapid City, said the money went toward the preschool operations expenses.
The state constitution precludes state legislators from contracting with the state to receive funds. In 2020, the state Supreme Court ruled that also included federal pandemic relief money.
In late 2023, Castleberry agreed to pay back nearly $500,000 — or about 2,300 a month for 30 years. Castleberry resigned her seat. She made payments for about a year but then stopped.
According to officials at the state auditor’s office, Castleberry’s last payment to the state was on Nov. 4, 2024.
Later that month, the former state lawmaker abruptly closed the two preschools.
According to the settlement agreement reached with Attorney General Marty Jackley in 2023, any missed monthly payment in full and on time shall be deemed as a default on the agreement.
“Protecting taxpayer dollars must be paramount. After my investigation revealed that former Sen. Jessica Castleberry was inappropriately awarded COVID relief funds from the Department of Social Services in violation of South Dakota law, I took immediate action to protect taxpayer dollars," Jackley said in a statement on Wednesday. "Castleberry has now defaulted on her obligations to return taxpayer dollars, so my office is taking action.”
Jackley's office said those actions include discussions with Castleberry's lawyers.
Castleberry told SDPB her intention is to repay all the funding in full per the agreement.
Court filings show Castleberry is suing her former lawyer — one who court documents show advised her the child care business met requirements to receive federal pandemic aid dollars. According to court filings, that opinion letter was penned in April 2022, about a year-and-a-half after the state Supreme Court ruled lawmakers were precluded from receiving the funds. According to Gov. Noem’s office, Castleberry applied for and began receiving the relief money in 2020, before she got the opinion letter.
She’s requesting a jury trial. Her former lawyer, Quentin Riggins, denies wrongdoing.
