T. Denny Sanford, philanthropist, banking giant dead at 90
Billionaire leaves behind wide legacy of community giving
T. Denny Sanford, the billionaire banker whose charitable contributions made him the most prolific philanthropist in South Dakota history, died Saturday. He was 90.
Sanford had been in declining health, and in recent public appearances had been limited in his mobility and speaking engagements. Still, despite his physical limitations, Sanford had participated in a flurry of recent events, including the announcement that he would donate $50 million to assist Smithfield Foods in relocating from central Sioux Falls and $300 million last year to support a new medical center.
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Sanford’s legacy as a philanthropist was cemented with a $400 million donation to Sioux Valley Health System in 2007, at the time the largest ever donation to a U.S. health care organization. Sioux Valley was renamed Sanford Health, and hundreds of millions more would flow to the system in following years.
“We are forever blessed that Denny chose us and our communities to make the transformational gifts that will change lives for generations,” said Sanford President and CEO Bill Gassen. “He was a driving force in modern medicine, empowering researchers and clinicians to think big and pursue bold, innovative endeavors at a pace not otherwise possible. We are able to provide care for more patients in their time of need because of his generosity.”
Born Dec. 23, 1935, in St. Paul, Minn., Thomas Denny Sanford was the youngest of two boys. Tragedy struck early in his life when his mother developed breast cancer and spent the final year of her life in a hospital. She died when he was 4, and he went through life having no memory of her.
Her death would play an important role in his philanthropy decades later.
As a boy, Sanford worked in his father’s clothing distribution business, sweeping warehouse floors and doing menial labor. His father remarried, a union that produced a half-brother, but Sanford had a troubled relationship with his stepmother.
Sanford worked throughout school, and he was a mediocre student. At 18, he was prepared to join the Navy when he participated in a drunken brawl that landed him in jail.
Instead of the military, Sanford received probationary status at the University of Minnesota. He graduated in 1959 after studying psychology and set out to work in sales.
While in college, his father died of a heart attack. His older brother died of a heart attack at age 40. His stepmother committed suicide when Sanford was 27.
By 1972, Sanford had created a distribution company called Contech Inc. That company went public at $5 per share. In 1982, he sold it at $35 a share.
Sanford was wealthy at that point, but much was yet to come.
The wealth he had accumulated at that point was put to the test after he purchased United National Bank in Sioux Falls in 1986. Sanford had no experience in banking, and his bank languished in Sanford’s first years of ownership. Sanford lamented the purchase as it drained his wealth.
In 1989, the bank hired Miles Beacom to oversee the creation of a credit card section of First Premier Bank. Beacom got the operation off the ground, left briefly, and then returned in 1993 at the request of Sanford. At the time of his return, Premier Bankcard employed eight people. By 2007, the credit card division had 3,000 employees and had grown from 30,000 accounts to 3.5 million accounts.
By the time Premier Bankcard was launched in the late 1980s, Sioux Falls was already a hub for credit card companies, given its relaxation of usury laws that were prevalent in other states. Premier Bankcard pushed that even further, offering credit cards to customers who had terrible credit ratings because of past unpaid bills. Sanford described those customers in a 2007 interview as people “who have had credit accidents, if you will, get back into the credit world and improve their credit bureau standings, and the like, so they could eventually get a higher limit of credit than we provide them.”
The cards came with high fees and interest rates, as well as low balances, because they were aimed at people with poor credit histories. Sanford justified the high fees and interest rates as necessary because of the large number of customers who failed to pay their bills. In 2006, he estimated those losses at $400 million. The model meant that those customers who paid their balances, fees and interest supplemented the customers who didn’t.
They also made Sanford and Premier Bank executives wealthy, and Sanford was soon ranked as the wealthiest man in South Dakota.
Prior to his historic gift to what would become Sanford Health, T. Denny had worked closely with then Sioux Valley CEO and President Kelby Krabbenhoft. By 2007, Sanford had already made several high-profile donations in the community, including $16 million in 2004 to the Sioux Valley Foundation for a new children’s hospital.
The initial $400 million donation to Sioux Valley was followed by a series of other donations aimed at bolstering health research. He donated $100 million for Type-1 diabetes research and, in 2011, $100 million to create the Edith Sanford Breast Cancer Center in memory of his mother.
Sanford’s donations to the health system in his name spurred an aggressive expansion policy on the part of Sanford Health, starting with the merger of Sanford and North Dakota-based MeritCare in 2009, creating the largest rural health care system in the country. The swashbuckling Krabbenhoft and his executive team pursued other mergers, with some of them failing to be consummated.
Then came 2020 and an episode that cast a shadow on his giving. In December 2019, an investigator with the South Dakota Division of Criminal Investigation sought a search warrant into an electronic account used by Sanford. That warrant was triggered by federal officials flagging possible child pornography downloads from a device registered to Sanford earlier that year. More warrants were issued in March of 2020.
By then, the reactions to the COVID-19 pandemic were reaching their height. In August, the child pornography investigation became public. Sanford Health’s executive team notified Sanford’s legal team that the billionaire banker was to have no contact with Sanford officials, with the exception of his personal doctors.
Behind the scenes, Krabbenhoft and his team were in merger negotiations with Fairview Health in Minnesota – a merger attempt that failed seven years earlier – and Utah-based Intermountain Healthcare.
On Oct. 26, 2020, Sanford announced a merger with Intermountain. Krabbenhoft shocked the Sioux Falls business community when he revealed the details of the merger. The corporate charter for the new entity would leave Sioux Falls and be based in Salt Lake City, Utah. Under the deal that never materialized, Krabbenhoft would relinquish his title as CEO and president. The deal meant that Sioux Falls and South Dakota would no longer be the hub of the health system.
While he had been purposefully sidelined because of the child pornography investigation, T. Denny Sanford failed to heed the advice of his lawyers not to contact Sanford executives. When he learned of the Intermountain merger and its conditions, the seasoned banker and businessman viewed it as an acquisition of Sanford.
He sent an email to Sanford executives suggesting that the merger would be bad for South Dakota and the Midwest. He also hinted that he might withhold his fortune from Sanford Health following his death because Intermountain was acquiring his fortune without his consent.
Sanford’s executive team hastily assembled a team to fly to Arizona to smooth over the merger announcement. But within a month, Krabbenhoft had been sacked after 25 years in the job.
Lawyers for T. Denny Sanford twice took media organizations to the South Dakota Supreme Court to stop the release of information surrounding the child pornography investigation. They lost both times. But nonetheless, charges were never filed, and Sanford’s legal team argued that his accounts had been hacked.
The end of the criminal saga saw Sanford re-emerge as a force for philanthropy, donating hundreds of millions for causes that included youth sports complexes, a virtual hospital, the State Theater, the South Dakota Symphony Youth Orchestra and Jacobson Plaza in downtown, among others.
Sanford was divorced twice. He is survived by two sons.
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