}

Monday, November 24, 2014

A SIMPLE PLAN: Before They "Wrote It Off", They Wrote A Letter; Grand Traverse Academy Board Aware of Ingersoll's $3.5 Million Dollar Obligation In 2012! And Just Where Is The Embezzlement Investigation?

It surprises me that many people who've heard of Steven Ingersoll's federal case continue to describe it as "too complicated" for the average person to understand. 






While the case does have its share of complexity, it's simple enough to be summed up in a few words: a public school academy manager, who appears to have been granted an inordinate amount of power by the school's board, allegedly misappropriated millions of dollars and cooked up a bank fraud scheme to repay $704,000 of his estimated $3.5 million dollar debt.

Simple as that. But that doesn't mean past and present Academy Board members are off the hook just yet, especially in light of the twisting and turning narrative that unspooled since Ingersoll's indictment and the recent "write off" of nearly $1.7 million of Ingersoll's Academy-related debt. For example, as recently as mid-September, the Board's attorney Kerry Morgan publicly floated the notion the Academy would "wait until after the federal charges against Steven Ingersoll" had been "resolved" to decide what to do about the outstanding debt―while in retrospect it appears the Board had already written off the amount well in advance of Morgan's statement.

While local coverage of Ingersoll's federal fraud case has been sporadic and incomplete, it has been seamlessly covered on this blog, beginning with breaking the news of the $2.38 million dollar "prepaid expense" nearly eight months ago. 

However, the activity that may have spurred the federal case has not yet been investigated...yet.

Let's look at embezzlement.

EMBEZZLEMENT FOR DUMMIES

Embezzlement in Michigan is considered to be the theft of property by a person managing it for another individual or entity, and embezzlement cases are treated very seriously in this state. In order for a theft crime to be considered embezzlement in Michigan, the person stealing the property must have a legal right to access it for another individual, and this factor is what deems a crime to be embezzlement rather than another type of theft. 

Those who are charged with counts of embezzlement in Michigan face harsh penalties for their actions, and these penalties will depend on just how much of another person’s property they took for their own personal gain. 

The charges and penalties a person may face after being convicted of embezzlement in the state of Michigan will greatly depend upon the value of the property in question. For extreme Michigan embezzlement cases involving property valued at over $100,000 a person may face a fine of $50,000, or 3 times the value of the property as well as up to 20 years in prison.

A person who engages in a conspiracy to embezzle is equally liable.

MISSING MILLIONS...AND MISSED OPPORTUNITIES


On June 13, 2013, Traverse City attorney Doug Bishop, counsel for the Grand Traverse Academy, issued a “demand letter” to Steven Ingersoll for the return of over $3.5 million.

In his letter, Bishop referenced the Academy's 2012 fiscal report in this statement: "It appears, at this point, that the amount due is at least $3,548,319.00, which, to our understanding, was a figure calculated by Dr. Ingersol (sic) as indicated to be due as of June 30, 2012." 






Bishop was clearly referring to this financial note that revealed the "amounts receivable from related parties" was $3,548,319 and revealing he and the Board knew the "party" was Ingersoll:



In his letter, Bishop continues:

"We have been directed by the Board to make a demand for immediate payment for all amounts due from Smart Schools Management, Inc. (Smart Schools) and/or Steve Ingersol (sic). These amounts include, but are not necessarily limited to, any amount formerly designated as a receivable on Grand Traverse Academy’s financial statements.

Please further understand that no GTA funds are to be paid to Smart Schools for any management fee or other service fee of Smart Schools until these amounts are paid in full.

It appears, at this point, that the amount due is at least $3,548,319.00, which, to our understanding, was a figure calculated by Dr. Ingersol (sic) as indicated to be due as of June 30, 2012. To the extent that it is your position that this obligation has been reduced by any sum, we will require documented proof of all repayment transactions, transferring funds from Smart Schools Management, Inc. to Grand Traverse Academy. Such documented proof must include, at a minimum, confirmation of the Grand Traverse Academy account to which the payment was made and the Smart Schools Management, Inc. account from which the payment came. The documentation should include documentation of wire transfer or copies of checks and other transfer documents."
 

Within days of the letter being sent to Ingersoll and former Academy Board president Mark Noss, the 2013 fiscal year ended on June 30.

When the 2013 financial report was issued in late October, the $3,548,319.00 2012 "related party receivable" had been reclassified as a “prepaid expense” and cut to $2,338,980―a reduction of $1,209,339.

In addition, although Bishop's letter firmly stated that "no GTA funds are to be paid to Smart Schools for any management fee or other service fee of Smart Schools until these amounts are paid in full", the Academy struck a unique deal with Ingersoll.

Did they accept a repayment plan that would require Ingersoll to return the cash he'd five-fingered from the Academy?

No.

While the 2013 audit report revealed that Smart Schools Management agreed that it "owed Grand Traverse Academy an amount classified as a prepaid balance" ($2,338,980), the Academy Board worked out  what they termed a "repayment" plan with Ingersoll. The plan called for Smart Schools to work off the prepayment by "partially reducing cash transfers for future management fees through June 2016".

In plain language, the Academy would simply deduct the $2.3 million overcharge--in three installments--from Smart Schools' expected future management fees, allowing Ingersoll to pay them back by being paid less. 


Oy!

According to the 2013 financial audit, the prepaid management fee “reductions” were scheduled to be received from Ingersoll's Smart Schools Management, Inc. as follows:

2014: $774,000
2015: $960,000
2016: $604,980


It's now clear from court documents recently made public in Ingersoll's federal fraud case that he was aware of the impending charges well over a year ago, and likely made the agreement with the Academy for repayment while his attorneys were negotiating a plea bargain.

But how was the $3,548,319 reduced to $2,338,980? 

Did Ingersoll come up with $1,209,339 or was another, secret deal made?

FOIA

No one's asked that question yet, so I've sent a Freedom of Information Act query to the Academy Board requesting:

●any and all response letters from Ingersoll/Smart Schools Management, Inc. relating to demand for repayment

●documentation of wire transfers by Ingersoll or copies of checks and other transfer documents


●additional correspondence relating to the Academy’s decision to reduce Ingersoll’s obligation by at least $1,209,339.


The statute of limitations on embezzlement cases in the state of Michigan is 6 years.

Friday, November 21, 2014

INGERSOLL TRIAL DATE DELAY WATCH: Will Update As Soon As Judge's Decision Is Public

No decision yet on Steven Ingersoll's request for yet another delay in his December 2 federal fraud trial date. 


I will bring you the information as soon as it's available.

In the meantime, enjoy this "smoking gun". Yes, it's low-res and studded with watermarks--but what did you expect!

Thursday, November 20, 2014

REUNITED, AND IT FEELS SO GOOD! The First Installment In A New Series; Exclusively From Miss Fortune!

 FROM OUR SPONSOR: Public teat chapped?  Try Bag Balm!

When Kaye Mentley needed to file an eviction notice in late April against a tenant living in a property owned by her real estate corporation, KWM Rentals, Inc., she turned to Doug Bishop—the lawyer who at the time represented the Grand Traverse Academy.


Miss Fortune has discovered that although both have subsequently been kicked to the curb by the Academy—Mentley was replaced by Susan Dameron and Bishop by Libertarian wannabe judge Kerry Morgan—they're still together.

Like an extremely pale version of Peaches & Herb, the duo "reunited" over a common interest: money.

On November 19, a $3,164.08 consent judgment was issued against Mentley's tenant, Jennie S. Johnson.


And, as the court records states, this "case is closed".

Tuesday, November 18, 2014

BAY CITY ACADEMY ASBESTOS REMOVAL TRIAL BEGINS TODAY: Defendants Roy C. Bradley, Sr. and Gerald A. Essex Face Up To 5 Years In Prison, $250,000 Fine

The twice-delayed United States v. Bradley and Essex federal trial begins this morning in the Bay City courtroom of U.S. District Judge Thomas L. Ludington.

In August 2013, a grand jury charged Bradley and Essex with four counts of illegally distributing and handling asbestos, a felony punishable by up to five years in prison and a $250,000 fine. 

In April 2010, Roy C. Bradley Sr.'s restoration company, Lasting Impressions, was hired by Steven J. Ingersoll to remove asbestos from a former church located at 400 N. Madison Avenue in Bay City. Ingersoll converted the church into a school building for his Bay City Academy, with Bradley completing the renovation. 

Federal prosecutors charge that Bradley and Essex worked together, and with others, to convert the former church into the Bay City Academy. In the process, prosecutors contend the pair "knowingly failed to remove and cause the removal of all regulated asbestos-containing material from that facility in accordance with the National Emission Standards for Hazardous Air Pollutants."

Prosecutors allege Bradley and Essex broke the law during renovations at the Madison Avenue building from Aug. 18, 2010, through Sept. 2, 2011.

On June 17, U.S. District Judge Ludington sentenced a third defendant, Rodolfo Rodriguez, to 21 months in a federal prison for lying to a federal grand jury regarding what he knew about asbestos removal from the Bay City charter school. 

Rodriguez was an employee of Bradley's restoration company, Lasting Impressions. In January 2013, Rodriguez testified before the grand jury and deliberately gave false testimony regarding how much asbestos he removed and who directed him at the task, court records show.

Excerpts of Rodriguez's testimony indicate he varied on how much asbestos he removed, from 20 feet to 200 feet. He initially maintained no one told him to remove the material and that he did so on his own volition, but after being pressed by the grand jury, he said crew foreman Gerald A. Essex told him to "gut the place".

In February 2014, Rodriguez pleaded guilty to one count of perjury before a grand jury. "At Bradley's direction, and under Essex's supervision, Rodriguez removed at least 200 feet of asbestos insulation from pipes in the church so the pipes themselves could be removed," the plea agreement states. 

Rodriguez, who was reportedly paid in cash "off the books", is expected to testify against Bradley and Essex.

In addition, on November 10, the government filed a notice regarding "opinion testimony", listing the following expert witnesses:

-Dr. Clark Kahn: Kalamazoo-based Kahn is expected to testify regarding regulations relating to asbestos removal and disposal, proper asbestos abatement procedures and equipment, and asbestos abatement costs.

-Peggy Forney: a chemist at the US Environmental Protection Agency (EPA), Forney will testify regarding the findings she made as a result of her examination of samples seized from 400 N. Madison Avenue during the execution of a federal search warrant.

-Anne Whitaker: may testify regarding the findings she made as a result of her examination of samples taken from 400 N. Madison, during site visits by state regulators.

-Robert Letarte: the Lab Director at Whitmore Lake-based APEX Research, Inc., Letarte may testify regarding the findings made pursuant to examinations of samples taken from 400 N. Madison during asbestos surveys.