Tuesday, April 22, 2014

CHERRY-PICKED! Grand Traverse Academy Superintendent Kaye Mentley Comes Clean...Or Does She?

Steven Ingersoll is turning into a rotting albatross around the Grand Traverse Academy’s neck.

Ingersoll, the Academy’s co-founder, faces federal charges of conspiracy to commit bank fraud and tax violations, accusations that publicly surfaced about a month after the school severed ties with his education management company, Smart Schools Management, Inc.

The Grand Traverse Academy board members recently opted to switch to a new management group, Full Spectrum Management.

Full Spectrum Management is owned by Mark Noss, a Traverse City optometrist who owns Full Spectrum Eyecare and served as the board president of Grand Traverse Academy. He resigned as president last month and filed incorporation papers with the State of Michigan on March 19, the same day the Academy board announced it was hiring Noss's brand new firm.

And now along comes Kaye Mentley, with “an interview” —a lengthy question-and-answer document recently posted on the Academy's website, clearly designed to calm the rabble.

Does it work? 

Although Miss Fortune thinks "crisis communications" should be practiced by professionals, you be the judge!


Cherry picking is often described—outside the Grand Traverse region, of course—when only select evidence is presented in order to persuade an audience to accept a position, and evidence that would go against the position is withheld.

The stronger the withheld evidence, the more fallacious the argument.

In a recently posted “interview”, Grand Traverse Academy Superintendent Kaye Mentley attempts to address questions about the Academy and Steve Ingersoll—and, baby, the cherry pits are flying!

Miss Fortune examines key questions, and Mentley’s answers. (Miss Fortune’s comments are shown in red.)

An Interview with Kaye Mentley,
Grand Traverse Academy Superintendent 


Recently Dr. Steven Ingersoll, a Bay City, Michigan optometrist, and one of the founders of Grand Traverse Academy, was federally indicted, along with family members, alleging they conspired to commit bank fraud and tax evasion.

Although these charges do not involve Grand Traverse Academy (GTA), there has been speculation about our relationship with Dr. Ingersoll. Until we changed companies in March of 2014, his Smart Schools Management company provided services to GTA.  This affiliation began with our founding in 2000.

[Miss Fortune: Ingersoll splits his time between a home in Bay City and one in Traverse City. In addition, Ingersoll’s Smart Schools Management, Inc. shows his Traverse City home address as the corporation’s headquarters.]

Q:  There has been speculation that Dr. Ingersoll’s legal issues extend to GTA.  Is there any truth to that?

A:  Ever since the start of GTA we have complied with financial transparency requirements, the same as public schools.  To our knowledge, Dr. Ingersoll’s legal issues are personal. 

[Miss Fortune: Contrary to Mentley's assertions, Ingersoll’s legal issues do appear to extend to the Grand Traverse Academy. Among the “overt acts” contained in the federal indictment is an allegation that, on or about June 30, 2011, Ingersoll sought to use part of the Chemical Bank construction loan proceeds that had been diverted to his personal Fifth-Third Bank account to “reduce his indebtedness to the Grand Traverse Academy from advances Ingersoll had “made to himself from funds belonging to the Grand Traverse Academy.”

By adding an illogical reference to “financial transparency” compliance, Mentley conflates the two, unrelated issues. In fact, public school academy financial transparency is required by Michigan law.

In addition, if the allegations regarding the repayment by Ingersoll are proven, the Academy could be the subject of a fraud “clawback”. Fraud clawbacks occur when there is an attempt to retrieve, or “clawback” money that was attained through fraud.]

Q:  In addition to posting current GTA financials on the website for public transparency, what other oversight is in place?

A:  We have always regularly reported to Lake Superior State University, our chartering agency; the Traverse Bay Intermediate School District; and the Michigan State Department of Education.

[Miss Fortune: Again, Mentley appears to dodge the real question. By diverting attention from oversight to transparency, Mentley avoids addressing the “oversight” issue completely.

Mentley appears to misunderstand “transparency”, and claims that the Academy has “regularly reported” to its chartering university, the school district and the State of Michigan. That reporting is required by the Academy’s charter agreement with Lake Superior State and by the State of Michigan.

New transparency requirements, signed into law in 2012, require that schools have a variety of information readily available to taxpayers. It appears that the Grand Traverse Academy does not have a plan to comply with those new requirements.

Among transparency requirements for Michigan public school academies are these major areas. (The complete list, provided by the state’s Department of Education, can be found by clicking this link.)

Transparency Mitten
Personnel Expense Chart
Operations Expense Chart
Annual Operating Budget & Amendments
Current Collective Bargaining Agreement
Audit Report for Previous Year
Total Salary & Comp Plan for Superintendent
List of People Working at the School that Earn a Salary > $100K
District Dashboard/Report Card w/3 Years of Data
Final Budgets from Last 2 Years
Copies of Audit Management Letters from the Last 2 Years
Copy of Charter Contract
List of Board Members w/Officer Designations & Contact Information
Board Schedule, Agendas & Minutes for Current Year
Board Policies
Copies of Board Checkbook w/Invoices for Items Exceeding $10K
Quarterly Financial Statements
Copy of Management Contracts
Copies of Certificate of Occupancies
Copies of Boiler & Fire Safety Certificates
Enrollment Information & Advertising
Technology Plan
School Calendar
Parent & Student Handbook
Fire Safety, Emergency Notification & Lockdown Information
Food Service Details, Including Wellness Programs Applications,
Rates & Menus
Staff & Faculty Professional Development
Technology Protection Measure & Internet Safety Policy]

Q:  Is there any credibility to rumors that Dr. Ingersoll appropriated money from GTA illegally?

A:  We are not aware of any money illegally taken from the Academy, nor has our board ever approved a loan to Dr. Ingersoll or Smart Schools. Previous to the past year, the management fee was made as a pre-payment at the beginning of a new school year.  This practice was stopped during the past year when the school's new accountants indicated that it was inappropriate. The previous school accountant had continued this procedure on an annual basis. Because the budget was adjusted due to finances and the need to reduce the management fee in several years, the amounts paid in excess of the amended budget were then owed to GTA by Smart Schools. In view of the circumstances as of the beginning of GTA's last fiscal year, our board demanded repayment from Smart Schools for the balance due. GTA continues to pursue this repayment. No monies were ever advanced to Dr. Ingersoll personally. All management fees went to Smart Schools. 

[Miss Fortune: Mentley’s use of the word “illegally” is a red herring. 

And you'll notice that she said "no monies were ever advanced to Dr. Ingersoll personally" and not "no monies were ever advanced by Dr. Ingersoll personally"! “Smart Schools” IS Steven Ingersoll!

And Mentley’s response appears to contradict the Academy’s 2013 financial report, audited by the Traverse City public accounting firm Dennis, Gartland & Neirgarth.

The financial report, available on the Academy’s website, states that the Academy carried a “prepaid expense/expenditure balance” of $2,338,980 for payments made to Ingersoll’s Smart Schools Management, Inc. 

The report outlined the Academy’s solution: just deduct the $2.3 million overcharge from Ingersoll’s projected management fees over the next three fiscal years.

Although Mentley claims that the board “demanded repayment from Smart Schools for the balance due”, she offers absolutely no proof.

Mentley appears to dodge any responsibility in allowing Ingersoll’s “prepaid expense” balance to balloon to over $2.3 million, instead throwing the Academy’s “previous school accountant” under the school bus,  claiming the firm “had continued this procedure on an annual basis”. 

What's left unsaid is that the "previous school accountant" audited the Academy's financial statements—provided to the accounting firm by the Academy!
The facts as stated in the
Dennis, Gartland & Neirgarth 2013 audit appear to be much less cloudy: according to the audit, the Academy’s contract with Ingersoll’s Smart Schools Management set “a ceiling for the management fee” but it did not include an “objective measure to calculate the fee annually”.

The report also revealed that Ingersoll had a nearly unfettered ability to transfer funds between the Academy’s and his Smart Schools Management bank accounts. Smart Schools Management took “cash advances for their management fee each year on the budgeted figure “without futher Board action”. 

The report claims that the net effect of Ingersoll’s ability to “prepay” his own fees and “withhold payment of overpaid fees enabled Smart Schools to “abuse their access to public funds”.

In the 2013 report, Smart Schools admitted that it owed the Academy $2.3 million in overpayments, but denied “abusing” public funds.

So, to recap, although it appears that while Ingersoll had indeed racked up a balance of over $2.3 million in management fee overcharges, the Academy’s solution was to simply pay him hundreds of thousands less each year—over a three year period!

No, they didn’t kick him to the curb after discovering that millions of taxpayer dollars had gone into Ingersoll’s maw.

According to the audit, the prepaid expense overcharge was supposed to be “received” from Ingersoll as follows:

2014 $774,00
2015 $960,000
2016 $604,980

And Ingersoll kept his contract…for a while, anyway!

Miss Fortune would love to see evidence of the Academy’s “pursuit” of millions of taxpayer dollars that disappeared into Ingersoll’s sticky pockets—real evidence!]

Q:  Full Spectrum Management is the educational services provider that is providing management of GTA since March 2014.  What is their background?

A:  Full Spectrum Management is owned by Dr. Mark Noss, a Traverse City optometrist who also owns Full Spectrum Eyecare. 

[Miss Fortune: Ah, yes! Mark Noss and Steve Ingersoll—the Chang and Eng of the Grand Traverse Academy.

As Miss Fortune recently reported, Noss and Ingersoll teamed up in 2005 to form the Excel Institute, a multi-disciplinary collaborative effort with psychologist Patricia Engler and Battle Creek optometrist Bruce Christensen. Ingersoll and Noss were classmates at Ferris State’s College of Optometry, graduating in 1980.

And with nearly 1,200 students, the Grand Traverse Academy was a fertile hunting ground for clients for the Excel Institute's "education remediation programs".

Formed in on January 18, 2005, the company was registered on behalf of Ingersoll by attorney Doug Bishop. If you've been paying attention, you'll remember that Bishop is the Grand Traverse Academy's attorney and "media contact"—yes, the one who recently got his boxers in a bunch about “transparency” and said “F**ck ‘em” in an email, referring to the Traverse City Record-Eagle.

Classy, that one!]

Q:  What prompted the board's decision to retain Full Spectrum?

A:  Dr. Noss was a long time trustee of GTA.  Most recently he was board president, a position he resigned when starting the charter school management company.  When our contract with Smart Schools was terminated, we did not have the luxury of time to research a new company.  He was familiar with our school, had been involved with our mission from the beginning, and was able to
provide a smooth transition to a new management company.

[Miss Fortune:Kaye Mentley appears to admit that the wily Mr. Ingersoll got the drop on the Academy, forcing them to ditch him quick and make the switch under cover of near darkness.

But Mentley's comment also reveals that the Academy and its board likely did not fulfill the “due diligence” requirement contractually obligated by its chartering agreement with Lake Superior State University.

The charter contract requires that the Academy board perform, among
education service provide-related other activities, “sufficient due diligence” to establish that an education service provider (ESP) has the “appropriate financial resources, educational services, and managerial experience to provide the contracted services”.

In addition, the contract states that the Academy board "only approve an ESP agreement with a formal vote at a public meeting". The chartering agreement requires the Academy to retain "independent legal counsel" to review and advise on the negotiation of the ESP agreement. (Legal counsel for the Academy—Doug Bishopmust not represent either party.)

Mentley admits that when the Academy’s “contract with Smart Schools was terminated, we did not have the luxury of time to research a new company.” And she may not have had time to share the new agreement with Lake Superior's Nick "we don’t get involved with the operation of the management company" Oshelski.

Translating Mentley’s summary, here’s the real rundown on the due diligence conducted: Mark Noss is no loose cannon, he knows the status quo, he’s known Ingersoll for years, and—best of all—he won’t make waves.

In other words, I just looked to my left, and there he was!

If you suspect people are only telling you a half-truth, don’t be afraid to ask, “Is there anything you are not telling me?”

It will be interesting to hear what Mike Flanagan, the Superintendent of Public Instruction in Michigan's Department of Education, thinks about this fiasco!

And when he responds, Miss Fortune will be the first to bring you the story!

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