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Tuesday, May 13, 2014

30 DAYS: An Exclusive Update On The Grand Traverse Academy's $2.3+ Million Dollar Financial Scandal

SCHOOLED!

Exactly 30 days ago, on April 13, this blog broke the news that federally-indicted charter school manager Steven Ingersoll had racked up a $2,338,980 "prepaid expense/expenditure balance" for overpayments made by Ingersoll from the Grand Traverse Academy's bank accounts to his Smart Schools Management, Inc.

Miss Fortune takes a brief look back at the scandal, the self-serving misstatements made by the Academy's Superintendent/Principal Kaye Mentley and its attorney, Doug Bishop, the smokescreen that still surrounds the hiring of Ingersoll's alter ego, Mark Noss, and the distinct possibility that Ingersoll's financial wake could swamp the Academy.


IF YOU STOLE MILLIONS FROM YOUR COMPANY, WOULD YOUR BOSS LET YOU PAY IT BACK BY DEDUCTING IT FROM YOUR PAYCHECK? NO? THEN MAYBE YOU'RE WORKING IN THE WRONG PLACE!

The official 2013 Grand Traverse Academy audit report stated that in addition to receiving “prepaid management fees”, Smart Schools Management also had the ability to “transfer funds between the Academy’s and Smart Schools Management, Inc.’s bank accounts” without prior approval.

The audit report reveals that on behalf of his firm, Ingersoll "took cash advances" for the management fee each year in the beginning of the school year based on the budgeted figure and “without further Board action”. 


That observation has never been publicly refuted by either the Academy board or Steven Ingersoll. 

In fact, the audit report revealed that Smart Schools Management agreed that it “owed Grand Traverse Academy an amount classified as a prepaid balance” ($2,338,980), and worked out a repayment plan with the Academy. 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 Steven Ingersoll's expected future management fees. And that plan may have worked had Ingersoll not been indicted on multiple fraud and income tax evasion counts. 

CRACKS IN THE FACADE: LET'S GET OUR STORIES STRAIGHT 

As the Traverse City Record-Eagle began its belated review of the situation and began contacting key players for comments, you could almost hear the cracks in Kaye Mentley's carefully crafted facade begin to form.

Ingersoll's attorney, Jan Geht, was quoted in the Record-Eagle deftly throwing the board under the bus by claiming that "Academy officials prepaid Smart Schools $2.3 million", while former Academy board president Mark Noss said in the same article he did not see a problem with the practice, which he said had been going on for years without being flagged by an auditor.

“There was never an advancement or more money provided to Smart Schools that they weren’t entitled to,” Noss said.

Except that pesky $2.3 million dollar fee overpayment that Steven Ingersoll admitted he owed the Academy in June 2013. 

The overpayment that was detailed in a November 2013 audit report, the result of months of back-and-forth with board and its president, Mark Noss.

HOW DO WE UNSCREW THIS THING?

After Ingersoll informed the Academy in March of his impending indictment, the search for his replacement begins...and quickly ends. 

Not wanting a new management company to come in and start rooting around like a truffle hog (who knows what else they'd find?), the board keeps it in the family.

Mark Noss forms an education management company on March 19, filing incorporation paperwork with the State of Michigan that afternoon. Later that day, the Academy announces that it awarded Noss a two-year contract to manage school. However, no financial details have been revealed by the Academy, and the Michigan Department of Education still hasn't received a copy of Noss's agreement.

Every family has a Fredo, right?

SECRETS REVEALED

But it doesn't exactly go like it was planned. On April 23, Miss Fortune reveals the appearance of quid pro quo corruption: Mark Noss's son-in-law, Brian Lynch, was named the Bay City Academy's new Superintendent and President of Instructional Services by its board of directors.

Steven Ingersoll founded (and funded) the Bay City Academy, he owns the buildings, and his Smart Schools Management collects every cent of the taxpayer millions flooding into the school every year as its management fee. 

That's right, Smart Schools receives all revenues as its management fee, from which it pays all operating costs for the Bay City Academy.

Like the rent on the buildings (owned by entities controlled by Ingersoll), the leased equipment (nearly $6,000 a month) and the Academy's accounting operation--all owned, operated and paid for by Steven Ingersoll to Steven Ingersoll.

Bay City Academy officials issued a press release on March 24 about Ingersoll’s departure and the appointment of Lynch, stating:

“Mr. Lynch will direct the implementation of Dr. Ingersoll’s Smart Schools education model. The latest multiyear, multi-site data from the State of Michigan shows the Smart Schools Model has produced the highest math and reading test scores of all charter schools in Michigan. Bay City Academy will reach these same levels of excellence under Mr. Lynch’s expert leadership.”


They left out a couple things: although Lynch had formerly taught at the Grand Traverse Academy, he'd returned to Ingersoll's company after a stint as an insurance agent; his teaching certificate had lapsed and he was not certified as a superintendent; and that he was staying in Bay City at a bed-and-breakfast owned by the disgraced Mr. Ingersoll.

Oh, and one more thing: he's married to Dr. Rebekah Noss, a partner with her father, Mark, in a Traverse City optometry practice.

PREPAYMENT OR EMBEZZLEMENT: WHO WILL BE THE JUDGE?

And here's where we are 30 days on: stuck in neutral with the words of hack PR flack (and Academy Superintendent) Kaye Mentley stinging in our ears, telling us she’s "not concerned about the $1.6 million owed by Ingersoll and Smart Schools."

“At this time the payment schedule that was arranged has been kept,” she said. 


Well, at least she finally admitted that Ingersoll took the money, even though her "payment schedule" claim is as specious as it is mendacious.

The feds talk to each other, Kaye.

I'm willing to bet that an investigation into the Grand Traverse Academy's financial activities is already underway.

We might have to wait another 30 days to hear, but let's hope the Grand Traverse Academy doesn't throw a "shredding party" like the Bay City Academy did after Ryan Schrock left.

Miss Fortune will be watching and reporting...even if no one else does.

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