}

Sunday, May 4, 2014

GRAND TRAVERSE ACADEMY'S INGERSOLL SCANDAL: Will It Blow Over...Or Blow Up?

Today's Traverse City Record-Eagle carries a brief report about Friday's Grand Traverse Academy board and committee meetings, and reports administrators at the Academy have "scrambled" to cut ties with federal criminal defendant, Steven J. Ingersoll.

However, when you read between the lines, it appears that Academy administrators have only succeeded in whipping up an omelette of lies—stuffed with millions of taxpayer dollars.

PREPAID EXPENSES: THE (NOT SO) NEW NORMAL

The Record-Eagle reports that board members "created a new (finance) committee to give members more financial involvement in the institution following the revelation the school’s old management company was prepaid and still owes the school $1.6 million."

Sure makes it sound like the "revelation" regarding prepaid managment fees just dropped from the sky like Superman into Smallville.

It didn't. In fact, "prepaid expenses" have been reported in the Academy's financial audits for years.






 





The above grid incorporates three key figures as reported in the Academy's financials, available publicly through the Michigan Department of Education's Office of Audits. (The reports for the years ending 2004, 2005, 2006, and 2008 are not available electronically, and I've submitted a Freedom of Information Act request for those four years.)

As you can see, prepaid expenses have bumped along in the mid to high six-figure range for the last five years, with the exception of 2012.

MULTI-MILLION DOLLAR LOSSES

The acute financial issue the Academy board and administrators are grappling with rests on the fact that Ingersoll  "withheld repayment" of the $2.3 prepaid management fee overcharge reported in June 2013...money he advanced to his corporation, Smart Schools Management, Inc. directly from the Academy's bank account right under everyone's noses.

And that $2.3 million dollar overpayment is on top of the $1,347,234 management fee paid to Ingersoll's Smart Schools Management, Inc. in 2013!

Since those funds were taxpayer dollars—state and federal—it's likely the Grand Traverse Academy will be soon targeted for serious, multiple fraud investigations for Ingersoll's multi-million dollar embezzlement. 

The core of this crime is a violation of trust: the agent (e.g., charter school management firm) was entrusted with the principal's (e.g., Grand Traverse Academy) property, acquired the principal's property through that relationship of trust, and dishonestly disposed of/took/hid/converted the property to his own use. 

In Michigan, embezzlement of $20,000 will get you up to 10 years in prison and/or $15,000, or 3 times amount embezzled, whichever is greater.

Doug Bishop can prattle on about how the Academy's janitorial function and child care programs “were brought in-house to watch them more closely and to ensure complete separation from Smart Schools”, conveniently leaving out the fact that the day care is still licensed in the name of Smart Schools. As of Friday, the Academy had not filed an application to obtain a State of Michigan license under its own name.

And it won't matter that the Academy's board formed a finance committee when the storm that's sure to come will be an F-5 on the financial Fujita scale.

Even Doug Bishop hasn't used that "F-word"!

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