News wrap-up, including September 12 motion filing deadline "document dump" and Grand Traverse Academy Board meeting.
Among the highlights: Ingersoll has enemies, Kaye Mentley testified to the federal grand jury that indicted Ingersoll, former Bay City crony of Ingersoll's recorded conversations, the IRS underestimated how much money Ingersoll made and the Grand Traverse Academy Board chickened out--they've decided to wait and see before suing to recover nearly $1.6 million dollars.
"Dr. Steven Ingersoll has made powerful and determined political enemies with his vision for reforming Michigan’s failing public school system through establishment of innovative, privately run charter schools. These political enemies have strong financial and political interests in undermining the charter schools established by Dr. Ingersoll, and stand to benefit from discrediting all of Dr. Ingersoll’s work."
-excerpt from a motion filed September 12
"to produce confidential informants and exculpatory information"
on behalf of Steven and Deborah Ingersoll
THE FEDERAL CASE
Martin Crandall and Kenneth Sasse, attorneys for federally-indicted Steven Ingersoll and his wife, co-defendant Deborah Ingersoll, filed a motion on their behalf in US District Court on September 12, requesting the court "order the government to produce information regarding its confidential informants as well as all exculpatory information in their possession."
The motion was made "pursuant to the Ingersolls’ rights under the Fifth and Sixth Amendments to due process, the right to present a defense, and the right to a fundamentally fair trial."
Ingersoll's federal case originated from the government’s investigation into allegations of improper asbestos removal at 400 N. Madison (left), a former church that ultimately became the Madison Arts campus of the Bay City Academy.
Ingersoll was not charged in that case, and his federal fraud case has nothing to do with asbestos.
During the government’s investigation into the asbestos case, the court documents claim officials "eventually turned their sights onto the Ingersolls’ personal finances, and a construction loan between
Chemical Bank and Dr. Ingersoll’s company, Madison Arts Academy, LLC, the proceeds of which were used to construct the BCA building."
On April 23, 2014, Steven Ingersoll was charged in a seven count superseding indictment with conspiracy to defraud a financial institution; conspiracy to defraud the United States Internal Revenue Service, three counts of obtaining money by false pretenses, and two counts of filing a false income tax return. Deborah Ingersoll was charged with one count conspiracy to defraud a financial institution.
THE FEDERAL CASE: INGERSOLL "BORROWED" FROM THE GRAND TRAVERSE ACADEMY, USED BANK LOAN PROCEEDS TO REPAY HIS "DEBT"
The activity detailed in the indictment started in April 2010 when Ingersoll purchased a former church at 400 N. Madison Avenue in Bay City, and in October 2010 entered into a construction contract with Roy Bradley in order to convert the structure into the Bay City Academy.
The government indictment alleged that in January 2011, Steven Ingersoll obtained a $1.8 million construction line of credit loan from Chemical Bank in Bay City for renovation at 400 N. Madison. During the next few months, the Ingersolls (Steven Ingersoll, his wife Deborah and brother Gayle) and Roy and Tammy Bradley moved large sums of money between various business and personal accounts and issued checks to one another.
On June 30, 2011, Ingersoll is alleged to have used part of the loan that had been diverted into his personal account to pay "a debt" to the Grand Traverse Academy. His debt resulted from "advances he made to himself from the academy’s funds", the indictment stated.
Did you catch that?
The indictment alleged that Ingersoll's Grand Traverse Academy debt resulted from "advances he made to himself from the academy’s funds" (emphasis added)—not to Smart Schools Management.
The indictment further stated the Ingersolls and Bradleys concealed that the proceeds of the loan were converted into personal income for Steve Ingersoll. It also stated that Steve and his brother Gayle Ingersoll filed false federal income tax returns for the 2011 tax year and that the Bradleys paid their construction workers in cash to not report their wages.
THE FEDERAL CASE: HATERS WILL HATE?
The September 12 motion alleges "Ingersoll has made powerful and determined political enemies with his vision for reforming Michigan’s failing public school system through establishment of innovative, privately run charter schools. These political enemies have strong financial and political interests in undermining the charter schools established by Dr. Ingersoll, and stand to benefit from discrediting all of Dr. Ingersoll’s work."
Ah yes, the "Marion Barry" defense!
By the way, that didn't work for Barry either.
Oh it's a setup, it's a setup, it's a setup--there's a traitor, there's a mole, it's a peacetime overthrow!
Among the names mentioned in the motion are Tim Hunnicutt, former CEO of Ingersoll's Front Porch Renaissance Group, and Kaye Mentley.
Mentley served as Superintendent of the Grand Traverse Academy for nearly 14 years before being fired by Mark Noss on July 2.
DOES HUNNICUTT HAVE AN AXE TO GRIND...OR IS HE JUST ANOTHER "HOLSTER SNIFFER"?
The motion claims that the "government has produced four covert recordings made by Tim Hunnicutt, none of which were transcribed by the government. The government has produced no memoranda of interview detailing how these recordings were made or obtained. Two of these recordings were created in coordination with EPA and IRS agents, as referenced in the recordings themselves."
And in a particularly vicious twist, the motion stretches credulity even further than a Sansabelt waistband: it calls out Hunnicutt, accusing him of being a wannabe cop who was "playing detective".
The motion reveals that Hunnicutt has an associate’s degree in criminal justice, and speculates whether he "was serving the government here as a paid informant, cooperating witness, or private citizen with an axe to grind."
What, only three choices?
The motion claims "Hunnicutt was out to setup (sic) Ingersoll and
was enjoying playing spy."
In addition, Hunnicutt is alleged to "have manipulated the two recordings he made on his own, as both of the recordings pick up in the middle of conversations, omitting any conversation that occurred before Hunnicutt pressed record on his recording device—shockingly unethical conduct for a person trained in criminal justice."
An associate's degree makes him a person "trained in criminal justice"?
That's like saying the steak dinner I once had at the Peter Luger Steakhouse in Brooklyn makes me Gordon Ramsey!
The overheated language continues, alleging that one "recording between Hunnicutt and Patty Engler omits both the beginning and end of the conversation."
The motion alleges that "the government nevertheless used the recording between Hunnicutt and Engler to intimidate Engler during an interview, pressuring her in efforts to incriminate Steven Ingersoll."
Engler's LinkedIn profile shows that she worked as the Vice President of Training and Development for Smart Schools Management from July 1996-June 2014 while serving as the Executive Director of Excel Management, Inc. from March 2000-December 2013. (UPDATE 9/15: Patty Engler's LinkedIn profile mysteriously disappeared shortly after this story was published.)
Excel Management was founded by and is currently co-owned by Full Spectrum Management's Mark Noss and federally-indicted Steven Ingersoll.
KAYE MENTLEY SPEAKS...TO THE FEDS!
In what may turn out to be a hide-saving move, it was revealed in the September 12 defense motion that Kaye Mentley, former Grand Traverse Academy superintendent, not only met with government agents twice in person and twice by phone, she also testified to the grand jury.
However, the motion claims that the "government has produced only two memoranda of interview related to Mentley, a discrepancy that, coupled with other facts above, suggests the government is withholding additional evidence relevant to the Ingersolls’ defense."
Crandall and Sasse also filed another motion on September 12, seeking on behalf of the Ingersolls to order that the goverment disclose its "confidential informants and exculpatory information".
The motions claims that "the government has not provided complete disclosure regarding their interviews with Tim Hunnicutt" and that "there are one or more additional witnesses which the government intends to rely on at trial, but who have not been disclosed to the defense. These additional witnesses are the equivalent of confidential informants under Roviaro."
In a criminal prosecution, the government has a qualified privilege to withhold the identity of informants. Roviaro v. United States, 353 U.S. 53, 59 (1957). The motions states that "privilege must give way", however, when an informant possesses information that is “relevant and helpful to the defense of the accused or is essential to a fair determination of a cause.”
The motion again cites Hunnicutt, claiming that "based on the surreptitious way Hunnicutt made recordings of conversations with Dr. Ingersoll without government oversight, there is reason to believe other individuals were likewise consorting with Hunnicutt and feeding the government information in efforts to ruin Dr. Ingersoll personally."
A BILL OF PARTICULARS: INGERSOLL DISPUTES TESTIMONY OF IRS SPECIAL AGENT, CLAIMS MONEY RECEIVED FROM GRAND TRAVERSE ACADEMY IN ANY GIVEN YEAR IS WAY, WAY MORE THAN IRS ESTIMATE!
Traverse City attorney Jan Geht also filed a motion on September 12 on behalf of his client, Steven Ingersoll.
The motion, requests that the government provide Ingersoll
"in detail for the tax years 2009 and 2010", including bank deposits, cash expenditures, net worth increase, net income information, disallowed expenditures, etc.
The motion states that the superseding indictment only alleges that Ingersoll willfully attempted to evade and defeat “a large part of the income tax due and owing by him” and that the correct taxable
income was “substantially in excess” of the reported amount.
Unlike the voluminous discovery provided by the government in regards to Counts 1 through 5 of Ingersoll's indictment, the motion claims that the "only discovery produced by the government to substantiate the tax evasion charges appears to be the grand jury testimony of Michael Kaza." (Kaza is a Special Agent at the Internal Revenue Service.)
The motion boasts that while "Kaza provided the grand jury with estimates of the additional unreported income", his explanation is insufficient to prepare the defense in this case for two reasons.
First, the firehouse of money that "Ingersoll's management company (Smart School Management) received from Grand Traverse Academy in any given year is more than what Mr. Kaza testified was received for the three years combined. (emphasis added)"
Second, the motion continues, while "Kaza testified that the government allowed business expenses to Dr. Ingersoll, payroll paid by Smart School Management alone was more than double the amount Mr. Kaza represented as money flowing from Grand Traverse Academy to Smart School Management. (emphasis added)"
If the IRS underestimated the gusher of money going into Smart Schools' bank accounts, they may have missed something else.
Seems like an odd thing to object to: I've got way more money than even you know!
GRAND TRAVERSE ACADEMY SEPTEMBER 12 BOARD MEETING
According to the Traverse City Record-Eagle, Ingersoll's lawyer Geht flipped the script on the Academy Board and now claims that the Grand Traverse Academy "owes Smart Schools $2.8 million in unpaid management fees accrued over the last decade."
"Its recovery is uncertain, but it's something we are going to consider pursuing depending on the outcome of his legal situation. It's driven by pragmatic concerns," said Kerry Morgan, an attorney who spoke on the board's behalf. "If you're sitting in federal lock-up, it's a little different. And the government seizes your assets ... It's kind of a, why are we doing this?"
A more appropriate question is: why are you not doing this now?
Brad Habermehl, are you listening? Looks like that July 18 statement might be coming back to haunt you...or was there another reason?
Reports circulating suggest that Ingersoll still has major influence on the Grand Traverse Academy's Board, and I'm starting to suspect that he may have had a hand in crafting the "statement" read by Habermehl back in July.
Why would the Board, which the Record-Eagle reports has "increasingly tried to distance the school from Ingersoll" allow its president to stand up and publicly claim that "Smart Schools gave (emphasis added) GTA $3.3 million"?
COMING SOON: An analysis of the Grand Traverse Academy's "history/budget", just released yesterday.