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Wednesday, September 17, 2014

THE RED HERRING REVIEW: There's Something Fishy Going On!

Part 1: Oh look, a shiny thing!

OVERLAP: Official documents reveal Mark Noss continued to serve on Grand Traverse Academy Board after signing two-year management contract; conflict of interest violation?

The idiom "red herring" is used to refer to something that misleads or distracts from the relevant or important issue. It may be either a logical fallacy or a literary device that leads readers or characters towards a false conclusion. 

A red herring might be intentionally used, such as in mystery fiction or as part of a rhetorical strategy, or it could be inadvertently used during argumentation as a result of poor logic.

Or the red herring might be a seemingly plausible, though ultimately irrelevant, diversionary tacticlike the "History of Grand Traverse Academy" posted last Saturday by the Academy's Board of Directors.

If you're expecting an in-depth analysis of this nonsensical attempt at propaganda, you're about to be disappointed: Miss Fortune held her nose and didn't follow that strong-smelling red fish down the wrong trail.

Instead, here are three things you need to know about the Steven Ingersoll controversy and its impact on the Grand Traverse Academy:


The Board's "history" does not include the June 2013 fiscal year.

The Board spent nearly 2,500 words in an unsuccessful attempt to convince readers that Smart Schools Management, in the person of Steven Ingersoll, "rendered support" to the Grand Traverse Academy that far outweighed the $2.38 million dollar overpayment during fiscal year 2013. 

Using four "methodologies" (direct donation, guarantee of debt, rebate of contractually authorized and budgeted earnings and an agreement to augment GTA’s revenue by leasing some of GTA’s facilities) the report strained credulity like a worn pair of Spanx.

Pulling a rabbit out of the hat, the report even inverts logic and claims that the "controversial $1.6 million “prepaid” is in actuality the remainder of nearly $5 million of earnings that SSM promised to pay to GTA according to its needs."

Promised to pay to GTA? I'll bet, like the so-called "repayment agreement", the Board doesn't have it in writing.

So does Ingersoll owe $1.6 million, or $5.0 million? 

Back in April, former Superintendent Kaye Mentley (who'd already met with federal investigators four times and testified in front of the grand jury that indicted Ingersoll) was quoted in the Record-Eagle saying she's "not concerned" about the $1.6 million owed by Ingersoll and Smart Schools. She went on to say that "at this time, the payment schedule that was arranged has been kept."

And while the Board recently decided to wait until after Ingersoll's federal fraud trial to sue Smart Schools for the outstanding $1.6 million, it gazes into a funhouse mirror and blurts out this line: "While GTA rightfully relied upon and expected SSM to deliver $1.6 million from its future GTA earnings; recovery remains uncertain."

What bloody hell is this? Conflating an overpayment of nearly $2.38 million dollars (accomplished in fiscal 2013, according to the Academy's official audit report) with "future earnings"?

I was born at night...but not last night.

Piling a convoluted narrative on top of the stark reality of missing a fat stack like $1.6 million shouldn't distract from the facts—unless you let it.

As outlined in the 2013 audit report, here's the real deal the Grand Traverse Academy made with Ingersoll:

In the auditor’s report, 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 installmentsfrom Steven Ingersoll's expected future management fees as follows:

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

Think about that for a moment. Imagine you're on the board of a charter school, and your management company has siphoned $2.3 million more they were legally entitled
directly from your own bank account.

What do you do? Do you call a cop? 

Or do you cover it up, and allow him to "pay you back" by "paying him less"?  


But what happens when you cut him loose? 

Mark Noss and His Academy Board/Full Spectrum Management Overlap/Conflict of Interest: "Forget it, Jake; it's Chinatown"

The full service educational management contract between the Academy and former Board President Mark Noss' Full Spectrum Management, LLC was supposedly "based on the uniqueness of the educational model upon which the school was founded" and, if you believe former Board attorney Doug Bishop, "urgency".

But was it really uniqueness and urgency that kept Mark Noss an active member of the Grand Traverse Academy Board for at least one month after he signed a two-year contract to manage the school...or something much more questionable?

As I reported on this blog, Noss was still president when the Academy Board voted unanimously to "withdraw from the management contract with Smart Schools Management, Inc." during an early morning meeting on March 19.

Minutes later, the Board voted unanimously to accept the resignation of "Mark Noss as the President of the Board." That motion was followed immediately by one that nominated Brad Habermehl as President of the Board.  The official March 19 meeting minutes reveal that only Habermehl abstained—Noss was among the four Board members voting "aye".

The meeting ended at 9:15 with a final motion: the approval of Full Spectrum's new management contract. Noss abstained from that vote, with three board members approving the contract and one member voting "no".

So, did Mark Noss vote to approve his own contract? 

One could argue that by voting to support the motion to withdraw from the Smart Schools contract, Noss did help set the wheels of transition in motion. 

And it's clear that negotiations for the management takeover of the Grand Traverse Academy by Full Spectrum began while Noss was still a board member.

Sometime on March 19, Academy Board member Noss and Board president Habermehl officially signed a two-year contract for Noss and Full Spectrum Management to run the Grand Traverse Academy, one that could pay him up $4.0 million dollars.

But if you thought that ended Mark Noss' tenure on the Academy Board, you'd be wrong

Although Noss resigned at the March 19 special meeting, official Board records reveal the resignation was not "effective immediately".

In a relationship that's reminiscent of a famous "Chinatown" scene, Noss' "my school board/my management company" wango tango kept right on going, at least through the April 11 meeting.

In a potential violation of Michigan's conflict-of-interest laws, Noss (the head of Full Spectrum Management) and sitting Academy board member called it in—attending the April 11 meeting via phone.

One of his last duties was adding an agenda item: approving an amendment to his Full Spectrum Management contract. The official meeting minutes indicated Noss added "8a", but the neglected to include a description or any information explaining the amendment.

Roughly one month after he was awarded a management contract, and witnessed by Lake Superior State University's charter office head Nick Oshelski and former Academy Superintendent Kaye Mentley, Noss officially stepped down from the Grand Traverse Academy Board...but not from the Academy.

I guess you can have it both ways!

June 30, 2011 and December 2, 2014

You won't read in these two dates the Academy's history, but as Ingersoll's December 2 federal fraud trial draws closer, they loom in importance.

For those of you who like to quote Gertrude Stein when you talk about a link between the Grand Traverse Academy and Ingersoll's federal trial ("there is no there there"), read this excerpt from his indictment:


All the jibber jabber about "prepaid" or "deferred" or "gifts" won't mean a thing when the feds get you on the stand.

I'll be back Friday with a final wrap-up ("Part 2: Oh look, a squirrel") of the "History of Grand Traverse Academy".

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