Wednesday, October 15, 2014

IS STEVEN INGERSOLL THE GRAND TRAVERSE ACADEMY'S SIX MILLION DOLLAR MAN? Federal Court Document Offers New Fraud Details; Explosive Revelations Undercut Academy Board's Bogus Claim Of Ingersoll's "Pledge Donations"; How Many More Millions Are Missing?

A court brief filed late yesterday in US District Court by Assistant U. S. Attorney Janet Parker in the Ingersoll fraud and tax evasion case includes a bombshell allegation—cash advances Steven Ingersoll made from the Grand Traverse Academy's publicly-funded coffers exceeded $3.5 million dollars.

And the feds didn't call that money a pledge or a donation!

The motion was filed by the government in response to questions asked by Judge Thomas L. Ludington during an October 8 motion hearing.

During the hearing, Judge Ludington asked whether the school board for the Grand Traverse Academy "was aware of the advances that Steven Ingersoll had made to himself from funds belonging to the school." 

While Ingersoll's attorney could only weakly point "out that the Grand Traverse Academy was audited annually", the government attorney responded by revealing that Note 4 (above) to the Grand Traverse Academy's publicly available audit report for the fiscal year ending on June 30, 2012 contains an entry that states, “Amounts receivable from related parties $3,548,319.” 

The government contends that the “related party” is Steven Ingersoll. 


On April 10 Ingersoll, his wife Deborah M. Ingersoll, his brother Gayle R. Ingersoll, Roy C. Bradley Sr. and his wife Tammy S. Bradley were each charged with conspiracy to commit bank fraud. Steve Ingersoll, Roy Bradley and Gayle Ingersoll were also charged with conspiracy to evade federal income tax laws. (The bank conspiracy charge alone carries a maximum penalty of 30 years in prison.) 

The indictment, unsealed April 11 in U. S. District Court in Bay City, alleged that Ingersoll, and the four others named, diverted about $934,000 from a school construction project, converting it into personal income for Steven and Deborah Ingersoll.

Steven Ingersoll allegedly used part of the construction loan proceeds, backed by the U. S. Department of Agriculture and diverted to his joint, personal Fifth-Third Bank account, to "reduce his indebtedness to his Traverse City charter school, the Grand Traverse Academy".

Those thirteen words were the impetus for my investigation, which revealed early details of Ingersoll's overpayments and the Academy Board's apparent cover-up. 


So how did the millions get from the Grand Traverse Academy to Steven Ingersoll?  And did he pay taxes on that money?

In its brief, the government revealed that "a significant part of the money at issue from Smart Schools Management reached Steven Ingersoll via Smart Schools, Inc., a Chapter S corporation." The books and records of the Grand Traverse Academy, Smart Schools Management and Smart Schools, Inc., were controlled by Ingersoll during the relevant time period, making the financial shell game that ensued a breeze.  (See timeline below)

Ingersoll formed Smart Schools, Inc. on October 9, 1996. 

According to IRS guidelines, "S corporations" are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. 

Judge Ludington asked about the "tax treatment" of the transactions at issue alleged to have occurred "between the Grand Traverse Academy and Smart Schools Management", referring to the $3.5 million the government alleges Ingersoll siphoned from the Academy's bank accounts.

The government indicated it does "not have any Forms 990 filed with the IRS for the Grand Traverse Academy for the years at issue, 2009, 2010 and 2011." In addition, the filing revealed that "a publicly-available database that should reflect the submission of Forms 990 by Steven Ingersoll on behalf of the Grand Traverse Academy apparently does not report the submission of such forms for the relevant years."

The court also asked about the tax treatment of the transactions alleged to have occurred between Smart Schools Management and Steven Ingersoll. For the 2009 and 2010 tax years, the government "submits that the Forms 1120 filed by Steven Ingersoll with the IRS on behalf of Smart Schools Management do not reflect the payments at issue." The government indicated that it "does not have a copy of a Form 1120 filed with the IRS by Smart Schools Management for 2011, and it appears that no Form 1120 for 2011 was filed with the IRS for Smart Schools Management by Steven Ingersoll."

Although people claim that tax law is way too complex, there's one statute that's real simple: you have to pay your taxes.

It appears that Steven Ingersoll did not.


Finally, during the discussion of Ingersoll's motion for a "bill of particulars", his attorney said that the amount of the taxes evaded, and the government’s theory used in computing that alleged underpayment of tax, was a proper subject for a bill of particulars because the amount related to sentencing.

The government replied, stating "there is a rather indirect relationship between the amount of unreported income and tax evaded, and the sentencing guidelines calculations that will apply upon conviction to Steven Ingersoll."

In addition, the government revealed that the unreported income for all of the years at issue will be multiplied by a factor of either 28% or 34%. Penalties and interest would be added to the tax loss upon conviction.

Based on the government's back-of-the-envelope calculation, Ingersoll could end up owing $2.5 million dollars.


Facing a December 2 trial date (that just got a helluva lot more interesting!), the Grand Traverse Academy's "six million dollar man" Steve Ingersoll is starting to look more like my prescient
April 22 description: a rotting albatross around the Academy's neck.

Having allegedly swept up over $3.5 million dollars from the Academy's bank accounts, and facing a potential tax debt of $2.5 million dollars, Mr. Six Million's future's not looking so bright.

And I'm wondering how Ingersoll's good buddy, Count deMoney himself Mark Noss (the Chang to Ingersoll's Eng), is resting most nights.

Hey, anyone want to try and convince me that money's a "donation pledge"?

I didn't think so.

See you all in court, bitches!

1 comment:

  1. Keep digging, Miss Fortune!

    The December 2nd trial date is getting closer and closer. We can only hope that justice will be served.