Miss Fortune investigates the Academy's missing millions, and discovers a complicit Board and a shocking cover-up!
In the end, it was all right there in black and white...you just had to know where to look.
Beginning in 2010, audits for the Grand Traverse Academy showed the charter school carrying seven-figure receivables, some classified as coming from "related parties".
And it appears that party was Steven Ingersoll.
THE TRUTH: FOLLOW THE NUMBERS
After spending months spinning like Sufis, the Grand Traverse Academy's Board finally heard the other shoe drop yesterday.
And in reality, following the missing millions trail was as easy as 1-2-3.
According to a court document filed October 14 in Steven Ingersoll's federal fraud case, the government alleges that Ingersoll began helping himself to the Academy's money sometime in 2009. The missing Grand Traverse Academy millions traveled during 2009-2011 from the Academy's bank account to Ingersoll's Smart Schools Management.
Making a short stop at Ingersoll's pass-through corporation, Smart Schools, Inc., the money ultimately reached Steven Ingersoll's personal bank accounts.
After discovering Ingersoll's theft, it appears the Grand Traverse Academy Board may have attempted to stave off any meaningful public disclosure of the loss, but time ran out. The government alleges Ingersoll took an estimated $3.5 million over the time period at issue, and the Academy's 2012 fiscal audit appears to confirm that, revealing an outstanding $3,548,319 "accounts receivable from related parties" in that year's audit (below)...but there's much more.
There is no description of the source of that receivable, and with the lack of data there's no way to definitively attribute that amount to Ingersoll.
However, by the next fiscal year, the Grand Traverse Academy revealed in Note 4 (below) of its fiscal 2011 audit that it was owed a whopping $2,500,000 from "related parties", the first use of that classification.
In its 2013 audit, the Grand Traverse Academy utilized an agile bit of financial alchemy, transforming its multi-million dollar Ingersoll-generated "receivable" (an uncollectible bad debt) into a "prepaid expense"—camouflaging Ingersoll's misappropriation with the guise of an asset. Amounts due from Smart Schools Management, Inc. were shown in 2012 as "accounts receivable" and included as "unassigned fund balance". That balance ($2.38 million) was reclassified in 2013 as "prepaid expenditures". The audit does not explain the status of the remaining $1.2 million dollars—if it was repaid by Ingersoll, or was owed to the Academy by someone else.
Mark Noss was quoted in that article saying he "knew nothing of the transactions that placed Ingersoll on federal prosecutors’ radar". And Kaye Mentley (displaying the peculiar sense of humor of one who'd testified to a grand jury and escaped without an indictment) said she was "not concerned" about the $1.6 million owed by Ingersoll and Smart Schools.
Knowing what she knew, Mentley must have laughed all the way back to her horse barn!
Yes, Noss actually said he knew nothing of the transactions that placed Ingersoll on federal prosecutors’ radar, even though he'd known him for over 30 years, been his business partner for nearly that long—and sat on the Academy's Board while millions leaked from its bank accounts into Ingersoll's.
“I’m surprised by the indictment because I only know Steve Ingersoll as a professional colleague,” Noss said. “I’ve only known Dr. Ingersoll to be of high character.”
The Record-Eagle story, quoting the 2013 audit report, stated that “Smart Schools Management, Inc.’s ability to prepay their fee and withhold payment of overpaid fees enables Smart Schools Management, Inc. to abuse their access to public funds.”
Noss said he did not see a problem with the practice, which had been going on for years without being flagged by an auditor.
“Smart Schools Management took their management fee that was budgeted for that fiscal year,” Noss said. The fee was adjusted down at the end of the year, and the remaining amount was owed to the schools.
“There was never an advancement or more money provided to Smart Schools that they weren’t entitled to,” Noss said.
Well, it looks like I was right...all along!