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Friday, November 7, 2014

WRITE OFF...OR COVER UP: CHARTER SCHOOL MANAGER MISAPPROPRIATES MILLIONS, BUT IMPOTENT BOARD JUST WRITES OFF HIS 7-FIGURE "BAD DEBT" BALANCE! Grand Traverse Academy 2014 Audit Reveals Steven Ingersoll's Smart Schools $1,623,020 Debt Written Off As "Non-recoverable"; Deficit May Spur Huge Cuts At Charter School. Fraud Audit May Follow Ingersoll's Conviction. (Is That A Paper Shredder I Hear?)

BREAKING NEWS: 2014 Audit Report Highlights!

INGERSOLL DENIED DELAY: Judge rules federal fraud trial must begin December 2. (More to come later today!)



-$1.6 Million Dollar "Bad Debt" Write-Off: An Early Christmas Present For Charter School Freeloader Steve Ingersoll?

-Ingersoll's GTAS, LLC reaped nearly $100,000 in "janitorial service fees".

-Related party activity: management company formed by current Ingersoll business partner and recent Board President Mark Noss paid nearly $70,000 a month.

-Rewriting history? Steven Ingersoll reference dropped from 2014 audit.

-More money, more problems: clawback coming as feds seek $704,000 asset forfeiture?

If you only read the Record-Eagle, you might wonder what all the fuss was about.


A R-E post that went live yesterday afternoon didn't just bury the "lede", it dumped it into a hole so deep it would defy resurrection by Jesus Christ!

So, as a matter of public service, Miss Fortune will explain it for you: after dithering publicly for months about its supposed "plan" to collect $1.6 million owed to the Grand Traverse Academy by Steven Ingersoll's Smart Schools Management, Inc., the Traverse City charter school's 2014 fiscal audit reveals the Board has decided to just "write it off".

Formerly carried on the Academy's books in 2012 as a "related party receivable", the $2.38 million dollars was later reclassified as a "prepaid expense" in 2013.



















In its 2013 audit (excerpt above), the Grand Traverse Academy utilized an agile bit of financial alchemy, transforming the multi-million dollar Ingersoll-generated "receivable" (really an uncollectible bad debt) into a "prepaid expense"—helping to camouflage 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". 

However, the 2014 audit reveals that it "was subsequently determined that the remaining balance (approximately $1.6 million dollars) was non-recoverable from SSM" and was recorded as "bad debt expense".

Seems shocking that the Board could summarily decide not to pursue a significant sum of money on behalf of Michigan's taxpayers, and not be compelled by State of Michigan charter school law statutes to at least try to recover those fat stacks of cash from their federally-indicted crony.

CLEAN UP, AISLE 2!: INGERSOLL SHELL COMPANY GTAS, LLC RECEIVES NEARLY $100,000 IN "JANITORIAL SERVICE FEES"; FORMER BOARD PRESIDENT MARK NOSS RAKES IN NEARLY $70,000 A MONTH IN "MANAGEMENT FEES"


The 2014 audit reveals juicy nuggets under the "Related Party Activities" section in Note 4.

During the fiscal year ending June 30, 2013, Mark Noss' Full Spectrum Management, LLC was paid nearly $70,000 a month in "management fees", representing an annual take that could easily exceed $800,000. Noss' contract caps his annual management fee at $2,000,000.

Noss was officially awarded his management contract on March 19 during an early-morning Board meeting, but actively remained a member of the Grand Traverse Academy Board at least through its April meeting—an arrangement that is illegal in Michigan and expressly prohibited by the Academy Board's ethics policy.

The audit also reveals that Steven Ingersoll's shell company, GTAS, LLCwhich previously collected roughly $250,000 per year—was paid nearly $100,000 for "janitorial service fees".

While it does answer some "related party" financial questions, we're left to wonder why Gretchen Ingersoll, Steven Ingersoll's daughter-in-law and current Smart Schools Management, Inc. employee, is still providing bookkeeping services to Mark Noss at his Full Spectrum Management, LLC.

REWRITING HISTORY? STEVEN INGERSOLL BECOMES "AN INDIVIDUAL"

You've gotta give it to the Grand Traverse Academy Board—the group's highly skilled in forcing its "facts" into a self-serving narrative.

But the Academy's 2014 audit indicates the Board can drop a "fact" like a hot rock when it's necessary, whitewashing any inconvenient truth.

Case in point: shown at left is the 2014 audit's "long-term liabilities" section.

You can see that among the debts listed is a $367,013 promissory note secured by "an individual".

That's funny...in 2013 that "individual" had a name.

As you can see below, the 2013 audit reveals the truth and identifies the so-called individual—you guessed itSteven J. Ingersoll! 


CLAWBACK COMING? 

In an October 25 post, I revealed more shocking details surrounding Steven Ingersoll's federal fraud charges, including his alleged diversion of $704,000 from a bank loan to repay an "indebtedness" to the Grand Traverse Academy.

While the Academy's 2014 audit clearly shows the charter school is in violation of the Michigan School Code with an unassigned fund balance of $365,129, it does not include any discussion of a post-conviction "clawback" that could result in more Ingersoll-related financial chaos.

That $704,000 will have to come from somewhere.








Of course, we could all be as cheery as Samer Bourdkani, the Academy Board spinmeister quoted in the Record-Eagle:

"Hopefully, not every year we're going to have a $1.6 million write-off," said  Bourdkani. "I think that will be easy for us to rebound from."  

Where do they find these people, and will they really be able to complete the District Deficit Plan? 


3 comments:

  1. Fun times embezzling money!

    http://s11.postimg.org/i7fy3fxkz/btl.jpg

    http://s21.postimg.org/o04i4b707/btl2.jpg

    http://s23.postimg.org/bbwkzgguj/btl3.jpg

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  2. This is great reporting. Though, to be fair, the auditors would require them to write it off it it was believed it was noncollectable. So they could still be pursuing collection, but if the odds are against being able to collect, then for proper financial statement presentation, it needs to be written off. For instance, if they left it as a $1.6 million receivable, it would appear as an asset on their balance sheet. But is it an asset if they will never collect? No.

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    Replies
    1. Thank you for your comment. The Grand Traverse Academy Board publicly stated in early September they will wait until the outcome of Ingersoll's federal fraud trial has been determined to sue him for recovery.

      The Academy Board's attorney Kerry Morgan was quoted by the Record-Eagle: "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. 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?"

      I believe that the Academy will never pursue the money, and the delay is merely an excuse.

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