FEBRUARY 6 DROP-DEAD DATE FOR PLEA DEAL!
DID STEVEN INGERSOLL HAVE A "RIGHT" TO THE GRAND TRAVERSE ACADEMY'S MILLIONS, OR DID THAT MONEY BELONG TO MICHIGAN'S TAXPAYERS?
CASE HINGES ON CRUCIAL DEFENSE MOTION REQUEST: “The various distributions to Dr. Ingersoll were for shareholder loans”. (Or do you mean “by Dr. Ingersoll”?)
One week from today (on February 6), the legal clown car that is United States v. Ingersoll, et al rolls up to Bay City's federal courthouse for a motion hearing with Judge Thomas L. Ludington. Ingersoll's federal fraud trial is scheduled to begin on February 10, barring any bullshit last minute defense legal maneuvering.
The defense has filed motions in limine (a motion filed which asks the court for an order or ruling limiting or preventing certain evidence from being presented by the other side at the trial of the case) and a motion requesting additional peremptory challenges—citing pretrial publicity.
I'LL TAKE ADDITIONAL PEREMPTORY CHALLENGES FOR $3.5 MILLION, ALEX!
According to a defense motion in the case, three of the defendants (the Ingersolls) are related by blood or marriage to one another, and the other two (the Bradleys) are married to each other.
The government charged the defendants with various offenses, with Count One charged against all defendants and Counts Two through Seven against one or more defendants.
The defense motion maintains “certain defendants will have similar defenses (for example, as to the tax violations charged in Count Two). As to other counts, the defendants may have contrasting defenses.”
The defense asserts that it may be “more difficult for the defendants to have fair and impartial jurors and thus this request for additional peremptory challenges is raised”. The other factor which the defense claims impacts its request is that there has been “pretrial publicity about this case, particularly in Bay City.”
MICHIGAN STATE SCHOOL AID ACT of 1979: 1. MCL 388.1618(1) SHOULD NOT BE INCLUDED IN THE JURY INSTRUCTIONS...WHY NOT?
Why would you take this section of the Michigan school code, cited in the Grand Traverse Academy's 2013 audit report as prohibiting the advancement—or prepayment—of state money to any private entity, out of the jury instructions?
Because the defense has a theory: those millions were loans and Ingersoll was entitled to every last damn nickel!
Yes, and just get a load of this: the defense claims that although the government asserts that Smart Schools Management, Inc. (SSM) cannot loan money belonging to the Grand Traverse Academy (GTA) because it was taxpayer money entrusted to SSM for the operation of the GTA, the government’s position misconstrues the origin and nature of the amount reflected, at various times, on the GTA’s books as accounts receivable and prepaid expense.
So now we're back to the “related party receivable/prepaid expense/Steve Ingersoll is a philanthropist and pees champagne” circle jerk!
Ingersoll's attorney, sounding a lot like GTA board president Brad Habermehl back in July 2014, claims the fat stack of cash hoovered up by Ingersoll was not a “loan” or an “advance” of management fees but a remainder from $5 million of Ingersoll's own budget-authorized earnings that his Smart Schools Management promised to rebate back to the Grand Traverse Academy according to its needs on an annual basis.
Ingersoll's defense claims that the Grand Traverse Academy's accounts receivable/prepaid balance has been “consistently mischaracterized by the government as an overdraw by SSM when it actually represents SSM's willingness to support the Academy by rebating budget authorized earnings.”
Although former GTA attorney Doug Bishop made a June 2013 demand immediate payment of over $3.5 million by Ingersoll, and the government insists that the “funds transfers made by Steven Ingersoll were never accompanied by the corporate formalities that should accompany a loan, even if it were permissible for the GTA to make loans”, Ingersoll's defense insists that SSM had repaid all but $1.6 million of the cumulative $5 million in total “promised support” over the years.
So why then did Ingersoll attorney Jan Geht try to strong-arm the GTA board back in July to sign off on what he called a “settlement agreement” that included this clause:
“The Board, recognizing the hazards (and unwelcome publicity) of litigation and all the support that SSM has shown to the Academy over the years, agrees to release the SSM from any obligation to reduce the Non-Spendable Fund Balance of approximately $1.6 million in return for the SSM’s agreement to release the Board and the Academy from any claim relating to the cumulative difference between the contractual management fee and the actual management fee (of approximately $2.8 million) that SSM may be legally entitled to as a result of the Reimbursement Resolution.”
Even I can't make this stuff up!
Geht doesn't give up, reminding us that the scheme happened in plain sight, right under our collective noses:
It is imperative to understand that GTA Board meetings were always open to the public. Moreover, each and every fiscal year of the Academy's existence (FYE 2001 through present), the
accounting practices and financial structure were reviewed during an annual audit. Annual audits were reviewed by Lake Superior State University, Traverse Bay Area intermediate school district, Michigan Department of Education, Michigan Department of Treasury, and the Standard and Poor's bond rating agency. The Academy's accounting practices and financial structures were never cited or questioned in any way as deficient by any regulatory entity, person or company at any time. As such, those responsible for the Academy's governance and management have always believed and continue to believe that the Academy's financial practices were correct and proper.
Never questioned until your girl Miss Fortune raised her hand!
But here's the thing: contrary to Geht's assertion, the State of Michigan's Department of Education and Lake Superior State University effectively nodded and snoozed their way through much of the last 12 years.
And if you don't believe me, then read this excerpt from former Detroit Free Press education reporter Chastity Pratt Dawsey's Bridge Magazine feature story, “Upcoming fraud trial for school operator hangs over charter school industry”.
“Nick Oshelski, executive director for the Lake Superior State University charter school office that oversees Grand Traverse Academy, said the exchange of money between the school and management company was never an issue because the audits were problem-free each year until 2013. After the 2013 audit that found the board was prepaying more fees than the school could afford, the authorizer asked the department of education if the process was illegal. The Department of Education questioned the board’s judgment but did not conclude that anything was illegal in the payment arrangement.”
As the Grand Traverse Academy's authorizer, Lake Superior State University apparently has no real clue where the taxpayer money went:
“Lake Superior State said it is waiting to see if the trial reveals illegal activity at the charter school. The authorizer doesn’t know the particulars about how the money flowed between the Grand Traverse Academy and Ingersoll’s company or why the school and the company each said the other owes it money, Oshelski said.”
So what is Lake Superior State regulating for its 3 percent cut of the Grand Traverse Academy's funds (hovering around $250,000 a year) if it doesn't know how the money “flows”?
AHH, CAN I HAVE A COUPLE LESSER INCLUDED CHARGES ON MY POO POO PLATTER, YOUR HONOR?
Geht reveals that while it's still the defense's position that the various distributions to Ingersoll were for “shareholder loans and that, unfortunately, they were not fully listed as such on some of the relevant tax returns.”
OK, it stinks...but it doesn't STINK!
Geht says he hopes that the jury “will not find that there was a false statement on the return and that it was made willfully”, it may do so creating potential misdemeanor liability.
And finally, Geht indicated in his motion that Ingersoll may request a “reliance on the tax professional” jury instruction—better known as the “I blame my accountant” defense.