}

Saturday, February 14, 2015

THE NOT-SO-SMARTEST-GUYS IN THE (COURT)ROOM: Former Accountant Compares Steven Ingersoll's Financial Records To Enron’s Sleight-Of-Hand Accounting

"Endless possibilities"...for greed, hubris and betrayal?

The Bay City Times reported yesterday that James Camiller, an Otsego County CPA, commented Friday during his testimony that "the financial records of Dr. Steven J. Ingersoll's various entities resembled those of Enron."

Whoa, Enron—the corporate pinnacle of "creative accounting"!

Enron was formed in 1985 following a merger between Houston Natural Gas and Omaha-based InterNorth. Kenneth Lay, who had been the chief executive officer (CEO) of Houston Natural Gas, became Enron's CEO and chairman, and quickly rebranded Enron into an energy trader and supplier. Deregulation of the energy markets allowed companies to place bets on future prices, and Enron was poised to take advantage.

When Enron’s sleight of hand accounting and unethical trading eventually met the realities of balance sheets that didn’t balance and products that didn’t exist, unwitting employees who had anchored their financial futures to the Enron ship watched in horror as water rushed in overhead. 

And no lifeboats, either.

Testifying during the federal tax evasion and fraud trial of Steven J. Ingersoll, his wife Deborah M. Ingersoll, brother Gayle R. Ingersoll, Roy C. Bradley Sr. and his wife, Tammy S. Bradley, Camiller said he picked up Ingersoll as a client when he acquired another accountant's book of business. Ingersoll's former accountant, Duane Kundinger, died in August 2010.

Camiller testified that he met with Ingersoll in December 2010 and they discussed Camiller doing tax work for Ingersoll's personal accounts and those of his entities, including Smart Schools Management, Smart Schools Inc. and the Grand Traverse Academy

Grand Traverse Academy financial records reveal Kundinger, formerly of Lewiston, also audited the charter school's financial statements during its initial years.

The Bay City Times reports that Camiller said that the lack of financial records made it difficult to prepare tax returns for 2010, which he expressed to Ingersoll. Ingersoll did not send him the requested records, Camiller said during his testimony.

In April 2011, Camiller sent Ingersoll and email saying he couldn't work for him.

"After further reviewing your entities and the historical economic flow of resources through the entities, I believe that you have the potential for some tax problems," the email read, as displayed by the prosecution on TV screens in the federal courtroom of U.S. District Judge Thomas L. Ludington in downtown Bay City. "As a 'small-town' CPA, I honestly do not have the experience to effectively deal with some of these potential problems (if they arise)."


Camiller testified that he later met with Ingersoll in person and specifically told him his entities' issues resembled those of Enron, a Houston-based energy company that filed for bankruptcy in 2001 after it was discovered company leaders had purposely misreported the company's financial situation. 

[NOTE: Although I've read and reread the Times' coverage, I did not see the words "philanthropist" or "donation" associated with Steven Ingersoll.]

MR. MONEYBAGS, SIRE! YOUR TOADY AND HIS EXPLOITED CREW OF UNFORTUNATES AWAIT YOUR PRESENCE!



After Camiller testified, the Times reports former Bay City Academy construction worker Jason Walbecq took the witness stand.

As reported by the Times, Walbecq's testimony is similar to grand jury testimony by another former construction worker. That worker, who also claimed that he met Roy Bradley when he was referred by other residents living with him at a Bay City homeless shelter, testified to working (with little breathing protection other than a drywall mask) on the renovation at the Bay City Academy. 

The Times reports that Walbecq said he worked as an unskilled laborer on the Bay City Academy construction project at 400 N. Madison Avenue for five to six months in 2011. Walbecq said he was hired by Roy Bradley.

Walbecq said he worked eight to 10 hours per day and co-defendant Tammy Bradley paid him $350 in cash each week. 


He never received W-2 or 1099 forms, he said. He also testified that on one occasion, he saw Roy Bradley hand Ingersoll what appeared to be a bank bag, which Ingersoll placed in his jacket pocket.

Attorney Mark A. Satawa, Roy Bradley's "magic hat" attorney, said that the federal agents were heavy-handed and overreaching in their investigation, implying Walbecq was intimidated by them. 

Tipsters have told Miss Fortune that Walbecq's upper body is covered with some pretty awesome ink—including a badass jester. 

Seems to your girl Miss Fortune that anybody who can handle the hard work required to squeeze that $350 out of Roy Bradley every week and can withstand tattoo pain is a lot tougher than Mark "Mr. Blueberry Pie Defense" Satawa implied.

NEXT UP

The trial resumes Tuesday, February 17, at 8:30am.

One final issue about the Bay City Times' coverage of the trial: repeating without commentary or counter explanation the claim by defense counsel for the Ingersolls and Bradleys that Chemical Bank has not been defrauded of any money, therefore no conspiracy could have occurred.

First off, we don't know yet if Chemical Bank has lost any money, as that claim has only been made by defense attorney who have yet to provide any evidence.

Secondly, I was in court during the opening statements (prosecution and defense) and a fraud conviction in this case is not predicated on whether or not "the bank lost money". 


At the heart of the government's case is the allegation that Steven Ingersoll, acting in concert with Roy Bradley, "conspired" to "induce Chemical Bank" to approve a $1.8 million construction line of credit loan to Ingersoll's Madison Arts LLC to finance the construction work for the Bay City Academy.

Here's the "fraud": rather than using the funds for loan's sworn purpose (the Bay City construction project), Ingersoll used the loan proceeds to repay advances he made to himself from Grand Traverse Academy. 


The government alleges that all five of the defendants conspired together in a series of transactions that diverted at least part of the funds required to be used on the Bay City Academy project to Steven Ingersoll's personal bank account at Fifth-Third Bank.

In addition, the government alleges that $704,000 traveled through a "circuitous route" including stops in Roy and Tammy Bradley's construction company account, to Gayle Ingersoll's business account before its final stop at Steven and Deborah Ingersoll's personal accounts.

The government alleges that Steven Ingersoll then wired the $704,000 to the Grand Traverse Academy on June 30, 2011 to plug a financial hole in his estimated $3.5 million dollar  "indebtedness" to the Traverse City charter school he formerly managed.
 

On its face, the case is complicated--and simple at the same time: it's about money.

2 comments:

  1. BC Enquirer, daily paper in Battle Creek, part of the Gannett chain, is seeking a breaking news reporter and an education beat reporter. I think you would make them better. Check out www.careerbuilder.com, Job ID 50146.

    ReplyDelete
  2. I know I can be "faster and better than the competition", but would they let me wear my babushka in the newsroom?

    Anyway, I'd probably get shot like Veronica Guerin!

    But thank you for the compliment.

    ReplyDelete