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Wednesday, February 11, 2015

UNITED STATES v INGERSOLL, et al: Attorneys Deliver Opening Statements...& Miss Fortune Was There!

MISS FORTUNE'S EXCLUSIVE REPORT!

As I stepped out of the elevator at 8:20am this morning in Bay City’s federal court building to line up for my security screening, your girl Miss Fortune had a close-up view of this case’s marquee defendant, Steven Ingersoll.

Looking haggard, with his eyes downcast and holding a leather belt in his hands, Ingersoll waited in line with his criminal defense attorney, Martin Crandall, less than 10 feet from me.

As Crandall schlepped his document trolly, ready to hoist it on the scanner belt, Ingersoll fiddled with his belt, and shuffled forward.
Accompanied by his wife, co-defendant Deborah Ingersoll (rail-thin in a chic ensemble), Steven Ingersoll moved mutely through security and huddled with Crandall prior to walking down a long hall to the federal courtroom of Judge Thomas L. Ludington.

The large, impressive room was brightly lit by traditional brass chandeliers, and its windows were framed by plush maroon drapes. A handful of people
less than ten—were arrayed in the public observation benches at the back of the courtroom.

Along with Steven and Deborah Ingersoll, seated at the defense table was Gayle Ingersoll, a bullet-headed man whose enormous size was striking; Tammy Bradley and her husband Roy, furiously chomping chewing gum, sat next to each other.

Immediately behind the Bradleys were their supporters, family members who whispered back and forth until the proceedings began.

Among those at the prosecution table was Assistant US Attorney Janet Parker, a federal paralegal, Parker’s co-counsel and EPA agent Mike Pemberton.

Parker, a petite woman whose serious game face was framed with long grey hair and stylish bangs, prepped for the session.  Looking up from her yellow legal pad briefly to acknowledge the defense team, Parker was immersed in her notes and files.

Shortly after 8:30am, Judge Thomas L. Ludington entered the courtroom and held a sidebar conference with the attorneys without the jury.

Clad in a baggy, wrinkled suit, Mark Satawa, Roy Bradley’s attorney, interrupted Judge Ludington—and was called up short. Chastising Satawa, Ludington reminded him that “no one interrupts a judge in his courtroom”. Apologizing as profusely as he was sweating, Satawa (whose patron saint could be the late John Candy) rejoined the attorneys in silence.

Ludington then called for the jury, and the bailiff opened a door and 14 people—6 men and 8 women, all white—entered the jury box and took their seats.

PROSECUTION THEORY


Assistant US Attorney Janet Parker walked from the prosecution table to a podium in the middle of the courtroom, presenting the government’s theory to the jury.

Parker spoke to the jury about evidence, reminding them that the indictment was not evidence nor were any attorney statements.

Evidence, according to Parker, was what Judge Ludington allowed as evidence.

And although each defendant enjoyed a constitutionally-protected “presumption of evidence”, Parker appealed to the jurors to use “reasonable inferences to draw conclusion from facts”.

Likening the presumption of innocence to a “level playing field” and demonstrating with her hands, Parker told the jury the scales of justice were not tipped to either the prosecution or defense side of the case. Rather, they begin in balance, with the prosecution bearing the burden of overcoming that balance with its evidence.

Citing the counts charged to each defendant, Parker stated that “charter schools are not on trial” and “IVL is not on trial”.

The case, according to Parker, “is plain and simple, about money”. And, she continued, “the common denominator was Steven Ingersoll”.


STEVEN INGERSOLL

• Charges -- three counts of fraud by wire, radio or television; two counts of attempting to evade or defeat tax; single counts of conspiracy to defraud the United States; and attempt and conspiracy to commit fraud.

Taking the jury through Ingersoll’s relationship with both the Grand Traverse Academy (GTA) and the Bay City Academy (BCA), Parker began with the GTA.

Explaining the flow of taxpayer money from the state of Michigan to the GTA, Parker comprehensively detailed Ingersoll’s financial relationship with the Traverse City charter school.

Flowing from the state, the money came through charter authorizer Lake Superior State University, to the GTA board and finally to a Smart Schools Incorporated bank account controlled by Steven Ingersoll.

Revealing that Ingersoll’s most recent GTA education service provider contract called for a management fee of 12 percent of the school’s revenue (capped at $2.0 million dollars a year), Parker likened Ingersoll’s byzantine business ownership structure to a “shell game” and accused him of “abusing control over companies that controlled money.”

Steven Ingersoll used his control to “dip into funds”, Parker alleged.

Although Parker initially stated that Ingersoll had removed “multiple millions” from the GTA, she later explicitly emphasized the amount: “$3.5 million dollars from the GTA”.

Explaining that Ingersoll had various business entities, with multiple sets of books, Parker said numerous accounting entries were discovered that didn’t “add up”.

As an example, Parker stated that an entry on one company’s accounting record showing a transfer of money to another business entity often did not have a record of the funds received.
By moving money around, he's able to make it so confusing, he's able to siphon off money. He used his position to control the books and take more than his contracted share (from the Grand Traverse Academy). He puts fake entries in the books or deletes entries when it's useful to his purposes.
 

Parker addressed the $3.5 million dollars the government alleges Ingersoll took from the GTA. Although Ingersoll’s defense asserts that the millions were loans, Parker told the jury they were “mighty strange loans”.

With no documentation— terms, collateral, interest rate, repayment plan—and no mention in “the GTA board meeting minutes”, Parker dismissed the defense theory as a “rationalization” Ingersoll's defense team came up with after the indictment.

Reminding the jury that Steven Ingersoll did not pay taxes on the money, she likened his financial shell game to “robbing Peter to pay Paul”.

The Bay City Academy’s renovation, a catalyst for obtaining a U. S. Department of Agriculture-backed construction line of credit from Chemical Bank, brought Ingersoll’s wife, Deborah, into the scheme.

In order to get the loan, Steven Ingersoll had to show some “skin in the game”. The bank required that Ingersoll provide 20 percent of the equity in the project, and Ingersoll and his wife, Deborah, both signed loan papers.  (The Ingersolls were using jointly held personal property as security, although Parker alleged that the duo used a property holding whose deed had already been transferred but not recorded.)

According to Parker, the construction line of credit loan was to transition to a mortgage after one year and the USDA backed the loan, guaranteeing an 80 percent payback of the $1.8 million to Chemical Bank if things went sideways.

Steven Ingersoll put up 20 percent equity, but Parker alleged he later “took it back out”.

Parker said that Ingersoll made withdrawals of cash in “large, round numbers” from the Chemical Bank line of credit and put the money in a bank account for Madison Arts, a business entity formed and controlled by Ingersoll. (Madison Arts is the business entity that owns the 400 N. Madison Avenue property housing the Bay City Academy.)

Parker explained that often “on the same day, Ingersoll would withdraw the same amount from the Madison Arts account, transfer it to the Bradleys' bank account, the Bradleys' would then write a check in the same amount to Gayle Ingersoll, who would then write a check back to Steven Ingersoll, who would deposit it in his and his wife's personal account.


Why do things this way? Parker wondered. Why do this ring-around-the-rosie if there's a legitimate reason?

ROY & TAMMY BRADLEY

Roy Bradley -- single counts of conspiracy to defraud the United States and attempt and conspiracy to commit fraud.

Tammy Bradley -- single counts of fraud by wire, radio or television and attempt and conspiracy to commit fraud.

After setting the stage, Parker then moved on to husband-and-wife business team Roy and Tammy Bradley.

Explaining that Bradley had been awarded a contract to renovate the Bay City Academy, which had been done under the names Lasting Impressions and later Thunder Builders, Parker walked the jury through Roy Bradley’s key role in the “circuitous route” that millions of dollars traveled during 2010 and 2011.

Bradley, who paid his construction workers in cash and “off the books”, kept no records, and did not make the required Social Security contributions, somehow managed to declare over $1,000,000 on his 2011 tax year income tax filing.

Calling Steven Ingersoll “the tide that lifts all boats” Parker revealed that for tax year 2010, Roy and Tammy Bradley’s income tax filing revealed earnings of less than $50,000.

GAYLE INGERSOLL
 

• Charges -- single counts of fraud by wire, radio or television; conspiracy to defraud the United States; and attempt and conspiracy to commit fraud.

Parker connected Steven Ingersoll’s brother, Gayle, and his effort to create a “phony company” as an integral part of the overall fraud scheme. Gayle Ingersoll’s company, Mid Michigan Geothermal, was formed as a DBA in Bay County on February 23, 2011. Court documents show that Gayle Ingersoll has claimed he formed his company to install geothermal heating at the Bay City Academy.

Gayle Ingersoll is charged with single counts of fraud by wire, radio or television; conspiracy to defraud the United States; and attempt and conspiracy to commit fraud.

In June 2011, Steven Ingersoll and Roy Bradley submitted a draw request of $704,000 from the Chemical Bank line of credit as a reimbursement for money spent with the Macomb Group on heating equipment and boilers for the Bay City Academy. 

Although by signing the draw request, Steven Ingersoll and Roy Bradley were “swearing” to Chemical Bank the amount requested was accurate, Parker revealed that the Macomb Group’s invoice revealed the amount “was half” the $704,000 Ingersoll and Bradley requested.

The $704,000 moved from Roy Bradley, and was then wired to Gayle Ingersoll’s account before finally being wired to a personal account held by Steven and Deborah Ingersoll.

The money was transferred by Steven Ingersoll back to the Grand Traverse Academy's bank account on June 30, 2011—plugging a gaping hole on the last day of the school’s 2010-2011 fiscal year.

Things started to fall apart for the group after Gayle Ingersoll filed his 2011 tax return. Although he showed no wages for 2011, Gayle Ingersoll declared $934,000 income from his “company”, a DBA named Mid Michigan Geothermal, with the same amount—$934,000—“paid out to subcontractors” for his business.

The day after Gayle Ingersoll filed his 2011 tax return, he got a knock on his door—it was the Internal Revenue Service.

In a panic, Parker said that Gayle Ingersoll told his friend, Roy Bradley, “I’m going to jail for tax evasion”.

Roy and Tammy Bradley, who were about to file their 2011 return, called their H&R Block tax preparer and told her to hold the phone: they wanted to revise their return.

Instead of the $300,000 they’d declared as income, they actually had over $800,000 in gross receipts.

The government alleges that although the Bradleys had no accurate system of documenting their income and expenses, the 2011 amount was actually closer to $2.4 million dollars.

DEBORAH INGERSOLL
 

• Charge -- one count of attempt and conspiracy to commit fraud.

In May 2011, Parker revealed that a “flurry of activity” was undertaken by Deborah Ingersoll. Trotting around to various branches of the Fifth Third Bank, Deborah Ingersoll made multiple cash deposits— all under $9,000.

Parker stated that Deborah Ingersoll did the same in August 2011 at Huntington Bank, with the deposits ranging from $8,500 to $9,000.

Bank records later showed the money was withdrawn by the Ingersolls and used for a “personal real estate purchase”.

DEFENSE THEORY


Steven Ingersoll’s attorney, Detroit-based Martin E. Crandall, began his defense presentation by waving around an aerial view of the Grand Traverse Academy, a glossy photo mounted on foam core board.

Moving past the podium in an apparent attempt to connect with the jury, Crandall spoke of the private sector, claiming it was “more effective” than the government in getting things done.

Crandall refuted Janet Parker’s claims, trotting out the oft-told story that there “never was a problem” and that the Grand Traverse Academy’s financial accounts were “audited every year and a problem never arose until the IRS got involved and claimed money had been stolen.”

According to Crandall, everything at the GTA was “transparent, open and obvious. There was nothing concealed or clandestine.”

Crandall admitted that Ingersoll wired $704,000 to the Grand Traverse Academy on June 30, 2011, but denied it was to plug a financial hole created by Ingersoll’s theft.

Crandall said his client Steven Ingersoll “spent his own money” to keep the Grand Traverse Academy running, alluding to the school's “pencils, crayons, computers, buildings” as evidence of Steven Ingersoll’s magnanimous financial support.

Waxing poetic about his client, Crandall spoke of Steven Ingersoll’s “vision” for a front porch renaissance in Bay City spurred by the Bay City Academy, including Ingersoll’s plans to “drive that vision down I-75 to Detroit.”

Dismissing the government’s talk of “conspiracy”, Crandall raised lurid images of Colombian drug gangs and New York City's Gambino family as “real conspiracies” in an attempt to convince the jury that an “optometrist and his wife, who runs a B&B” were just part of a “bumbling, unsophisticated group of friends and relatives” who simply banded together in a group effort to “get it done”—create the Bay City Academy.

Crandall said that the $1.8 million loan from Chemical Bank was bolstered by an additional million out of Steven Ingersoll’s “own pocket”, all used to convert the 400 N. Madison Avenue church building into a school.

"It's done, it's beautiful, it's operating and it's filled with students," Crandall said.

Crandall said that the $704,000 Ingersoll withdrew from the Chemical Bank loan was to reimburse him for money he also already spent out of pocket on the school, which he then sent to Grand Traverse Academy.

As Crandall spoke, he showed a slideshow of photographs taken by Sally Sanders during the Bay City Academy renovation.  I watched closely, looking for a bone-headed move, and was rewarded with a shocking image—an image of convicted perjurer and former Bradley crew chief, Rodolfo (Rudy) Rodriguez, perched on a ladder and smiling broadly at the camera. 


On the morning of April 22, 2011, Bay City Police officers were dispatched to the Bay City Academy construction site at 400 N. Madison Avenue, in reference to an assault. Police found Matthew J. Scherret, one of Roy Bradley's “all cash, off the books” construction workers bleeding from his lip. Although Scherret was initially uncooperative with Bay City Police officers, he ended up telling them Rodriguez had just struck him in the face with a crowbar. 

Although Rodriguez was charged with assault with a dangerous weapon, a four-year felony, he plead guilty to a misdemeanor count of aggravated assault in September 2011. In exchange, prosecutors dismissed a felony count of assault with a dangerous weapon and sentenced Rodriguez to a year of probation and ordered him to participate in a 12-week anger management course and submit to drug testing. The judge also sentenced Rodriguez to two days in jail, with credit for time served, and ordered him to pay $980 in fines and restitution.

Rodriguez is currently serving time in federal prison for make false statements to the grand jury investigating the Bay City Academy asbestos mishandling case.

Claiming it was not a “conspiracy”, Crandall said it was “a group effort to get it done” (meaning the Bay City Academy) that was somehow “misinterpreted by the IRS.”

Crandall went over the top, going deep, deep into the wayback machine and pulling out 86-year-old Mark Lane, an attorney and author of the President John F. Kennedy assassination conspiracy classic book, “Rush To Judgment”.

While your girl Miss Fortune is a supreme connoisseur of all things kooky and conspiratorial, even I think Crandall missed the mark: it looked like most of the jurors wondered who the hell he was talking about.

Citing the “enormous power of the government” arrayed against Steven Ingersoll, Crandall said even Ingersoll’s legal team “paled in comparison to the government.”

Representating Roy Bradley, attorney Mark A. Satawa, revealed his skeptical view of the government’s case: "Where there's smoke, there's fire. We don't like the business model. We don't like the way things went down. So, they committed a crime."

Satawa said when the government goes looking for fraud, they’ll find it…no matter what.

Satawa picked up Crandall’s thread, again referring to Bradley as a skilled “craftsman” , but one who lacked an MBA and had not even graduated from high school.

Saying the trial would consist of the prosecution's "strained and constrained attempt to fit a square peg into a round hole", Satawa said the government had an “unbalanced, one-sided” case. According to Satawa, government overreach was behind the charges against Roy Bradley.

Using a crazy, and yet strangely folksy story about a missing blueberry pie, Satawa cautioned the jury to be skeptical of “circumstantial evidence”, the government’s “fancy PowerPoint presentations” and the prosecution’s “white noise, window dressing and minutiae.” (Funny, I don't remember any mention of fruit pie related charges in the April 23, 2014 superseding indictment!)

Kenneth Sasse, representing Deborah Ingersoll, said there is no evidence a conspiracy ever occurred and that Chemical Bank “wasn't defrauded out of any money.”

"Everything that was supposed to be done was done by Steven Ingersoll under the contract," Sasse stated.

Tammy Bradley’s attorney, Robert J. Dunn, referred to his client as a “hard working, blue collar lady from Bay City”, who is hard at work selling used automobiles and taking care of her grandson.

A “simple blue collar lady”, she only did as directed by her husband, Roy.

And finally, Gayle Ingersoll’s attorney, Joan Morgan, told the tale of a man who’d been bounced out of Frigidaire after 25 years service, only to find he could not find another job.

Gayle Ingersoll went back to school, and earned an associates degree in heating and cooling technology, and then moved to Bay City to install geothermal heating in his brother Steven Ingersoll’s many projects.

Morgan cautioned the jury to not accept the government’s theory of a “shell game”, saying that she’d prove that her client had “formed his company” with a DBA at the Bay County Clerk’s office before opening an account at a credit union.

I almost hate to tell Morgan that her client obtained his DBA just days before the first of three check transactions hit his new credit union account in late February 2011, and not eight months before when the Bay City Academy project kicked off! 


THE REST OF THE TRIAL 

Your girl Miss Fortune bailed after the opening statements were completed, and may not be able to spend much time observing in court during the trial.

But you never know...

2 comments:

  1. The day finally arrived!

    "Everything was open, transparent and obvious" at GTA. Hilarious.

    What is transparent to me is the government's case. Ingersoll et al's attorneys are continuing with Stevie's games. Go get'em, Ms. Parker!

    ... and as usual, THANKS for the coverage, Ms. Fortune.

    ReplyDelete
  2. First we had the twinkie defense, now the blueberry pie defense. May you find the time to write more about the trial. I don't expect the MSM to do much of that.

    ReplyDelete