Have you ever seen a monkey with a purple tail?
No? Me neither.
And, until I broke the news on this blog, I'll bet you never knew that the Grand Traverse Academy was owed millions by Steven Ingersoll—even though that stunning fact had been sitting out there for nearly six months, waiting to be discovered in the Academy's 2013 fiscal report.
You didn't need to send a Freedom of Information Act request to see it...you just had to download it.
But no one did, except your girl Miss Fortune nearly ten months ago.
Shortly after Steven Ingersoll's federal indictment was unsealed on April 11, 2014, this phrase caught my eye: “Count 1 alleges, in part, that Steven Ingersoll sought to use $934,000 of bank construction loan proceeds to reduce his indebtedness to the Grand Traverse Academy.”
I wondered: if Ingersoll took nearly half of a $1.8 million dollar Chemical Bank loan (backed by the USDA) and used it to “reduce” his debt—just how much money did this cat owe?
Here's what I found: the Grand Traverse Academy's 2013 audit exposed unsound financial practices that drove the school’s General Fund into a “deficit unassigned balance” of $1,378,971, primarily resulting from a “non-spendable fund balance of $2,338,980 for the prepaid balance with Smart Schools Management, Inc.”
My examination of the Grand Traverse Academy’s financial report for the year ending June 30, 2013 (issued on November 7, 2013 by Traverse City certified public accounting firm Dennis, Gartland & Niergarth) revealed the Academy was “out of compliance” with the Michigan Uniform Accounting and Budget Act in several critical areas. And even more importantly, the audit revealed Ingersoll overpaid himself $2,338,980—and had, according to the audit, “withheld repayment”.
The Academy ‘s Board of Directors passed a resolution on May 12, 2012 establishing a management fee cap of 12 percent of revenue, and the Academy's contract with Ingersoll's Smart Schools Management, Inc. (SSM) stated that the management fee should “not exceed $2,000,000 in any fiscal year.”
However, the Grand Traverse Academy 2013 fiscal year audit revealed that the SSM management fee exceeded that 12 percent cap by nearly $300,000.
More importantly, the audit also revealed that the Academy was carrying a whopping “prepaid expense/expenditure balance” of $2,338,980 for payments made over the past few years to Ingersoll's Smart Schools Management, Inc.
According to information revealed in the audit, that while the Academy’s contract with SSM set a ceiling for the management fee, it lacked an objective measure to calculate that fee annually.
In addition to receiving “prepaid management fees”, SSM also had the ability to “transfer funds between the Academy’s and Smart Schools Management, Inc.’s bank accounts” without prior approval.
SSM took cash advances for its management fee each year in the beginning of the school year based on the budgeted figure and “without further Board action”.
Prior to 2013, budgeted amounts “exceeded what the Academy could ultimately afford”.
By the time the Grand Traverse Academy realized that it could not afford Ingersoll’s management fee, the fee was adjusted “downward” on the general ledger—but the majority of the millions advanced to Steven Ingersoll’s Smart Schools Management, Inc. have never been repaid.
Ingersoll's attorneys—and even Academy Board officials!—explain the amount differently. They say the amount is part of $5 million that Ingersoll's company promised to “rebate” the school according to its needs each year.
The Academy Board has written off Steven Ingersoll's remaining debt—$1,623,020—as “non-recoverable”, declining to pursue recovery.
Oh, yeah, it's a scandal, and now that all the heavy lifting is done, even the Detroit Free Press has finally deigned to cover it.
But Miss Fortune had it first—and she had it right!
Miss Fortune won't be attending every minute of the Ingersoll trial, breathlessly reporting every fart, burp and surreptitious ass scratch (Martin Crandall, I'm talkin' to you!).
So you can direct your endless questions about motion hearings and jury selection and voir dire to the people who should have been doing their respective jobs (you know who you are) for nearly the last year.
Isn't that why they get paid?