And how many of Ingersoll's board cohorts are still working with Steve...and are they afraid of what he knows?
More exclusive details, only from Miss Fortune.
To answer the question posed a week ago, Miss Fortune reviewed previously undisclosed Grand Traverse Academy financial documents, including a newly released letter from Doug Bishop, the Academy's former attorney, to Michigan Department of Education auditor John Brooks dated November 25, 2013.
The letter reveals that although the Academy had determined it would not pay Steven Ingersoll's Smart Schools Management, Inc. its 2013/2014 management fee, there was one exception.
Although charter school's board of directors, headed at that time by longtime Ingersoll crony Mark Noss, publicly revealed in the Academy's 2013 financial statement its decision to credit Ingersoll's future management fees against his $2.38 million dollar "prepaid expense" balance until it was reduced to zero, the Board still authorized a cash payment of "approximately $332,000 in pre-obligated, annual debt service of SSM with regard to GTA has agreed to pay to SSM."
You read it correctly!
After publicly revealing in its 2013 financial audit (which apparently no one read until I revealed Ingersoll's $2.38 million dollar prepaid balance on this blog), and sticking to the story that Ingersoll would be "working off" his prepaid balance by foregoing any fee payments, the Grand Traverse Academy board apparently paid Ingersoll roughly $332,000 so he could have the cash flow necessary to make payments on an unspecified Smart Schools Management debt.
Yeah, Ingersoll needed money to pay a debt apparently unrelated to the Grand Traverse Academy, so a provision was apparently made to provide him with the cash.
And I state "apparently", because the payment was never mentioned in the Academy's 2014 financial report.
As you can see above in the "Note N-Related Party Activities" excerpt from the 2014 report, the Academy notes cash payments to Smart Schools Management, Inc. totaled $190,000.
So, was the payment made or did the Academy decide against paying Steven Ingersoll $334,000 so he'd have the cash flow to pay his own debt?
And if the payment was indeed made, why wasn't it disclosed in the 2014 financial report?
Those are questions even Miss Fortune cannot answer.
EMBEZZLEMENT 101 FOR DUMMIES: PART FACT, PART EMBELLISHMENT, PART PURE IMAGINATION
The story of how $3.5 million dollars went "missing" from the Grand Traverse Academy by the apparent actions of Steven Ingersoll have been explained away by its board in a particularly Orwellian manner in a document titled "History of Grand Traverse Academy".
Although the deliberately dishonest document was quietly deleted from the Academy's website within the last few weeks after sitting out there since last September (it's still available at this link), it painted Ingersoll's looting of the charter school as a distinct financial benefit: "SSM provided financial support to GTA by four methodologies; direct donation, guarantee of debt, rebate of contractually authorized and budgeted earnings and an agreement to augment GTA’s revenue by leasing some of GTA’s facilities".
As we learned last week, "direct donation" is a ludicrous term when it really means required "reimbursement of a management fee overpayment".
The rewriting of "History" continues: "Management fees were reduced and lease obligations were booked as receivables from SSM to GTA according to GTA’s need at the last board meeting of each fiscal year. This accrued a reduction in SSM earnings and an accounts receivable on GTA’s books."
Not so fast.
As we learned from the 2013 DGN forensic audit, Ingersoll paid himself the entire annual Smart Schools Management fee in a lump sum during the first month of each fiscal year (July), instead of prorating the monthly payments as they were earned. As the initial management fee amount was based on a preliminary Acadeny budget, it invariably required a "downward adjustment", leaving Ingersoll with a balance owed to the Academy from the inflated advance he'd taken.
It's clear from DGN's report that the Traverse City CPA firm didn't see it like the Board would like you to believe, a likely reason why the audit report was never made public.
Here's how DGN portrayed Ingersoll's management fee overpayment monkey business: "By any objective measure, the fee arrangement lacks economic substance and accountability, provides an opportunity for abuse, and is structured to potentially become a benefit of a private party. It permits SSM to maximize their fee in good years and reduce their fee in poor years, leaving the impression that SSM is forgoing payment for the benefit of GTA; when in actuality, SSM is holding GTA’s funds in the process."
But the Academy, in its "History" document, presses on.
In likely the most dishonest statement in the entire five-page document, the Academy board asserts: "These funds have been mischaracterized as an over draw by SSM when they actually represent SSM’s willingness to support the Academy by rebating earnings. The controversial $1.6 million “prepaid” is in actuality the remainder of nearly $5 million of earnings that SSM promised to pay to GTA according to its needs."
Again, the characterization of Ingersoll's six-year pattern of fee overpayment that resulted in a $3.5 million dollar debt as his "willingness to support the Academy by rebating earnings" is a lie...and a preposterous one at that.
Let's look at Ingersoll's Ponzi-like creation of "revenue" from an office lease rental scheme at the Grand Traverse Academy.
The original lease agreement between Smart Schools and the Academy included no stated monthly rent amount, and DGN revealed that Ingersoll provided them with two sets of often conflicting figures for the "actual lease of facilities" amounts, ranging from $0 to $1.1 million dollars.
Stop and think about that for a moment.
Someone is trying real hard to make you think Steven Ingersoll would actually agree to pay over $1.0 million to lease a couple rooms at the Grand Traverse Academy!
And that's likely another lie, too.
And here's what's likely the biggest whopper: "The controversial $1.6 million “prepaid” is in actuality the remainder of nearly $5 million of earnings that SSM promised to pay to GTA according to its needs."
No, that $1.67 million dollars is the amount estimated Steven Ingersoll still owes the Grand Traverse Academy after overpaying his management fees consistently for at least six years.
Money that came directly from taxpayers...and that means you.
And that's why you should care.
THE CASE FOR EMBEZZLEMENT
It is important to make clear that embezzlement is not always a form of theft or an act of stealing, since those definitions specifically deal with taking something that does not belong to the perpetrator.
Instead, embezzlement is, more generically, an act of "deceitfully secreting assets by one or more persons that have been entrusted with such assets".
While the Grand Traverse Academy board maintains the $1.67 million dollars it wrote off as "bad debt" is still collectible from Ingersoll, there's no evidence the board has ever formally filed a civil action to recover the money.
In addition, by deeming the massive amount still "collectible" and consequently not being required to issue an IRS 1099-C Forgiveness Of Debt form, Steve Ingersoll's cronies on the Grand Traverse Academy board have allowed him to continue living (after six years of juggling financials to cover up his multi-million dollar misappropriation) in an enviable financial limbo--not being sued to return the money while still enjoying his seven-figure tax free windfall.
Scratch the surface, and I'll bet you'll find it was a conspiracy to defraud, and more than one board member getting hush money.