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Monday, June 29, 2015

SECRETS & LIES: How Steven Ingersoll Embezzled Millions From The Grand Traverse Academy While The Charter School's Crony-Stuffed Board Looked The Other Way

Was the cover-up worse than the crime

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.






WHAT DOES THIS MEAN, MISS FORTUNE, AND WHY SHOULD I CARE?

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". 

The closer the suckers are to you, the harder they fall.

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.

23 comments:

  1. Again, thank you Miss Fortune, for exposing the truth behind the GTA Board and Ingersoll. Do you think it's the 'new Math' they were using? We hope the State and the Federal governments won't swallow the findings.

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  2. The embezzlement and the coverup are both just as bad. They are both criminal actions that should be addressed.

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  3. The Traverse City Record-Eagle needs to stop camouflaging the baloney that the GTA and its board are propagating. The Record-Eagle needs to do some serious digging and investigating of its own. They need to take off their rose-colored glasses and report what has and is continuing to happen: A huge financial coverup and embezzlement along with a complacent irresponsible board.

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    Replies
    1. The R-E wouldn't have to do any digging...Miss Fortune's already done it!

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    2. You're right, Miss Fortune. You have already done the digging! They should hire you and pay you for your investigative journalism.

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  4. You wonder how Ingersoll can keep his countless lies straight. Self incrimination and trying to remember which lies he told along with how often and when, are probably the main reasons he and his co-defendants never took the witness stand in their own defense.

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  5. I do not know why I continue to be amazed. It makes me wonder how much more fraud is occurring in other charter schools.

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    Replies
    1. There answer to that is, a lot.

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  6. Wonder if they have 'F' and 'E' in their grading system? 'F' for Fraud, and 'E' for Embezzlement... they sure do have a lot of 'F's and 'E's on the report cards for both Ingersoll/Noss and the GTA board....

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  7. When newspapers won't write about something like this, you know that someone has hushed them or paid them or promised them something. That goes for the Bay City Times, mlive and the Record Eagle in Traverse City. Are there no honest people left? What has happened to integrity and honesty? Is the government just going to keep giving them free money. Michigan is known as the welfare state, but this is blatant embezzelment. Running a business and getting free government money, bravo steve and waving it in everyone's face. When will justice be served, where does this end? What trick does ole Steve have up his sleeve next, because once a conniver always a conniver. Stop this, make our school be accountable, take care of our children, get this schlep out of education. These guys are laughing all the way to the bank and the people in government and education that are letting this happen are all profiting in some way.

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  8. How can Ingersoll, Noss and the GTA board possibly think that the "overpayment" is a reimbursement?! There is no philanthropy there at all; just another camouflage and fraud. They must think if they keep calling it a reimbursement/donation/etc., that the public will be so naive or stupid to actually believe it. Well, the news is that we are not believing it... we'll call it what it is - FRAUD, EMBEZZLEMENT, DECEPTION, GREED.

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    Replies
    1. Sounds like the Ingersoll way - Fraud, Embezzlement, Deception, Greed. That's how he does business. Can't believe he got away with it for so long.

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  9. Hope the Feds start checking out Mr. Noss and his management company very carefully. Just think if he gets indicted too, and then found guilty. Maybe Mr. Ingersoll and Mr. Noss could be cellmates in prison?

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  10. Baloney... "Smart Schools was generous enough..." HOGWASH... Smart Schools was deceptive enough and Noss along with the board were wondering how they were going to make this look as innocent as possible...not to mention to keep the $7,000 + per student State aid money gushing in for the new management company. The public is not stupid...

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  11. You just wonder how two crooks like Ingersoll and Noss have been able to work together for so long without one of them financially taking advantage of the other?
    How can two crooks like that trust each other? Maybe they have some 'honor' between just the two of them?

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  12. Does make you wonder how much and how many board members were paid either off the books, in perks, etc.?

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  13. What a 'pledge' Mr. Ingersoll and Smart Schools were making. A pledge to deceptively divert as much money as possible to his own bank account and later to try to make it look like he was being so generous so he wouldn't go to prison.



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  14. It would be wonderful to put Ingeridiot in prison. Charge the çurrent team and board and get them all cells for the handling of public money. At the very least they are all accessories.

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  15. Lake Superior you are still authorizing this charter. You did not provide over sight. Write the 3.5 million check to the State of Michigan. You collect from Ingersoll.

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    Replies
    1. What kind of payment or compensation should be made to the students and parents who were given the 'IVL' "cure" and then had to pay for tutors and remedial education because of the Ingersoll/Noss propaganda/deception? Meanwhile, they took the monies and had so many students at the bottom of the barrel with their test scores. There were some parents who simply believed in this new IVL curriculum and maybe didn't make much effort at home, but there are many who tried to help their children and after a few years realized it was a bunch of non-proven malarky.

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  16. That lineup of people, banks, feds trying to collect from Ingersoll has their work cut out for them. He has been so devious in trying to hide his assets or underreport them when convenient for himself. May they take everything he has left including any future royalties for his pseudo-learning curriculum.

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  17. If these two schools are still open in the fall then you know the government did not do it's job by stepping in and stopping this ridiculous display of embezzelment. And anyone who associates with Ingersoll, Noss, Lynch, Lake Superior State authorizing team, the board members of both Grand Traverse Academy and Bay City Academy and their leadership teams, then we all understand just what kind of people they are.

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