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Tuesday, July 14, 2015

TALL TALES ABOUT STEVEN INGERSOLL'S 2007 HEART ATTACK...And Other Interesting Facts!

THREATENED, BRIBED...OR JUST MISGUIDED?







If you took a walk through your local Target, Meijer or Walmart (admit it, you all shop at Walmart!) on July 5th, you would have seen “Back To School” displays being set up as the July 4th merchandising was heading to the crusher.

What comes after “Back To School”? 

Halloween candy displays (Candy Corn M&M's!) — and Steven Ingersoll's sentencing hearing on September 24 at 2:00 p.m.

Or, as I like to call it, “Back To Court”.

In an order filed July 13, Judge Thomas L. Ludington set a scheduling conference for August 11 at 3:00 p.m. to address
“the sentencing issues raised by the objections to the Presentence Investigation Report.”
Ludington ordered the defense and prosecution to prepare, by August 3, “preconference submissions no greater than fifteen pages in length” that address the following issues: 


-The Grand Traverse Academy’s business relationship to Steven Ingersoll's Smart Schools Management, Inc. (SSM) and Smart Schools Incorporated (SSI)

-Steven Ingersoll’s leadership role in the criminal conspiracy

-Tax Loss Assessment—SSM/SSI distributions to Ingersoll 

-Steven Ingersoll’s financial solvency 

Let's take them one at a time. 

GRAND TRAVERSE ACADEMY: SSM, SSI BUSINESS RELATIONSHIP 

The preliminary report contains suggested scoring calculations and shows the sentencing ranges established by the federal guidelines. According to the July 13 order, government prosecutors contend Ingersoll should be assessed two additional guideline points for his “abuse of a position of trust pursuant to U.S.S.G. § 3B1.3”, explaining as follows: 

Steven Ingersoll abused the public trust placed in him by the school boards for the Grand Traverse Academy and the Bay City Academy, Lake Superior State University, and the people of Michigan who pay taxes to support the public schools of this state. Most, if not all, of the untaxed income received by Ingersoll was money that Ingersoll diverted initially from the public school academies that he was entrusted to operate for the benefit of the students, not him, his solely-owned entities, or his self-aggrandizing schemes. The misplaced trust induced by Ingersoll allowed him to use accountants, bookkeepers and his solely-owned entities to conceal his diversion of funds and to defeat the oversight mechanisms on which the public relied to prevent the abuses committed by Ingersoll. 

As you can imagine, Ingersoll “disputes the Government’s assertion that Grand Traverse Academy (“GTA”) is a victim of Ingersoll’s abuse of trust.” 

Ingersoll asserts that without his oversight and financial benevolence, the GTA would not have begun nor would the organization have survived. He explains in particular that had he not “rebated” the contractually agreed upon management fee as well as the lease payments, the GTA would have collapsed. 

Yeah, it actually says that!

Falling back on the infamous (and debunked) “History of Grand Traverse Academy”, recently scrubbed from the Academy's website, Ingersoll explained using a summary from the document:

GTA’s budget faced continuous strain due to high building debt service, fluctuating funding and rapid expansion. SSM and Dr. Ingersoll co-signed for equipment leases and acquisition of the land upon which the high school wing was built. SSM and Dr. Ingersoll remain the guarantors of GTA’s land mortgage to this day. SSM and GTA agreed on the philosophy of small class sizes, continuous annual teacher salary increases, state of the art facilities and technology and maintenance of programmatic excellence. In 2008 and 2009, school funding was reduced. 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. 

Let's take a step back and examine this. Using 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) the History report strained credulity like a worn pair of Spanx.

Someone actually gazed into a funhouse mirror and blurted out this line, which made it into the History: 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 need

But Ludington's order reveals Ingersoll is not the only person who believed the GTA “was not abused and that every transaction was fully disclosed.” 

Margo Abbott, a former Smart Schools Management, Inc. employee who was based in Traverse City and worked at both the Grand Traverse Academy and Ingersoll's Bay City Academy, explained her view in a letter to the court.

The continuous effort to keep GTA in the “black” was always the driving force for Steve. He accomplished that in part by using his own personal resources, even putting his family’s residence on the line.
In 2007 he managed to gather the partners needed to refinance the school’s longterm debt and worked for months to get the deal to closing. It was a very stressful time and so much so that it actually landed Steve in the hospital with a heart attack on the day of the closing!


This is where I have to step in. I guess Margo has never heard of Miss Fortune's Cardinal Rule For Liars: never lie about something I can easily disprove.

As you can see in the excerpts above from the GTA's 2007 official bond issue statement, the closing date was March 13, 2007.

And the document clearly shows that Ingersoll had a mild heart attack on February 16, 2007, had a stent inserted and was released from the hospital on February 20.

But Margo makes it sound like Ingersoll came this close to keeling over at the closing table!

So, will I believe anything she tells me? Nope!

But Margo, more a moth to the flame than someone at the white-hot center of this conspiracy, continues:

I worked closely with the GTA Auditor in each of those years providing information needed. I saw the outcome of the audits; which were reviewed, scrutinized and vetted by the State of Michigan (Glenda Rader, Treasury), Lake Superior State University, and Traverse Bay Intermediate School District. There were NO issues noted because there was NO wrongdoing. I was there; I saw and understood the financial position of GTA. The charges of bank fraud and theft from GTA are simply unfounded and untrue.
 

Without knowing the date of Abbott's letter, it seems like she only hung around to eat the sausage and wasn't invited to watch the boys grind the raw meat and stuff the casings. 

And look who joined the party!

Ingersoll's co-conspirators cronies at the GTA also firmly disagree with the government's contention that Ingersoll abused its trust...proving once more there is honor among thieves.

While the Academy board appears to acknowledge that it paid Ingersoll's management fee in advance of him actually performing his services (and earning the money!), it nevertheless acknowledges it approved the transactions.


Doug Bishop, former legal counsel for the GTA, explained as follows to the Michigan Department of Education in a letter dated October 29, 2013:

In particular, in recent years, SSM’s management fee has been included in the proposed budget prepared by SSM, for GTA, providing for a management fee to SSM which has been equal to, or exceeded, an amount which would approximate 12% of GTA’s revenues and/or operating budget. SSM has taken that management fee, apparently as one or more lump sum payments, in the early portions of each prior fiscal year, in what SSM and/or GTA’s prior auditor categorized as a “pre-paid” expense. 


Thereafter, if economic conditions for the current fiscal year did not support a management fee of the magnitude budgeted, SSM would reduce its management fee and then show the portion of the pre-paid fee which had been reduced, as a prospective refund, or
“receivable” on GTA’s annual financial statement. This procedure apparently was done with the blessing of the prior auditor, as previous audits never suggested that the procedure of prepaying the management fee, or the method of accounting for the refunded portion of the fee, were improper or questionable. 


So, what part of "magnitude" did you miss when referring to Ingersoll's management fee? 

A "prospective refund" that was never actually repaid, even after it exceeded $3.5 million dollars! 

But it's just fine, because the "blessing of the prior auditor" (a shady buddy of Steven Ingersoll's) gave the misappropriation scheme an almost Vatican-like aura!

There were also concerns raised as to the controls on expenditures and disbursements to SSM and whether they were properly handled and documented. These were not raised by the prior auditor. . . .

At the same time, GTA made an unequivocal demand of SSM to immediately repay the “receivable” which had resulted from the reduction in budgeted management fees which had been paid in advance for the previous several years. As of June 30, 2013, this “receivable” remained outstanding in the amount of $2,338,980.00, although the current year’s management fee, as is now earned and entered on a monthly basis, is not being paid to SSM, and the amount of the monthly fee is being credited against the receivable.


Not so fast! As I revealed on this blog June 29, a previously undisclosed Grand Traverse Academy letter from Doug Bishop, the Academy's former attorney, to Michigan Department of Education auditor John Brooks dated November 25, 2013, revealed startling information.

Although the Academy had publicly claimed 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, 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 that correctly!

After publicly revealing in its 2013 financial audit (which apparently no one read until I broke the story of 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 snuck 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. 


I hope the feds are taking notes!

But Ingersoll and his cronies circled the wagons, claiming all of these transactions were disclosed and approved by both Lake Superior State University and the GTA board. 

And Doug Bishop, the Grand Traverse Academy's former legal counsel, reinforced that story in an October 29, 2013 letter to the Michigan Department of Education. Referring to the 2013 forensic audit conducted by Dennis, Gartland & Niergarth, Bishop stated:

The results of the forensic audit did not disclose any payments to SSM not authorized by the Board of Directors in GTA’s budget.

So, can I take that to mean they were all in it together?

Yeah, I thought so!

TOMORROW: Ingersoll’s Leadership Role in the Criminal Conspiracy; Tax Loss Assessment—SSM/SSI Distributions to Ingersoll; Ingersoll’s Financial Solvency









 



22 comments:

  1. Well isn't that just funny how anyone associated with Steve Ingersoll was in on what he was doing. I wonder how much she profited all these years, because clearly they all had and still have quite the racket going. Until there are laws in place that govern these charter school these problems will not end, they will only get worse. Don't think that Noss and Habermehl are any different than Ingersoll. They too want to support their lifestyles by receiving government money under the guise of educating children.

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    1. The whole point of for-profit charter schools is to have free rein over public funds, turning them into private assets. Do you honestly believe Ingersoll is the only one involved in shenanigans like this? Last year the Detroit Free Press spent a week exposing for-profit charter schools for the fraud factories they are.

      The only way to "fix" this problem is eliminate for-profit charter schools in the state. Begin by reinstating the cap on new charter schools opening. Before that happens, lots of people in Lansing need to lose their jobs in the next election.

      Up North Progressive

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    2. Sad but true phrase - 'Fraud Factory'...that's exactly what Ingersoll's charter schools and those that paid and continue to pay (with taxpayer money!) for his non-proven curriculum IVL are... Fraud Factories.

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    3. There are rules and laws in place. Ingersoll and his typejust do not follow them. Lake Superior does not have the qualified staff to review the local charters. Charter schools as a whole are corrupt. You should see how they play with student counts.

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    4. If LSSU does not have the staff required to hold these crooks accountable, then they are also guilty and need to stop authorizing charters.

      Up North Progressive

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    5. Agree completely, Up North Progressive. And all other sponsoring entities (usually universities) should either have adequate staff to monitor the charter schools they sponsor, and also stop any future charters they could grant. It's not rocket science that they should hold someone accountable.

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    6. Consider the possibility that one or more charter officials may be directly involved with a scheme like the one Ingersoll pulled with the compliant GTA board and you'll see why Michigan's "oversight" is just another fallacy of syllogistic logic.

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    7. Sad, but you're right again. Very good possibility that some official(s) may be involved in a scheme like Ingersoll and his GTA board....

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    8. It is not just universities that are charter school sponsors. Ask about how many charter school's your local ISD, RESA, ESA (all the same name for what was called an intermediate school district) authorized. There truly is not oversight for these institutions. They are publicly funded - do not do the same disclosures. There is so much fraud in these schools. Steven Ingersoll is just the tip of the iceberg.

      Local school boards have meetings to discuss issues outside of the public meetings. School board president's order administrator's to commit fraud. If your district has a high turn over of Superintendent's and business staff - start going to your local board meetings and ask questions.

      If your board is burning thru your fund equity, ask questions. Your local district is at risk. Get involved - all of it is your tax dollars.

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    9. Good insight... sometimes the local ISD, RESA, ESA authorize a charter school. Some of the fraud could be stopped by having the exact same requirements of charter schools that are placed on 'regular' public schools. And we, the general public, no matter our age or if we have children or grandchildren in school, should ask questions and not be afraid to ask questions. And if we get accused of being trouble makers for asking questions or if the answers are not given to our satisfaction, or are schuffled under the carpet, we should be all the more suspicious. We're so glad that Miss Fortune is asking questions and doing research, and is not afraid. We need to join our efforts of seeking justice to her shining a light on darkness.

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  2. Miss Fortune who is Margo Abbott? Outside of being an Ingersoll coconspirator?

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  3. Ingersoll probably had the 'mild heart attack' because he was wondering how he was going to resolve the financial mismanagement he had been doing all along. If people propagate lies and deception, the body is going to pay for it in some way sooner or later. Wonder how his heart will be doing now that he knows he's going to be sentenced in September and whatever is left of his financial empire will fall.

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    1. It's unlikely that Ingersoll's heart attack was caused by any worry about financial mismanagement. His pattern of overpayment ramped up after the 2007 bond deal was signed. More likely cause was diet, lack of exercise.

      And for his heart problems now? I can't find anyone who gives a shit!

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  4. You want to look at school fraud? Look at pupil counts for places like Saginaw Public schools. They count students who never show up. There are very few high school students. The Isd should be required to go in and physically count students. STATE WIDE.

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    1. They do count students, twice a year on Fourth Friday Count. Funding is based on the number of students in every school. Schools work hard to make sure as many students are physically in the building on that day, but there are always absent students, which requires more paperwork by the school.

      All state student aid is based on how many students are in the school. Real public school districts must follow these rules, as there is a great deal more oversight on public schools than there are on for-profit charter schools or even online education companies. They're even worse when it comes to fudging numbers.

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    2. You go to Saginaw High School on any count day. You count the actual students in the district. You review the numbers that are turned in. There is no matching. If a student is not there on count day, look at their attendance for a whole month. There would only be a fraction of the students. All ISD should be required to go in and count the students with the local districts. If they have to hire people to go in with the school personnel. The fraud is in the number of students as well.

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    3. I also love charter schools who keep the students thru count day, and then dump them thru kick outs or whatever, to put them back to a local district to educate while they keep the money. If a district does not maintain their students, they should not maintain the funds.

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    4. Charter schools should not get the same amount of funds as the local districts. There should be a reduction for not educating high school and special needs students. The local district has to handle these costs - and they can refuse them with their lottery system or how the restrict students.

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    5. A woman in Detroit years ago had this sage observation on for-profit charter schools and fourth friday count: "The first four weeks are a free for all. You can pee on the principal's shoes and nothing is going to happen to you - until they get their money from the state. Then your month of school is done and you're out the door."

      Then those kids have nowhere else to go but the public school, except if they're a discipline problem they'll wind up in the "alternative" education program, which today is online school.

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  5. Oh LSSU was definitely in on it, they knew exactly what was going on but the university also profited from it and they were not going to stop the money from coming their way. They can make up some false statements but if you look at who is part on their staff or who recently left, you can figure it out who is working with Ingersoll, Noss, Habermehl and Lynch. It was never a matter of too little staff at LSSU and always a matter of profits for the university.

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    1. Parents should no encourage their high school graduates to attend LSSU. They could strongly encourage their own students to attend college elsewhere. Surely there are some colleges/universities that do not sponsor charter schools, and if they do, hopefully they have some proper oversight over them and would not tolerate such apathy and corruption.

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    2. Sorry about the typo in the above note... should have read "Parents should not encourage..." I should have reread before submitting. The Grammar and Spelling Bee police!

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