Forensic accountant will not testify for defense; 'significant discrepancy' suggests Ingersoll did not truthfully disclose the amount of SSM’s management fee as a percentage of GTA’s revenues to the GTA board; manufactured 'History' figures undermine accuracy, reliability of Ingersoll's information.
The shell game — everyone knows it: a small ball is hidden under one of three walnut shells.
The operator shuffles the shells around quickly, and a player is made to guess which shell houses the ball. Wagers are usually made, and indeed a typical run may appear to draw in a great many bets around a makeshift table on a street corner.
But the shell game is not a game of chance at all.
It's a confidence trick.
A skilled operator can remove and replace the pea at will, insuring that the player only wins if the operator chooses (which he might do in order to encourage additional bets).
Most of the audience is in on the swindle, and their bets serve to encourage a target to place (and then ratchet up) the wagers. The shell game is not a game at all.
It's a fraud, a swindle — a con.
And it's a game convicted felon Steven Ingersoll played masterfully, adroitly using his imperious, domineering persona (along with an apparent coterie of criminals) to shift millions of dollars — virtually in plain sight — away from the education of Michigan school children into one of his nine (nine!) bank accounts.
On February 11, 2016, Ingersoll filed a brief regarding various sentencing issues, including whether the Grand Traverse Academy qualifies for restitution and whether a sentencing enhancement for “abuse of trust” should apply.
Ingersoll anticipated calling David Hammel, a forensic accountant retained as an expert witness by Ingersoll's attorneys, during the sentencing hearing.
The government filed its response to Ingersoll's brief on February 19, 2016, in which it also addressed the Grand Traverse Academy's restitution request and the applicability of the abuse-of-trust enhancement.
Per court documents filed February 23, Ingersoll's attorney, Jan Geht, revealed during a status conference yesterday in U. S. District Judge Thomas L. Ludington's chambers that he no longer intends to call Hammel as a defense witness at the sentencing hearing.
Because government prosecutors anticipated testimony from Hammel, they did not address one of the attachments, entitled “SSM Historical Management Fees per Books,” Hammel included in a pretrial discovery dated January 28, 2015. (Chart is shown below; click on image to enlarge.)
1) The column to the far right of Hammel's report ('Percent') calculates Smart Schools management fee as a percent of the Grand Traverse Academy's gross revenue.
During the sentencing hearing, Ingersoll testified that he and the Grand Traverse Academy board mutually understood that the management fee was not to exceed 12%. Hammel's report, however, shows that the management fee exceeded 12% in years 2001, 2003, 2005, 2011, and 2013.
In fact, the report calculates Ingersoll's 2013 management fee as a whopping 15.48% of the Grand Traverse Academy's $8,727,722 gross revenue. (It is unclear, however, from the report whether or not Hammel included the additional $300,000 annual curriculum fee Ingersoll allegedly paid himself, per Kaye Mentley, or the estimated $250,000 annually Ingersoll paid himself for janitorial services provided by GTAS, LLC, an entity Ingersoll formed in 2003.)
According to the government's February 23 brief, this discrepancy suggests that Ingersoll did not truthfully disclose the amount of SSM’s management fee as a percentage of GTA’s revenues to the GTA board. (In common parlance, he lied.)
2) Ingersoll previously submitted the now-infamous September 2014 “History of Grand Traverse Academy” document. As shown in the image above, page three included a table for years 2005 to 2012 showing “Earnings Rebate” from Smart Schools Management to the Grand Traverse Academy, along with “Lease Contribution,” and “Total SSM Support.”
Ingersoll testified during the sentencing hearing that he believed that the figures in “History” were accurate, but that his defense counsel actually prepared the figures. (Yet another conflict about the document, not cited by the prosecution, arose during Grand Traverse Academy board president Brad Habermehl's October 21, 2015 sentencing hearing testimony, when Habermehl petulantly phumphered his “humina-humina-humina” Ralph Kramden-esque description of the document's creation:
Q: Okay. Can you describe the – what efforts went into creating Exhibit 13. [The history document.]
A: A lot of the efforts was going back to the year – back in the years on even how the school was thought to be even – to happen or become and, again, that – the big thing, too, is that we wanted to let the parents of our students know more about the history and why the school was special and why the school was even developed.)
In addition, the government points out in its February 23 brief that the figures in the History's “Lease Contribution” column do not correspond with the figures in the “Lease from SSM” column in Hammel's report for the years 2006, 2007, 2009, 2011, and 2012.
According to the government, assuming the calculations made by Hammel, Ingersoll's retained expert, are correct, this significantly undermines the accuracy and reliability of the information presented by the Grand Traverse Academy board in its 'History' document.
Geez, does that mean the statement read by Brad Habermehl during the Grand Traverse Academy board's July 18, 2014 meeting is merely co-conspirator spin?