Part 3 of Miss Fortune's exclusive Kaye Mentley sentencing testimony series.
Mentley questioned by Assistant U. S. Attorney, Janet Parker:
Q. Was there a time when there was joking about lease
payments being made by Smart Schools to GTA?
A. I think there was a time when Steve talked about, you
know, the large fee that he -- that Smart Schools was paying in
a lease for a relatively small office, yes.
Q. But was there any -- was that like a shared joke or how --
how was that discussion conducted?
A. I would say more of a passing comment. I don't recall
board members being overly involved in it as a joke.
Q. But part of what -- did you understand those payments to
be a vehicle for balancing the budget?
Q. And do you know whether the payments were actually made?
A. No. Still don't.
I mean, I remember Mark Noss and I
talking the summer or early fall of 2013, I think was about the
time, I'm not positive, maybe even later than that, not
understanding was all of this about actual dollars, or was it
just printouts and that there weren't the actual dollars going
back and forth.
Q. Do you even known the answer to that question today?
A. I do not.
Q. And when you said there was casual conversation which made
you aware of 2.2 million being owed, who was that conversation
Q. And who owed the 2.2 to whom?
A. It was my understanding that Smart Schools owed Grand
Traverse Academy the 2.2 million.
Q. And let me clarify, when did that conversation occur?
A. I would say in the fall of 2013 or early in the year of
Q. And when was it that a prepay was part of the board
A. Not until after the IRS investigation, and I'm not sure
Q. All right. But it was at least post awareness of the
MS. PARKER: Your Honor, I don't know if you would
have any questions for the witness. I think I'm exhausted for
THE COURT: Okay.
MR. GEHT: Thank you, Your Honor. (Recross-examination of Kaye Mentley.)
Q. Do you recall if it was 2.2 million or 2.5 million?
A. I could not answer that specifically.
Q. Do you recall if it was fall of '12 or fall of '13?
A. I could not answer that. I perhaps could looking at
notes, but --
Q. Well, I'll make it easier. Did you submit an affidavit in
Q. Okay. You'll see that was filed on October 19th, 2015.
Do you see that at the top?
Q. Paragraph 3, do you see that?
Q. You stated under oath, On November 12th, 2012, I met with
Steven Ingersoll to discuss finances and SSM owes GTA
2.5 million, do you see that?
Q. And then on the next page, paragraph 4, On January 29th,
2013 I met, 2.5?
Q. Does that refresh your recollection whether or not it was
2.2 or 2.5?
Q. And which one is it?
A. I believe it was 2.5.
Q. And does that refresh your recollection if you discussed
it in '12 or '13 -- in the fall of '12 or in the fall of '13?
A. I think we discussed it in the fall and then again in
Q. In the fall of '12, though?
A. Whatever that said because that was based on notes I kept
in my office.
Q. I ask, Ms. Mentley, because on redirect you testified that
that conversation took place in the fall of '13, spring of '14,
so I'm asking, does this refresh your recollection if it was
actually fall of '12, January of '13.
A. It would be whatever is said in the affidavit.
Q. Okay. Did you -- after you had that conversation with
Dr. Ingersoll, did you go to Doug Bishop and say, hey, I just
found out two and a half million dollars is owed?
Q. Okay. Did you go to any board members and say, hey, I
just found out two and a half million dollars is owed?
Q. Okay. You were also asked about KM entries, do you recall
Q. Okay. And on --
MR. GEHT: Your Honor, this isn't pertaining to GTA,
but may I just cover this really quickly?
THE COURT: I don't understand the subject.
MR. GEHT: I understand. There was a brief comment
made or brief line of questioning on redirect about the other
surprising thing during the interview, and the witness
testified that the other surprising thing was there were
certain entries made in QuickBooks that had "KM" next to them.
Does Your Honor recall that line of questioning, or perhaps it
was too passing.
It's not -- I'm -- by way of -- it is not, from our
standpoint, related to GTA but it is related to the
sophisticated means enhancement. May I examine on that point?
THE COURT: I don't see how it --
MS. PARKER: We're not going to argue that that was
part of a sophisticated means if that's what you think.
MR. GEHT: No, but it is part -- I guess it was asked
on redirect. This is --
MS. PARKER: She said reference to it, so I just
tried to clarify what she said, but I mean --
BY MR. GEHT:
Q. What is your recollection as to what the journal entries
A. When I asked Steve why the initials "KM" were in there --
Q. Let's take a step back. Where were the journal entries
A. I believe they were in a QuickBooks account.
Q. For which entity?
A. I think Grand Traverse Academy.
Q. Okay. Let me show you interview of memorandum of the
interview with you on June 12th, 2013, do you see that?
Q. Okay. On the second page, paragraph 6, do you see that?
Do I need to ask --
MS. PARKER: I can give her a copy.
MR. GEHT: Oh, do you have a -- well, but I don't
know that the Court has a copy.
THE WITNESS: I see that.
BY MR. GEHT:
Q. All right. Can you read paragraph 6 to yourself first --
Q. -- and then I'll ask you --
A. But hold it still.
Q. I'm sorry?
A. But hold it still.
Q. Oh, I apologize.
Q. And I just want to -- does this refresh your recollection
as to whether or not the journal entries were made in the
QuickBooks for GTA or for SSM?
Q. Okay. And to the extent that your redirect testimony was
that there were adjusting entries made on GTA's books, would
you agree with me that that's not what the KM entries were?
Q. Okay. And I presume, since I know where they came from,
that as you sit here today, you don't know where those journal
entries came from?
MR. GEHT: Okay. I don't have anything further for
this witness, Your Honor.
THE COURT: Any remaining questions?
MS. PARKER: Yes.
BY MS. PARKER:
Q. When you prepared your affidavit, you provided the date of
November 12th -- excuse me, November of 2012 for one of your
conversations with Steven Ingersoll?
Q. About the money going from -- that he -- Smart Schools
Management owed to GTA?
Q. How did you know that was the date when you prepared your
A. I used a very old fashioned kind of a personal management
system called a tickle file, and so often if I were observing a
teacher or had a parent request a reading level of a student, I
would make a note of the date that request was made and the
student's name, and then I would tell the teacher about it, but
then I would put that piece of paper that I had written back in
my file about when I thought that that should happen, that
action, and then I would go back to the teacher and make sure
that that parent had been contacted about the reading level.
It was the same thing, it just helped me be a little
more aware of what was going on, and so I made notes of that
meeting, and I put it back, I think, into February, I'm not
sure, to see were those payments starting to be made.
Q. All right. When you prepared your affidavit, then, were
you referring to your contemporaneous notes of the conversation
with Steven Ingersoll?
Q. And when you were testifying here, were you referring to
Q. And so if the date is an issue, what is the most accurate
A. My notes and the affidavit.
Q. All right. You testified that when you had that
conversation then, and we'll go with November of 2012, with
Steven Ingersoll, you did not then go to Doug Bishop or the
board and report that this was ongoing.
Q. Why not?
A. I didn't have any relationship with finances with the
board. We had a complete separation of duties. I was in
charge of instruction and he was in charge of finances.
Q. But when the IRS came and interviewed you, and you became
aware of a three and a half million dollar thing on the books,
you did go to an attorney and seek what?
A. I did seek legal counsel and interact more closely with
the board president and the other attorney.
Q. Why did you do it then?
A. I was alarmed by the IRS investigation, by the questions
that they asked. I was alarmed by the journal entries with the
initials "KM," and I was alarmed that the board had not
received reports or conversation clarifying what that was and
what was happening with it.
Q. Going back a couple of answers, after you had that
November, 2012 conversation with Steve Ingersoll, did he give
you reason to think that indebtedness was being reduced?
A. I don't recall him saying that at the time it was reduced
but that he planned it to be reduced as Bay City became
financially healthier, Bay City Academy, became financially
healthier. They would be able to reimburse Smart Schools for a
lot of the outlay that Smart Schools had done for the Bay City
Academy, which would then enable Smart Schools to pay that back
to Grand Traverse Academy.
[NOTE: Mentley describes the millions looted from the Grand Traverse Academy and conduited to the Bay City Academy as "outlay". It appears she forgot to refer to the GTA as the "golden goose".]
Q. And when you became aware of the three and a half million
dollars in May of 2013, did you perceive that as having an
impact on the viability of the Grand Traverse Academy?
A. Yes, from both a publicity, public relations standpoint as
well as financially.
Q. And is the Grand Traverse Academy still in business today?
Q. Still functioning?
Q. And how do you feel about that?
AND YOU'LL BE THRILLED NEXT MONDAY, WHEN MISS FORTUNE REVEALS MENTLEY'S S-CORP, AND THE MILLIONS THAT WENT TO STEVEN INGERSOLL FOR HIS IVL!