Part 2 of Miss Fortune's exclusive Kaye Mentley testimony series: a coming funding collapse and Kaye's quarter-million dollar payday!
The Grand Traverse Academy’s former top administrator (Kaye Mentley) and current management company head (Mark Noss) knew about unethical and potentially illegal financial practices at the Traverse City charter school in May 2013, at least a year before its former manager Steven Ingersoll was indicted by the federal government — and never reported it to the State of Michigan's Department of Education, the Michigan Attorney General, the FBI or the IRS.
Chew on that with your morning bagel as you read the January 7, 2016 testimony of Kaye Mentley, exclusively brought to you by Miss Fortune:
THE COURT: Record will reflect the fact that it's
about 10 minutes after nine. I took the opportunity to spend
about a half hour with counsel to get an understanding for the
use of our time today, and ultimately the -- getting an
understanding for the witnesses that we would be hearing to
reach a conclusion. It was a good use of time. We are ready
MS. PARKER: Your Honor, the Government calls Kaye
THE COURT: Record will reflect the fact that there
has been -- will be an objection rendered by Dr. Ingersoll by
counsel. If you'd like to at least get your record on that
MR. GEHT: Thank you, Your Honor. The defense
objects to Ms. Mentley being called as a rebuttal witness as
she had not been previously identified as a rebuttal witness in
any -- in response to any of the Court's orders or Court's
questions in earlier proceedings. We understand our objection
has been overruled. Also because we did not get notice of her
testimony, we may not be fully prepared to cross-examine her
today and will indicate to the Court at the close of her direct
whether or not we will seek to have her be available at the
next hearing session.
THE COURT: That summarize the attention that we've
given to the issue. I'm aware of the fact that -- and have
reviewed her affidavit. I do believe that her testimony would
be helpful, including her cross-examination. If we need to
separate it, we will. Ms. Parker, your witness.
MS. PARKER: Thank you, Your Honor.
[NOTE: Mentley is sworn in at 9:14 a.m. as a government witness, under direct examination by Assistant U. S. Attorney Janet Parker.]
Q. All right. Would you state your name and spell your first
and your last name for the court reporter, please.
A. Kaye Mentley, K-A-Y-E, M-E-N-T-L-E-Y.
Q. And you were subpoenaed to testify here?
Q. Could you tell the Court what your educational background
A. I've been a teacher and a school administrator for 37
years. I have a bachelor's degree in elementary education, a
master's degree in gifted education and about 60 graduate hours
Q. And could you tell us what your work experience is.
A. From the beginning or just --
A. Okay. I started --
Q. Briefly, I don't need a day-by-day description.
A. All right. I started as a teacher in Vestaburg, Michigan
and from there was an administrator for gifted education for an
ISD. From there I was a principal in Alma, Michigan and a
director of gifted. From there I was an elementary principal
in Wyoming, Michigan and then at another school in Wyoming,
Michigan, and then I helped to establish the Grand Traverse
Q. And when did you become involved with the Grand Traverse
A. I was hired, I believe, in June of 1999.
Q. And when did the Grand Traverse Academy open its doors to
A. October 2nd, 2000.
Q. So you were with the school from -- from its very
A. Correct, uh-huh.
Q. And how long did you continue at the school?
A. Until June 26th of 2014.
Q. And what was your position -- or let me ask first of all
your title, and then I'll go into your duties. Okay. What was
your title with regards to the Grand Traverse Academy?
A. Superintendent slash principal.
Q. And who was your actual employer?
A. Smart Schools.
Q. And what were your duties?
A. Initially it was recruiting and hiring and helping to
train teachers, developing curriculum, classroom procedures,
then it was recruiting students and parents. After that it was
establishing class lists, getting the school off the ground,
customer service, trying to retain students, parents and
teachers, classroom visits to monitor instruction, monitor
pupil progress on achievement, things like that.
Q. What was the division of labor between you and Steve
Ingersoll within Smart Schools Management relative to GTA?
A. Steve was responsible for finances. I was responsible for
learning and instruction.
Q. And in your capacity as superintendent slash principal,
did you attend GTA board meetings?
Q. For what purpose?
A. In case the board members had any questions about the
instructional program or the progress students were making.
Q. Would you -- how would you characterize your attendance at
GTA board meetings?
A. I think I was at almost every meeting. Typically I would
give a report as a part of the meeting about school activities
that were going on and different projects and issues.
Q. Over the course of the 15 years that you were associated
with GTA, approximately how many board meetings did you miss?
A. Perhaps two.
Q. And you would give your superintendent's report?
Q. Would there be a financial report?
Q. And that would be given by whom?
Q. Would you be present during those?
Q. Can you describe how the financial reports were presented
to the board during that 15-year period that you were in
A. Typically, up until the last few months, the board members
would be handed a QuickBooks printout during the meeting. That
would summarize the budget for the year as well as year-to-date
so that they would be able to see where the school was in
relation to each general line item.
Q. And can you describe the materials. You said they would
be QuickBooks. Would they -- would they be big spreadsheets,
you know, how would they look?
A. No, they were pretty fine print that was kind of a
standing joke at the board meetings is all of us were reaching
for our glasses and trying to read it.
Q. And did you learn during your near perfect attendance at
these meetings that Steven Ingersoll prepaid himself the entire
management fee at the start of each fiscal year for the school?
A. No, I don't recall that being discussed at board meetings.
Q. How did you learn that that was occurring?
THE COURT: Ma'am, when you say that, are you
referring to Smart Schools?
MS. PARKER: Yes.
THE COURT: When you said "paid himself."
MS. PARKER: All right.
BY MS. PARKER:
Q. What was your --
MS. PARKER: Maybe I can --
THE COURT: Because Smart Schools would also have
been her employer.
BY MS. PARKER:
Q. Let me put it this way: Your understanding is -- what is
your understanding, excuse me, as to who owns Smart Schools
A. Steve Ingersoll.
Q. And is -- what is your understanding regarding whether he
has any other person who's a co-owner or anything like that?
A. I do not know that he has any co-owners.
Q. So let me rephrase the question, I guess, to address the
Court's concern. Did you learn at the meetings that you
attended of the GTA board that Smart -- Dr. Ingersoll was
taking the entire management fee for Smart Schools Management
at the start of the school's fiscal year?
Q. That was not discussed?
Q. How did you learn that that was the case?
A. I learned that later, after the IRS investigation came to
my attention and the school began working with more attorneys
and also with a new accounting firm and also by questioning the
current auditor who was Tony, Tony Henning. Then I was told
that it was -- the whole prepaid issue was because of Smart
Schools taking the management fee on July 1st of each year.
Q. What do you mean by the "whole prepaid issue?"
A. The IRS investigators, when they came to my office, showed
me on the audit a section that talked about accounts receivable
and then that later also became synonymous with prepaid.
Q. And had those accounts receivables on the audits been
discussed at the board meetings you attended?
A. No, not to my knowledge.
Q. And you said you discussed that with Tony Henning?
Q. What did Mr. Henning tell you about that?
A. He said that the other party that was referred to in the
audit notes was Smart Schools and that it was Smart Schools
taking more money than it should have for -- beyond the
expenses of running the school.
Q. Did Mr. Henning explain why it was identified in that
fashion rather than an account receivable from Smart Schools
Q. Did you discuss that with him?
Q. Did you discuss it with Steven Ingersoll?
A. Steve and I talked about it after the IRS investigators
[NOTE: In her October 19, 2015 affidavit, Mentley "learned that GTA was owed $3.5 million when I was interviewed by federal agents on May 2, 2013. During the interview, the agents showed me a footnote to an audit report. Later that evening, I contacted Amy Wilson, a relative by marriage and corporate attorney, for advice. As a result of my conversation with Ms. Wilson, the next morning, I contacted GTA’s auditor Anthony Henning. I contemporaneously wrote notes from that conversation. Anthony Henning told me that SSM is the related party mentioned in the footnote of the audit report, and that SSM owed GTA $3.5 million. Henning also told me that the $3.5 million receivable was from “transfers made by Steven Ingersoll from GTA to SSM in excess of funds needed to operate the school.”]
Q. All right. Up until the investigation was made known to
you, had you had any discussions about that, that account
A. Not really about that line item, and we also did -- we
never had discussion on the management fee being taken on the
first day of the fiscal year each year.
Q. All right. And once you became aware of the IRS
investigation, what was your discussion with Mr. Ingersoll
regarding that account receivable?
A. He told me that it was money that he had pledged back to
Grand Traverse Academy and that it was coded like that and that
prevented Grand Traverse Academy from going into the red.
Q. Did he indicate whether he had actually ever paid that
A. No. Later in our discussions he had said that he had paid
some of it back.
Q. And did you have a communication from him regarding how he
had supposedly paid some of it back?
Q. How much were you -- how much were you paid during your
time at Grand Traverse Academy?
A. It varied year-to-year. I started at I believe it was
150,000 and I believe I ended -- well, I ended at 95,000, and
then there were a couple years in there where I believe it was
Q. Do you recall if you received 260,000 in 2009?
A. That seems high, but I don't have paperwork to offset
Q. 251,000 in 2012?
Q. Do you know if Dr. Ingersoll drew a salary from Smart
A. Pardon me?
Q. Do you know if Dr. Ingersoll drew a salary from Smart
A. Yes. What he had said is that we would always be equal in
compensation, and he would present me typically once per year
with what he called the parity picture, parity, and it would
include his salary and then what was paid for his health
insurance, vision, dental, 401(k) etc. and then it would
include my salary.
Q. Okay. So -- and you said those meetings took place once a
years or more frequently?
A. We had the discussions more frequently. He would give me
that printout once per year.
Q. Okay. Are you currently employed?
A. I am not.
Q. After being terminated -- well, how did you leave Grand
A. I was dismissed.
Q. Who were you dismissed by?
A. Full Spectrum Management.
Q. Was this -- was Dr. Ingersoll still at Smart Schools
Management at that time?
A. I believe so.
Q. You believe Dr. Ingersoll was still at Grand Traverse
Academy when you were dismissed by Full Spectrum Management?
A. No, I believe he was still with Smart Schools Management.
Q. I'm sorry, was he still -- I apologize. Was he still
affiliated with the Grand Traverse Academy at the time you were
dismissed by Full Spectrum Management?
A. Not on a legal basis, no.
COMING TOMORROW IN PART 3, THE "FUNDING COLLAPSE", KAYE MENTLEY'S S-CORP, AND MILLIONS TO MARK NOSS!