Glistening, Quivering Underbelly
Deep hole for Mark Noss on the heels of his Steven Ingersoll recommendation letter revelation, with room for more digging.
The two-man rule, a control mechanism designed to achieve a high level of security for critical operations, has a bastard financial stepbrother: delegation of approval authority and segregation of duties.
Who authorized the curious April 7, 2016 payment of $105,492.90 from the Grand Traverse Academy to its management company, Mark Noss-owned Full Spectrum Management, LLC (FSM) just days after it had already been paid its contractually-obligated monthly $70,456.95 fee? And where were those "two sets of eyes" when the overpayment was made?
According to Mark Noss, the March departure of his former accountant (after blowing the whistle about Mark Noss and monthly $12,500 payments to Steven Ingersoll, beginning in April 2014) landed him in such a predicament that he required the help of a "local accounting firm", resulting in the admittedly suspicious overpayment.
While Noss may be selling it, I'm not buying it.
Here's why: the Grand Traverse Academy board's gone down this "prepaid/overpayment" road once before.
I CALLED IT A "RECEIVABLE", BUT I LEFT WITH $3.5 MILLION (NYAH, NYAH!).
Beginning in 2007, and continuing for six years until 2012, at the beginning of each fiscal year (July 1), Steven Ingersoll advanced himself his entire annual Smart Schools Management, Inc. fee directly from the Grand Traverse Academy’s bank account before it had been earned — and before he was entitled to receive it. Although based on Board-approved preliminary budget figures, Ingersoll’s management fee cut was later adjusted downward after actual budgets were calculated.
However, Ingersoll never really repaid the difference between the amount he'd advanced himself and the actual management fee he was contractually allowed to receive.
How did the receivable grow from roughly $500,000 to an estimated $3.5 million dollars by June 2012 if Ingersoll, as he claimed, booked the difference as a receivable and paid it off at the beginning of the next fiscal year?
Simple: after Ingersoll had paid the previous year's receivable balance using Michigan state aid money provided to the Grand Traverse Academy, he transferred the money back from the Academy to Smart Schools, and created a new and even larger, receivable balance. (According to his own sworn sentencing hearing testimony, Ingersoll admitted his scheme on December 9, 2015).
Despite a promise to clean the schoolhouse, things don't appear to have changed much at the Grand Traverse Academy.
So why wasn't the overpayment proactively dealt with by Noss, instead of waiting over two months? And what about his "blame the accountant" excuse?
I JUST ADMITTED I HAVE NO FINANCIAL CONTROL OF YOUR MONEY...OR DID I?
Who initiated the transaction, and who approved it?
In my opinion, it's unlikely Noss would have left the initiation, processing and final approval of a six-figure transaction to a "local accounting firm", and not reserved at least that final approval for himself...unless he is completely financially incompetent.
In addition, the highly suspect amount (1.5 times the standard monthly fee) eliminates the possibility of an inadvertent duplicate payment.
And a close examination of the March and April 2016 Custom Transaction Detail Reports reveals the $105,492.90 payment to FSM was the only "overpayment".
Although a taxpayer has no right to know, the Academy board can get Noss to provide answers to these questions: who initiated the transaction and who approved it, and when was the money refunded to the Academy account.
In addition, the board should demand to review actual FSM's bank transfer records.
On November 1, 2015, I exclusively reported that during FYE June 2013 (July 2012 - June 2013), Steven Ingersoll falsified bank documents — using those bogus documents to cover his tracks and steal another $110,000 from the Grand Traverse Academy. With those altered financial documents, Ingersoll (facilitated by longtime business associate, then Academy Board President Mark Noss) effectively swindled the Academy out of at least $110,000, while successfully using the deceptive bank documents in a bizarre scheme to convince the Academy Board he’d repaid $1,813,330 owed by Smart Schools Management, Inc. to the Grand Traverse Academy.
If you get a chance to Noss another question, see if you get an honest answer to this one: how many fingers am I holding up? (And hold up at least two fingers.)
As the Grand Traverse Academy shows, it often seems as though charters schools are great assets to their managers...not the other way around.
If you don't believe me...