September 22, 2016
U. S. District Court sentencing opinion/order
Exclusive analysis, beginning soon.
-Steven Ingersoll explains the apparent financial statement fraud device he used on behalf of the Grand Traverse Academy to avoid triggering a bond fund balance covenant:
“[W]e used [the end of the fiscal year] to adjust to keep the school from experiencing deficit, and the mechanism by which we did that, initially, was a reduction of management fee creating an accounts receivable at the end of the year then if the – well typically we – we budgeted 12 percent at the beginning of the year, and if it got reduced to 6 percent, then that 6 percent became a receivable at the year-end.
And the auditor came in, looked at that, and said okay and then that’s – that was the method.
So later we added to that – we were searching, especially in 2008 – seven, eight, and nine were disastrous years for the academy because of first the fund covenant – the fund balance covenant, followed by the financial collapse in 2008 and the reduction in per pupil funding and its hangover in 2009. Those were three really tough years that – and the [GTA] needed a great deal of support, and we came up with the idea at some point, I think we had actually done that earlier, set up the lease arrangement.”
-Money for nothing:
“Ingersoll explained, at one point, that he understood the agreement to provide that the receivable owed by SSM to GTA would eventually be excused when GTA became profitable.”
-Ingersoll's history of cash payments to Mark Noss and his Grayling-based Great Lakes Vision during the years Noss was a Grand Traverse Academy board member.
“The payments to Great Lakes Vision Service and Mark Noss are related. Ingersoll explains that Great Lakes Vision is an office owned by Noss in Grayling, Michigan. Ingersoll alleges that the payments to both were for the purchase of equipment, the use of Noss’s facility, and staff for SSM training events unrelated to GTA. In support of this claim, Ingersoll offers a picture of a piece of equipment (court exhibit shown at left) that he allegedly purchased. Ingersoll has provided no other evidence to support the alleged purchase, including, for example, the purchase price or equipment use. The picture alone does not establish that the payments to Great Lakes Vision and Mr. Noss were business expenses and not personal expenses.”
-Former Grand Traverse Academy board president Brad Habermehl's stunning sentencing hearing testimony, confirming that while the charter school board had agreed to “excuse the 5 million” owed by Steven Ingersoll, he still asserted Ingersoll was owed money by the school--the money Ingersoll himself admitted he'd advanced himself and already received during a seven year period between 2007-2012:
Court: You indicated that while GTA was deferring recovery of the 5 million – excuse me, GTA had agreed to excuse the 5 million, they were still nevertheless entitled to receive it when GTA was able to pay, correct?
Court: How do you record GTA’s prospective liability to SSM when financial conditions permit them to repay it? How is that obligation to repay the 12 percent recorded at GTA, to your knowledge?
Habermehl: I’m not sure if I’m understanding the question, Judge.
Court: Well, you indicated that SSM was entitled to the full 12 percent?
Court: They had rebated certain amounts because of the financial condition of GTA?
Court: But they were ultimately entitled to the full 12 percent at a point in time in which GTA could afford to pay it?
Court: How is that obligation or liability to repay SSM actually recorded in the GTA’s books?
Habermehl: It’s not. It’s just an agreement that we had with Steve Ingersoll that when the school was going to be financially sound, and we had figured out that about the time now that we’re in the school years that we would – our debt would be down, the school numbers of students would be higher and that we would be able to pay the rest of the money back to him for the 12 percent total for each year, so those payments were deferred. It was never put into the books.
Coming soon, only from Miss Fortune.