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Friday, February 3, 2017

STEVE GOES TO CAMP: Convicted Tax Cheat, Disgraced Charter School Founder Steven J. Ingersoll Now Officially In The Custody Of The Federal Prison System

BREAKING NEWS: Steven Ingersoll will spend the next 41 months in Bob Dylan's birthplace, Duluth, Minnesota, grazing on fresh vegetables, watching movies and sleeping in quarters resembling a college dorm in a federal correctional institution described by ArrestRecords.com as “one of 50 most comfortable prisons in the world”—and they should know.

Duluth Federal Prison Camp is located on the grounds of the Duluth International Airport. There are no fences, no perimeter patrols, no guard towers. The only gate is a railroad-crossing type of arm that stops cars on the main road into the grounds. 

Anybody can walk out at any time, and Department of Prisons rules forbid guards from chasing them. 

Inmates at the all-male camp are “pretty much there on the honor system,” as opposed to a high-security setting with locked cells. 

However, there are rules. 

According to the Duluth camp's Admission & Orientation (A&O) Handbook (yes, that's really a thing), beds must be made every morning by 7:30 a.m.:

“Beds should be made by stretching the top blanket out full length and tucking it under the sides and bottom of the bed. The blanket should be stretched tight for neat appearance. Should you use your bed at any time during the course of the day, you will be expected to remake it prior to leaving your dorm. 

A&O inmates will be dressed by 7:00 a.m. each week day and will remain dressed until the 4:00 p.m. count. There are specific dress requirements outlined under Dress Code, page 10, and you are expected to adhere to those standards. 

All A&O inmates must sign out when leaving their dorm and must indicate time departing and destination each time. You must also sign back in each time you return. 

You are required to carry your Institution Identification Card (Commissary Card) at all times. 

No inmate is permitted to address any staff member by their first name.” 

Sounds more like junior high...with uniforms!

Although Ingersoll, Michigan's most notorious “charter cheater”, was convicted on March 10, 2015, and sentenced on December 15, 2016, stunning revelations continued to stream out about his previously undisclosed financial relationships with select board members and the former head of Lake Superior State University’s charter school office—including the December 8, 2015 testimony of former board president Brad Habermehl, who admitted soliciting a $300,000 “loan” in late 2014 for a “school project” on behalf of his “friend and colleague” Steven Ingersoll.  

In addition, hefty monthly cash payments were made by current manager Mark Noss to Ingersoll between April 2014 and March 2016 and on April 27, 2016, “letters of support” were sent on Ingersoll's behalf by Noss, Harger and Habermehl to the Michigan Board of Optometry—again, reported exclusively by this blog. 

Although he has yet to be charged in connection with the fraudulent conversion of nearly $5.0 million from the Grand Traverse Academy, convicted felon Steven Ingersoll admitted under oath during his sentencing hearing that he fabricated an accounts receivable scheme as financial cover for his diversion of funds from the Traverse City charter school. 

Ingersoll made the admission during questioning by Assistant U. S. Attorney Janet Parker on December 9, 2015. In this excerpt from the official transcript, Parker takes Ingersoll through a line of questioning that uncovers the method he used to steal millions from the Grand Traverse Academy. 

 In short, Ingersoll paid himself his entire management fee (before he’d earned it) in a lump sum at the beginning of each fiscal year based on an estimated budget. At the end of each fiscal year, Ingersoll booked his annual overpayment as a "receivable", then used school funds at the beginning of the next fiscal year to repay the receivable, creating a new (and even larger) receivable each year: 

Q. Doesn't the rebate affect expenditures by lowering the management fee? 

A. Yeah. 

Q. And also -- there was another component to the rebate, wasn't there? It was not just a management fee, but it was also a lease component? 

A. Yeah, that's on the revenue side, and the management fee on the expense side, that's right. 

Q. Right. And the -- why don't I put it this way: Can you explain to the Court how the amount of the lease was determined. 

A. Well, as -- no, I can't explain that, other than the sum of the reduced management fee plus the gross amount of the lease. The lease was written to be determined -- I think the language in it said a retrospective determination at year-end. Of course, the reason it was written that way was to use it as a mechanism by which -- to influence that rebate position, so -- so I can't give you an exact -- I can't give you a definition as to how those -- the number was arrived at. It was well -- I can't say. 

Q. Well, who arrived at that number? 

A. I did pretty much. 

Q. All right. So you arrived at a number that was based on what? 

A. The primary driver of that was the amount of money that was required, amount of support, I should say, that was required to balance GTA's books for that fiscal year. 

Q. Okay. 

 A. And that had to be split between the vehicle for revenue enhancement versus vehicle -- plus vehicle for expenditure reduction, management fee. 

 Q. Why would you split it between those two things? 

A. I don't know. 

Q. It was your decision, wasn't it? 

A. Are you referring to the creation of this methodology or a specific year, for example? 

Q. I'm referring to why would you opt as a methodology to, in order to make things not show a deficit, attribute part of the adjustment in your management fees and use the lease to the other side of the equation to complete the necessary adjustment? 

A. I can't tell you why that is. Both of those method -- 

Q. Was -- I'm sorry. If you can't tell me why -- 

A. I guess I can say the why for both of those was the same, to create a methodology to deliver the support that the Academy needed to balance its books. 

Q. Okay. And at the start of the year, was there a lease amount in the budget? 

A. Most times. 

Q. At the end of the year, would there be any relationship between that budgeted amount and what was in the final budget, or would that figure be based on the need to make the books look balanced? 

A. It was -- the amounts were based on what it would take to balance the books at the end of the year – 

Q. All right. 

A. -- and the beginning was an estimated circumstance. 

 Q. All right. And the bottom line is you never paid that amount? 

A. Well, that's not quite true. 

Q. Well, did you actually pay the lease amount that is included in the final budget to GTA? 

A. Yes. 

 Q. Or was that part of the receivable? 

A. It was part of the receivable. 

Q. Okay. And when you actually paid it, did you actually transfer that amount to GTA? 

A. Yes. 

THE COURT: Now, you can answer the same question with respect to the management fee. They're two different questions. 

MS. PARKER: Right. 

BY MS. PARKER: Q. Did you actually pay the management fee? 

A. Yes. 

Q. Explain when and how you actually paid that management fee. 

A. In the first two months -- within the first two months of the prospective fiscal year, the rebate total in the preceding fiscal year was paid by actual transfer of monies from Smart Schools to GTA. 

Q. All right. A. Simultaneously, thereabouts, sums of money from GTA were trans -- that were budget authorized in the previous year were transferred to SSM to supply the money to do so. 

Q. In other words, you used the next year's money to pay the last year? 

A. That is correct. 

 Q. And that is why the receivable kept growing? 

A. No. 

Q. Then why did the receivable -- the receivable is a combination of the management fee and the lease, correct? 

A. No. 

THE COURT: Can I stop for just a moment. 

 MS. PARKER: Sure. 

THE COURT: This is not the time to be curt with the prosecutor. You know these answers. 

THE WITNESS (INGERSOLL): Well -- 

THE COURT: This is the time to explain it to her as well as you can. 

THE WITNESS: I'll do that. So if -- if you'd like me to reframe your questions, I'll do that. Here's what happened. When the rebate was determined, what it should be, it was booked as a receivable, and it was -- had two components; management fee and lease, and the sum of those two totaled the amount of the rebate. At the same time -- 

BY MS. PARKER: Q. All right. How is that different from what I asked you before and you said no? 

A. Well, I don't know -- well, that is quite different. That's -- 

Q. Please inform me. 

A. I'm trying to. When you said that -- do you want me to -- never mind. I'll just carry on with what I'm saying and then I think it'll be clear. So at the end of the fiscal year, whatever the need was, it was accomplished by those two elements that became in their sum the total of the receivable. At the same board that the finalization of the lease amount and reduction of the management fee occurred, the authorization for revenues to be delivered to Smart Schools for the prospective fiscal year was also established. And if you tally up the line items that Smart Schools was authorized to receive, it's about six -- 6.6 or thereabouts each year. Out of that money, a good share of it anyway, would be drawn early in the fiscal year, that is the first two months, to help Smart Schools be able to service the created rebate. So in a sense, the — your point was so, so you used GTA’s money to pay the rebate. Well, that’s not technically correct. I used SSM’s money that was authorized by GTA to repay the rebate, so that’s the mechanism that we were operating under each of those years. 

Q. And this is -- you recognize that this was something that had to be done in the first 60 days of the new fiscal year under Government accounting principles? 

A. That's what I understood, yes. 

Q. So you have some familiarity with Government accounting principles? 

A. I do. 

Q. Are you familiar with the term kiting? 

A. I know what that means. 

Q. All right. What is your understanding of what that means? 

A. A bank account that is out of money gets filled with money by drawing money from another bank account that is out of money, that then creates a, you know, a negative balance over here. 

Q. Right. And then you make a draw against the first bank account to replenish the second bank account, back and forth, correct? 

A. I don't think this is quite the same, if that's what you're implying. 

Q. Well, I'm not asking your opinion on that. What I'm asking is why does the rebate continue to grow if you're paying it in full? 

A. It was paid in full. The rebate is more a function of the operational activity through the year relative to the funding sources, that is the expenditures through the year versus -- revenues versus expenditures through the year. That's what determined the change in the rebate amount. 

Q. But the rebate continues to grow because you've paid this year's money into last year's and now have to take more to keep the process going? 

A. Well, the lion's share of the balance of that rebate occurred '07, '08 and '09 if you look at the -- 

Q. When -- I'm not asking you that. 

A. Okay. 

Q. It continued to grow. It grew -- by the time of the spring of 2012 it was $3.5 million? 

A. Yes. [NOTE: As of June 30, 2012, the end of fiscal year 2011-12, the accounts receivable balance actually exceeded $4.0 million dollars.] 

Q. Yes. It was smaller in the preceding year and even smaller in the year before that? 

A. That is true. 

Q. All right. So why? 

A. The revenues were insufficient to cover the expenses and the amount of rebate -- the amount of infusion against the rebate that Smart Schools was able to put in -- the rebate grew by the fact that -- that the -- whenever the management fee was shrunken from 12 percent, that added to the rebate amount so every year – 

Q. When, in your estimation, were you obligated to pay off that rebate to zero? 

A. Say the question again, please. 

Q. When were you obligated to pay that rebated sum to make it zero? 

A. I don't think there was a definite date for that. I don't think that that rebate needed to be zero at any particular date. Well, at least until the separation of the -- I mean, the agreement was that at the end -- that became a conundrum of course because the plan was for me to -- once GTA was able to pay 12 percent, essentially – 

 Q. All right. Okay. I'm not sure that you're answering my question anymore. 

 A. Okay. All right. 

Q. If you didn't feel that you were obligated to pay that to a zero by any particular date, what about that general accounting principle -- or government accounting principle 60 days? 

A. I was obligated to pay that within a 60-day period. 

Q. But then you create a new one? 

A. Yeah, that's right. 

 Q. Just keep creating a new and larger one each year. 

A. (Nodding head.)


15 comments:

  1. wow how sad that's not a prison thought he was being locked up in prison not daycare

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  2. WOW that's prison? sounds more like daycare

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  3. Why do you think he faked his heart attack and paid off doctors to tweak his records. So he could get into a place like that. I sure hope that someone is looking into the money stolen from Grand Traverse Academy and he gets real prison time for those offenses. Along with his buddies Noss and Lynch. Time to stand up for what is right and clean up these schools, take care of children and the teachers. These charter cheaters only get away with what they do with the help of their board members and an administration willing to sell their souls for money and power.

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  4. It is a very comfy prison to say the least. But, at least he's finally there. It was long overdue.

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  5. I imagine he was flown there with a federal prison guard? Or did they let him fly there on his 'honor' with our tax dollars paying for his flight of course.

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    Replies
    1. He likely would have been required to "self-surrender" on his own dime.

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    2. Thank you, Miss Fortune, for the info. Hope he is soon charged with the other crimes, like the $5 million at the GTA. We all know he is guilty of that and many other crimes too.

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    3. Roy Bradley must be in prison by now too, but probably not in such luxury conditions as Ingersoll.

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    4. Roy Bradley is not in federal custody; he has not yet been sentenced in the tax fraud case.

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  6. The federal camps are cheaper to run for the non-violent felons. If they are stupid enough to violate the rules on the "honor code", they go to adult prison. Ingersoll and honor? LOL

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    1. Maybe Ingersoll will try to be a decent inmate, not because of honor (which we all know with him there is NO honorable cell in his body), but because he wouldn't want to go to a regular adult prison. He'll probably be telling his prison colleagues that it was all a government conspiracy and that he was still innocent (Him innocent, that's laugh!) and was framed.

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    2. Prisons are full of innocent men...and women.

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  7. Think about it? At least for the next couple years he will be like a dog with a shock collar LOL

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    1. "Dublin is a prison with culture. Solar panels decorate the roofs; the library is stocked with classics; civilized prisoners are allowed to work off-site with supervision. Serving time is as easy as the breeze that wafts through the windows."

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