}

Friday, May 12, 2017

THE $2.8 MILLION DOLLAR 'FOREGONE SSM FEE' REPAYMENT OBLIGATION MYTH RUNS UP AGAINST A SIX-YEAR STATUTE OF LIMITATIONS: Grand Traverse Academy Does Not Owe Steven Ingersoll $2.8 Million...Even Though Full Spectrum's Mark Noss Still Insists It Does!

“The Board, recognizing the hazards (and unwelcome publicity) of litigation and all the support that SSM has shown to the Academy over the years, agrees to release SSM from any obligation to reduce the Non-Spendable Fund Balance of approximately $1.6 million in return for the SSM’s agreement to release the Board and the Academy from any claim relating to the cumulative difference between the contractual management fee and the actual management fee (of approximately $2.8 million) that SSM may be legally entitled to as a result of the Reimbursement Resolution.”
July 8, 2014
Settlement agreement draft

Let's put a lie to rest: the Grand Traverse Academy does not owe Steven Ingersoll $2.8 million dollars.

Let me repeat, the Grand Traverse Academy does not owe its former manager, currently ensconced in FCI Duluth, $2.8 million—even though Mark Noss, head of the school's current management provider, would have you believe otherwise.

Noss, fiercely battling to maintain control of the Traverse City charter school, apparently refuses to acknowledge a six-year “statute of limitations” would limit Ingersoll's recovery of those purported “foregone legitimate management fees dating back to 2004” if he chose to file a breach of contract civil lawsuit against the Grand Traverse Academy.

The genesis of the illusory obligation to repay Steven Ingersoll began shortly after his Smart Schools Managment, Inc. was canned by the Grand Traverse Academy board on March 19, 2014.

Jan Geht, an attorney representing Ingersoll, drafted two documents in early July 2014: a settlement agreement and a resolution.

GTA board attorney, Kerry Morgan, forwarded on August 1, 2014, the proposed agreement, which included prepaid expense/contributions calculations by Geht that deviated significantly from those published in the Academy's fiscal audit and the Board's “history” document, to Lake Superior State University's charter school office.

Mark L. Dobias, LSSU's attorney, responded with a terse letter to Morgan dated August 18, 2014, explaining that he had reviewed the documents with Nick Oshelski (then head of LSSU's Charter School office) and CPA Rebecca Clawson. 

The verdict? 

The LSSU charter school office did not approve the proposed settlement and resolution.

Back to the claim that the Grand Traverse Academy owes Steven Ingersoll $2.8 million dollars, let's refer to an exhibit on February 23, 2016 by Ingersoll's defense team during his sentencing hearing.

The chart shown below was created by David Hammel, a forensic accountant hired by Ingersoll.


The column to the far right of the chart calculated SSM’s management fee as a percent of GTA’s revenue. 

Steven Ingersoll testified during his sentencing hearing that he and the GTA board mutually understood that the management fee was not to exceed 12%. 

The chart, however, shows that Ingersoll’s management fee exceeded 12% in years 2001, 2003, 2005, 2011, and 2013. 

In fact, Hammel's chart calculates the 2013 management fee as 15.48%. 

In a February 23, 2016 prosecution filing, the government asserted this “significant discrepancy suggests that Steven Ingersoll did not truthfully disclose the amount of SSM’s management fee as a percentage of GTA’s revenues”

Additionally, Ingersoll previously submitted the “History of Grand Traverse Academy” during his sentencing hearing. 

Page three of that document included a table for the years 2005 to 2012 showing “earnings rebates” from SSM to GTA, “lease contributions,” and “total SSM support.” 


Although Ingersoll testified during his sentencing hearing that he believed that the figures in the “History” document were accurate, he also admitted his defense counsel actually prepared the figures, and not the Grand Traverse Academy board, as former board president Brad Habermehl repeatedly and publicly claimed.

And finally, let's look at the years that would be subject to a breach of contract claim by Ingersoll within the last six years, and the amount potentially recoverable by him through any civil action against the GTA board:

July 1, 2011-June 30, 2012 $822,303.00 
9.38% ($1,067,644.44; difference -$245,341) 

July 1, 2012-June 30, 2013 $1,347,234  
15.48% ($1,047,326.64; difference +$299,908) 

July 1, 2013-June 30, 2014 
(fired March 19, 2014; paid $335,000 cash) 

As you can see, Ingersoll was paid 9.38% during the FYE June 30, 2012, as compared with 12%, which would have netted him $1,047,326.64.

Under terms outlined in the May 4, 2012 resolution (but never formally executed in contract agreement between the GTA and Ingersoll), Ingersoll may claim the school owes him $245,341.

That amount, however, is more than offset the next year, the FYE June 30, 2013. Ingersoll was paid 15.48% of the GTA's revenue, or a management fee of $1,347,234.

With a 12% of revenue management fee calculation, he should have been paid $1,047,324—a gain in the plus column for Ingersoll of $299,908, which more than offsets his potential claim for $245,341 from the previous year.

If you're keeping score, Ingersoll's up by $53,867!

And, although his management firm was fired on March 19, 2014 (during the first year of a three-year repayment plan, which called for Ingersoll to work off his purported $2.3 million dollar debt to the school by reducing cash transfers for future management fees through June 30, 2016), the GTA board, including current president Lesley Werth, former president Brad (I and Steve are 2 of the five) Habermehl and Full Spectrum's Mark Noss, approved a resolution during its November 2013 board meeting authorizing a cash payment of $335,000 to Ingersoll.

So, by my calculations, and taking into account a six-year statute of limitations on recovery under a civil breach of contract suit, Ingersoll's up by $388,867—and the Grand Traverse Academy is under investigation by the Michigan Department of Education and the Michigan Attorney General.

2 comments:

  1. When is the board and community going to get real. Mark Noss is an extension of Steve Ingersoll and will absolutely take full advantage of the school and the student to bolster his fat lifestyle. Wake up!
    And if the community lets the board side with Noss, then the board needs to be replaced along with Noss. Obviously, everyone already understands Lake Superior State University is in on the deal, they ARE NOT going to help you straighten this mess out. Take action for your kids, your community and future generations.

    ReplyDelete