}

Tuesday, August 29, 2017

FOR THE LOVE OF MONEY: Mark Noss Agreed To Personally Assume Charter Cheater Steven Ingersoll's Obligation To Repay $900,000+ Traverse City State Bank Line of Credit Debt--BEFORE Noss Was Awarded The Grand Traverse Academy's Lucrative Management Contract!

BREAKING NEWS: AFTER MICHIGAN FINANCE AUTHORITY REFUSES TO LOAN MONEY TO GRAND TRAVERSE ACADEMY, BOARD HIRES FINANCIAL ADVISOR TO CRAFT MUNICIPAL BOND OFFERING TO REFINANCE $2.4 MILLION TRAVERSE CITY STATE BANK LOAN AND FUND STATE AID ANTICIPATION!

Once again, I'm taking on the Sisyphean task of correcting the record...Record-Eagle, that is.

As I revealed yesterday, the Grand Traverse Academy board has retained the services of a financial advisor to work out a solution for the school's ongoing debt crisis. 

Contrary to the published assertion by Lesley Werth, president of the Grand Traverse Academy board, the Michigan Finance Authority has no direct role in the still-unresolved solution, although it's aware of the board's effort and its current status.

Neither Werth nor GTA superintendent Susan Dameron have been forthcoming about the size of the loan the school is seeking, and whether the roughly $900,000 owed to Traverse City State Bank by former manager Mark Noss will be folded into the amount. 

Werth's comments in the August 27 Record-Eagle article appeared to cloud an April 28, 2017 statement issued by the GTA board on the Noss matter, one that seemed to close the door on any payment of Noss's debt by the school.



In a stunning comment that appeared to upend a situation supposedly put to bed months ago, Werth revealed Traverse City State Bank officials are seeking repayment from the academy and not Noss. 

Werth argued in the Record-Eagle article that it’s not GTA’s duty to repay the loan. “They want to be made whole. We understand,” Werth said. “We’ve lost a lot of money because of Ingersoll. We get it. But we’re not going to take that on. We can’t. We can’t take on that obligation. … Unless there’s something that demonstrates that it’s our obligation, we’re not going to accept it.” 

Silly me, I thought this issue was settled! 

After spending thousands on legal fees, including nearly $14,000 in the 4th quarter of the most recent fiscal year (ending June 30, 2017), Traverse City State Bank is seeking repayment not from Mark Noss but from the Grand Traverse Academy?

What!?

Did TCSB file a civil suit against the school? 

If not, in what form did the bank's demand for repayment come? 

And where are those records?

My peerless examination of this issue, available at this link, revealed that Mark Noss assumed the obligation to repay Steven Ingersoll's line of credit debt before he assumed managerial control of the Grand Traverse Academy.

In fact, a contemporaneous string of emails from early March 2014 among Steven Ingersoll, Mark Noss and TCSB's Dan Stahl revealed a deal was struck on March 16, 2014 for Noss to assume the obligation to repay Ingersoll's outstanding debt, days before the GTA board voted to sever ties with Ingersoll. 

Noss wasn’t formally awarded a management contract until March 19, 2014. 

And what about the deposed Mark Noss?

An email excerpt that appeared in the Record-Eagle article revealed Steven Ingersoll's sidekick seems to be getting ready for Halloween, donning a “good guy” mask and trotting out this hoary canard: 

“I voluntarily contributed $211,000 of my fee in fiscal year 2017 to keep them out of deficit in 2015-16,” Noss wrote in an email to a Record-Eagle reporter. 

However, the true story of Full Spectrum Management's fee reduction is much cloudier, and far less altruistic. 

According to a September 14, 2016 email sent by Rebecca Clawson, a CPA and Finance Specialist in the Charter School Office at Lake Superior State University, to GTA board members Lesley Werth, Samer Bourdkani and Charter Office head Chris Oshelski, Noss did not actually refund $209,789.34 to the Grand Traverse Academy, he merely booked it as a Prepaid Expense for the next fiscal year. 

By shifting the contribution into the next year, FYE June 30, 2017, Noss was able to record his “reduction” in the FYE June 30, 2016, craftily engineering a financial balance sheet maneuver that ultimately paid off with positive PR—while maintaining a tight grip on his $852,341 management fee payment for 2016. 

In her email, Clawson advised GTA board president Werth about the proper method of accounting for the $209,789.34 fee reduction. Referencing a conversation she'd had with FSM accountant, Angela Bush, Clawson detailed appropriate guidelines for handling the transaction: 

“Ms. Bush explained that the Prepaid Management Fee was recorded because GTA over expended their budget and Mr. Noss decided to “forgive” the Management Fee for the last quarter of FY 2016 (Apr-June 2016). 

I questioned Angela about the proper accounting treatment of the Prepaid and if it was GAAP; she stated that is was upon GTA’s auditor’s recommendation that the item be recorded as a Prepaid Asset. 

I asked if she would confirm with the auditor (Mr. Sweeney) about the treatment of this item regarding the Annual Audit; she included me in an email to Mr. Sweeney, which I have not yet seen a response confirming this item. 

In the event that the Prepaid Management Fee is displayed in GTA’s Annual Audit Report, then the Academy Board needs to be aware that there should be no cash (or check) paid to FSM during 1st Quarter of FY 2017 (Jul-Sep 2016) for FSM’s Management Fee. 

There should be no payment because, in effect the Academy has already paid for the service in the last quarter of FY 2016 (Apr-Jun 2016) even though Mr. Noss forgave the fee. 

In the Academy’s accounting records for the first quarter of FY 2017 the Prepaid Management Fee should be reduced and applied towards the Management Fee expense. 

However, there should not be a cash (or check) transaction in relation to FSM’s Management Fee. It is incumbent upon the CSO to inform the Board that the forgiveness of fees should be confirmed in writing, ideally, prior to the execution of the transaction, in order to protect the Academy from recourse (if any). I did not see that the Management Contract between the Academy and FSM addressed forgiveness of fees.” 

Kind of makes you wonder who's really in charge at the Grand Traverse Academy.