}

Wednesday, August 9, 2017

COOKING THE BOOKS-PART 2: DOES THIS INFLATED GENERAL FUND BALANCE MAKE ME LOOK FAT? By The Numbers: How Steven Ingersoll, With The Participation Of The Grand Traverse Academy's Board Of Directors, Manipulated Financial Statements For Years To Conceal The True Financial Performance Of The Traverse City Charter School!

On June 30, 2011, Steven Ingersoll propped up the financial health of the Grand Traverse Academy with a last-minute $700,000 cash infusion from his personal bank account in order for the school he managed to meet a crucial bond debt covenant.

As revealed in an August 8, 2017 post on this blog, if he hadn't, the Grand Traverse Academy would have violated a bond covenant requiring the school to maintain a minimum percentage of its unassigned fund balance at the end of each fiscal year. 

Based on the parameters defined in the bond issue, the school should have had 10 percent of its operating expenditures remaining in the fiscal year ending June 30, 2011. 

However, the Grand Traverse Academy didn't meet that target: without Ingersoll's cash infusion, it had less than $450,000. 

But, inflated with Ingersoll's phantom funds, the Grand Traverse Academy's reported a $1,221,510 general fund balance in its 2011 annual financial report and complying with the bond covenant.

After violating the important financial bond covenant for the last four years (between 2014-2017), it appears the Traverse City charter school may finally be forced to confront significant financial consequences. 

But, as I discussed extensively in another post, which appeared on August 7, 2017, the financial statement manipulation likely began in 2007, the year the $16.2 million bond was issued.

Propped up in 2011 with Ingersoll's last-minute $700,000 cash infusion, the Grand Traverse Academy benefited again in 2012 when Ingersoll fabricated a $3,548,319 asset by recording his seven-figure debt to the school as a “related party receivable”. (Ingersoll later sought to have his massive debt, described in a March 3, 2015 post on this blog, characterized as a loan.)



In 2012, the Grand Traverse Academy asserted it delivered a $1,300,419 general fund balance, exceeding the bond covenant amount by nearly $500,000.

In 2013, the Grand Traverse Academy and its manager, Steven Ingersoll, converted what would have been a -$1,378,931 deficit into a $960,009 positive general fund balance by booking Ingersoll’s “non-spendable” $2,338,930 “prepaid expense/related party receivable” as an asset, creating the illusion of a stronger financial position by offsetting that original seven-figure deficit with Ingersoll's multi-million debt—which was part of the fraudulent conversion of nearly $5.0 million from the Grand Traverse Academy, a multi-year scheme Ingersoll acknowledged on December 9, 2015, during his sentencing hearing.  Ingersoll admitted that he'd fabricated the accounts receivable scheme as financial cover for his diversion of funds from the Grand Traverse Academy.

During the fiscal year ending June 30, 2013, the Grand Traverse Academy’s finances began to go off the rails—but it appears no one noticed.

Finally forced to confront Ingersoll's massive debt during a May 20, 2013 board meeting, the Grand Traverse Academy board did what it always did—it made allowances for Steven Ingersoll.

The board agreed to a repayment plan that would have required Ingersoll to manage the school for three years while foregoing his seven-figure annual management fee. However, Ingersoll never completed the repayment plan, and was replaced shortly after by former Grand Traverse Academy board president (and longtime Ingersoll business associate) Mark Noss, who assumed management of the school on March 19, 2014. Ingersoll was federally indicted on April 10, 2014, along with his wife, brother and two others.


The Grand Traverse Academy ultimately went off a fiscal cliff in 2014, spurred by “the write-off of the unrealizable prepaid expense of $1,623,020. As of June 30, 2014, the Academy does not meet parameters of its bond debt covenant, a condition that the trustee may address on June 30, 2015 if the condition persists.” 

And does it ever persist.















4 comments:

  1. Wow, so what do the bond issuers have to say about this? Don't you think this kind of crap needs to stop right here and right now? This school is criminally run by charter cheaters Ingersoll/Noss/board memebers/superintendents. This doesn't just happen. Does the state and the bond issuers not care about this? It looks like they are in violation of so many covenants and laws. Even the years the money was up, didn't that money just get taken right back by Ingersoll/Noss after they showed the bond issuers their statements?
    This is outrageous and needs to be investigated immediately!

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  2. If they start digging deep into this charter school, it would likely make them nervous that they need to start digging into the finances of other charter schools. What people need to realize about for-profit charter schools is they're doing exactly what they're designed to do - leach as much public money out of real public schools, making those schools more anemic and harder to provide essential services. The end game is no public schools, and your options for educating your kids is enroll them into one of these criminal enterprises cleverly disguised as a school, a private school that you likely can't afford, or home school.

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  3. Your analysis of the whole GTA financials is outstanding and clear. How the hell can so many people miss that Ingersoll/Noss and the whole board have been so deceitful and crooked.

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  4. And Betsy DeVos will be heading that criminal enterprise, such a disaster. Anyone that can stop this demise of the public schools needs to get after it now.

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