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Tuesday, August 15, 2017

DEFAULT IN OUR STARS: Wide-Ranging Accounting Fraud Covered Up Theft Of Millions From The Grand Traverse Academy; Brazen Misappropriation Of Funds By Steven Ingersoll Camouflaged By Financial Statement Alchemy. SEC Complaint Filed!

WHERE WAS THE AUTHORIZER? GTA BOARD? 

DID THE GRAND TRAVERSE ACADEMY BOARD INFLATE THE SCHOOL'S ASSETS AND REVENUE TO DECEIVE BOND INVESTORS? THE AVAILABLE EVIDENCE INDICATES THE ANSWER IS “YES”!

During a seven-year period (between 2007 through 2014), the Grand Traverse Academy presented deliberately misrepresented, misstated or omitted its financial statement data for the purpose of misleading bondholders and creating a false impression of the charter school's financial strength.

Fraud in financial statements takes the form of overstated assets or revenue or understated liabilities and expenses.

Over a seven-year period (between the fiscal year ending June 30, 2007, through the fiscal year ending June 30, 2013), the Grand Traverse Academy carried on its books six- and seven-figure amounts classified variously as “amounts receivable from sources other than governmental units”, “prepaid expenses” or “related party receivables”. 

Although he has yet to be criminally charged with embezzlement for the years-long scheme he perpetrated with the Grand Traverse Academy board's cooperation and consent, Steven Ingersoll admitted under oath in late 2015 during his sentencing hearing utilizing a fabricated accounts receivable scheme as financial cover for diverting millions of dollars from the Grand Traverse Academy. 

Under oath.

In short, Ingersoll paid himself his entire management fee in a lump sum and the beginning of each school year based on an estimated budget. 

At the end of each fiscal year, when the budget required an inevitable downward adjustment, Ingersoll booked his annual overpayment as a “receivable”, then used school funds at the beginning of the next fiscal year to repay the receivable, and then created a new (and even larger) receivable each year.

In its 2010 audit, the Grand Traverse Academy revealed it was owed $2,715,251, an amount classified as “amounts receivable from sources other than governmental units”. 

The 2011 audit revealed that the Grand Traverse Academy was owed a whopping $2,500,000 from “related parties”, the first use of that classification. In 2012, the “related party receivable” amount had ballooned to well over $3.5 million dollars. That “related party receivable” amount was attributable to Steven Ingersoll, who admitted his debt during a May 20, 2013 Grand Traverse Academy board meeting with Mark Noss, Kaye Mentley and attorneys from the Thrun Law firm. 

So why were the obvious red flags ignored, and will there be consequences for inflating financials to deceive bondholders and investors?

The scale of Ingersoll's misappropriation of funds at the Grand Traverse Academy raises a larger issue: providing incomplete and inaccurate information could lead to securities fraud charges.

By making misleading public statements in regards to the deteriorating financial state of the Traverse City charter school, its board of directors provided incomplete or outdated information to potential investors, including violating a general fund balance bond covenant.

In a May 6, 2013 SEC press release, George S. Canellos, Co-Director of the SEC’s Division of Enforcement, said, “Statements that are reasonably expected to reach the securities markets, even if not prepared for that purpose, cannot be materially misleading”.

I am conducting an in-depth investigation of fraud, and the results are shocking, like the table below that reveals the Grand Traverse Academy's general fund balances without Steven Ingersoll's financial padding. 

Stay tuned.

 

7 comments:

  1. These are criminal acts and they should definitely be prosecuted for them. What attorney wouldn't love this piece of cake trial. Since you have laid it all out plain and simple you have done a lot of the ground work Anita. Come on District Attorney's pick this one up and run with it for the good of your community and our children. Make a better city, don't dirty it up by hiding what she has uncovered.

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    1. Amen... do your part now, State of Michigan, and go after them big time. Otherwise it's simply an invitation for further fraud by GTA and others like it.

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  2. Just to let people know - Ingersoll's and Noss's IVL (Integrated Visual Learning aka I Value Loot) is not mentioned at the Bay City Academy's web site; it is still mentioned at the BCA's satellite campus, North Central Academy, in Mancelona. Interesting. Wonder how that "curriculum" and fee for its use is being done, if it still is even at the one campus.

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  3. GTA has until the end of August to get the 2.3 million dollar loan- correct? Does anyone know what'll happen if they are unable to secure a lender? I pulled my child from that school due to all of the blatant corruption and I truly had no idea how for profit charter schools had so many opportunities to launder money like this. It is so utterly disappointing/disgusting to me this happened in the first place, and I must say- had I taken the time to research these shenanigans back in 2007 when the shit was hitting the fan back then- I would've pulled my children back then! Thank you Anita for all of your hard work and exposing GTA's board for what it truly is! Parents- do not kid yourselves that board- Lesly Werth runs that school and has fostered corruption from the get go. She is one of the only board members that still sits there on her throne and she was there when Ingersol was embezzling and her name was on the dotted line when she signed off on falsified bank documents-correct? That all being said why the hell is she still there? Why wasn't she indicted? Do the right thing for your children GTA parents- start transitioning your children back into real schools, put an end to all of this corruption!!

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    1. Werth has been a board member since the school opened in 2000.

      While there is no evidence Werth "signed off on falsified bank documents" per se, she was a board member in 2013 and received an email from Mark Noss sent an email regarding a dispute that arose after the Grand Traverse Academy Board’s November 8, 2013 meeting.

      According to government documents released in connection with Ingersoll’s sentencing hearing, Noss was responding to an email Ingersoll sent to him on November 24, 2013, denouncing CPA firm Dennis, Gartland & Niergarth's presentation of the “final audit and unexpected finding that implied ‘abuse’ of public funds.”

      In his December 6, 2013 email to Ingersoll, Noss revealed that he'd followed Ingersoll's direction and sent an email to the entire board pushing against DGN's position that “SSM had not transferred cash to service the FYE accounts receivable balance on GTA’s books at FYE 12.”

      Ingersoll disputed DGN’s contention that he had not transferred cash from his accounts to the Grand Traverse Academy to “service the FYE accounts receivable balance” during the fiscal year that ran from July 1, 2011 through June 30, 2012.

      In a November 24, 2013 email to Mark Noss, Ingersoll bitched to Noss that “I disputed that contention both verbally and in management’s written response. The auditors verbally repeatedly stated that there was no evidence of cash transfers. I have stated that bank statements that they should have reviewed would confirm those transfers. I have attached the confirming bank statements for your review. Please share these statements with your board member colleagues to give them comfort that those transfers did occur.”

      Lesley Werth was indeed one of the Grand Traverse Academy board members that supported the fiction that Ingersoll had repaid $1.8 million.

      However, Ingersoll used bank statements he’d created himself, crude forgeries accepted as “proof of payment” by the GTA board, which then included Lesley Werth, Mark Noss, Larry DeYoung, Kim Elliott and Brad Habermehl.

      Later, during the sentencing phase of Ingersoll’s federal tax evasion trial, bank records authenticated by federal prosecutors revealed Ingersoll did not repay roughly $1.8 million to the Grand Traverse Academy as he'd claimed.

      An October 19, 2015 court document revealed Ingersoll transferred $1,748,300 to the GTA, but transferred $1,863,000 back to SSM.

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    2. Done!! Now we watch the train as it prepares to wreck itself on the tracks

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    3. Ingersoll, the "bank transfer king" of IVL Land - I Value Loot Land. Mr. Philanthropist/Fillanthropist (Fill-up-My Bank Account) of the year.

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