}

Friday, September 29, 2017

HEADS ROLL AT GRAND TRAVERSE ACADEMY: Three Staffers Shown The Door As Charter School Seeks To 'Live Within Its Means' While Enrollment Drops

“We’ve lost a lot of money because of Ingersoll. We get it.”

Grand Traverse Academy superintendent, Susan Dameron, today announced the layoffs of three staffers in an email to GTA parents. According to Dameron, although the school ostensibly saved a significant amount of money after it kicked Mark Noss to the curb, sinking enrollment and stricter financial controls required today's human resources reengineering.

In her email, Dameron maintained a “condition of the loan agreement was that we retain a certain amount in our fund balance, or cash reserves, each month.” 

What Dameron apparently forgot to mention? 

The shitty track record the school's had during the last several years, frequently violating a condition of its $16.2 million 2007 bond by letting its general fund balance sink as low as $18,112. The school has violated that covenant during four of the last five years, after Steven Ingersoll left in 2014. 

Once Ingersoll was no longer artificially propping up the school's financials with his prepaid expense/accounts receivable/lease contributions financial statement fraud tricks, the tide went out...and everyone saw who was swimming naked. 

Here's the truth: the Grand Traverse Academy worked with PNC Bank, part of PNC Financial Services Group Inc., to issue a short-term municipal bond. 

Although its unclear from Dameron's email if the deal has actually closed, PNC Bank is underwriting the bond offering, which will likely bundle payment of the Grand Traverse Academy's now-delinquent $2,330,000 Traverse City State Bank loan with a multi-million dollar state aid note anticipation loan. However, the Michigan Treasury is not directly involved with the transaction. 

In fact, the Treasury Department's spokesperson exclusively confirmed the following to me in an August 28 email: “Grand Traverse Academy hired a financial advisor who worked with the academy and PNC Bank to develop a customized solution for their School Aid Note. To date, no money has been provided to Grand Traverse Academy. We expect final credit approval, paperwork and processing in two to three weeks.” 

Here's Dameron's email:

Dear GTA Families, 

As you may know, our school board in June voted to discontinue Grand Traverse Academy’s relationship with our former education service provider in favor of becoming self-managed. As a result, they have also engaged the services of a professional employer organization to oversee human resources and an accounting firm to manage our finances. This move has saved us a substantial amount of money and will provide us with the expertise necessary to ensure that our organization remains professionally staffed and fiscally sound. 

Unfortunately, in looking at our staffing numbers, we are overstaffed for the number of students that we currently have. Due to this overstaffing, we needed to reduce our elementary staff by two classroom teachers and one curriculum enrichment teacher. Parents whose children will be affected were contacted individually today so that the transition to a new teacher will be as smooth as possible. This was an extremely difficult decision, and I assure you that it was not made lightly or without a thorough review of every other alternative as we work to maintain and improve the financial health of our school. 

We are pleased to report that these positive changes were recognized by the Michigan Finance Authority, which enabled us to refinance our outstanding state aid anticipation note through their partnership with a local bank. A condition of the loan agreement was that we retain a certain amount in our fund balance, or cash reserves, each month. This provides a financial cushion and is an indicator of our school’s financial health. Upon review of staffing by the schools leadership team it was determined that our school was overstaffed based on our current enrollment. The conclusion was that staff reductions were unfortunately necessary in order for us to be financially responsible. These layoffs are so unfortunate and we regret the loss of any of our valued GTA family. However, we are confident that this is a temporary financial situation and that we are well on the way to rebuilding our fund balance by continuing to stay within our means. 

Looking back, we have so much to be proud of in just the past year: 

1. U.S. News & World Report awarded GTA with a bronze medal in their 2017 Best High Schools list (one of only five districts in our region to have received an award). 

Our high school English proficiency rate was nearly twice that of the state, and significantly higher than every other school district in the region in their analysis, and our high school math proficiency rate exceeded that of the state, and was higher than all but one district in the region. 

2. The Class of 2017 received a record $1,526,000 in college scholarships, a testament to their college readiness through the education they received at Grand Traverse Academy. 

3. Elementary NWEA Measures of Academic Progress results for 2016-17 indicate the kind of improvements from Fall to Winter to Spring that we want to see; what’s more the average scores of GTA students are above or well above the grade level averages in all areas but 1st grade reading, which is only behind by two points. 

4. Grades 3-8 M-STEP testing data from Spring 2016 to Spring 2017 show significant improvement in English Language Arts and Math proficiency, as well as a very large increase in student academic growth. 

5. Spring 2017 PSAT aptitude test score averages for 8th- 9th graders and 10th graders are significantly higher than the state average. In addition, our students’ college and career readiness scores are significantly higher than state averages. 

Grand Traverse Academy has established itself as a leading school of choice for parents across the region who seek an alternative public education for their children: a dedicated staff, loyal parents, hard-working students, a challenging curriculum, character education, and much more! We appreciate the confidence you have placed in us, and want you to know that we have a clear plan for continuing to move forward. As always, please contact me or member of our board if you have any questions or concerns. 

Sincerely, Susan Dameron 
Superintendent/Principal Grand Traverse Academy  

Looking back, eh Susan? 

Next week, I'll be looking forward...



“OUTLOOK IMPROVES” AT GRAND TRAVERSE ACADEMY: But Where Is The New Loan? And The Investigation Into The Loss Of Millions?

“We’ve lost a lot of money because of Ingersoll. We get it.”

In an August 27, 2017 Traverse City Record-Eagle article reporting on what was described as a “financial pinch” at the Grand Traverse Academy, its Board president, Lesley Werth, publicly admitted the Traverse City charter school had “lost a lot of money because of Ingersoll.”

So where is the follow-up reporting, and what happened to the Academy's promised PNC Bank-underwritten municipal bond offering?

Anybody?

And after years of making misleading public statements (“There were times when the resources were just not there. So SmartSchools basically pledged or rebated that money back, saying ‘at some point in time we will repay what we’re calling a prepaid expense.’”) as the charter school’s financial condition was deteriorating due to the fraudulent conveyance of approximately $5.0 million from the charter school by its former manager, Steven Ingersoll, what does Werth's staggering admission mean to a future criminal fraud investigation?

Anybody?

Thursday, September 28, 2017

ROBERT BUCKHANNON'S CO-DEFENDANT, TERRY RAWSTERN, TAKES A DEAL: Sentencing Set For December 28, 2017 In Las Vegas


Terry Rawstern, co-defendant along with Robert Buckhannon in a $34 million hedge fund fraud case, plead guilty yesterday morning. During the 35 minute change of plea hearing, Rawstern plead guilty to one count of Conspiracy to Commit Wire fraud.

In return, the government agreed not to bring any additional charges against Rawstern arising out of the investigation in the District of Nevada which culminated in the plea agreement and based on conduct known to the United States. 

In addition, the remaining counts of the indictment will be dismissed at the time of sentencing, which is scheduled for December 28, 2017.

Based on the plea agreement’s “Offense Level Calculations” it’s likely Rawstern, like Buckhannon, may be sentenced to less than 12 months in prison. However, the stipulations outlined in the agreement, signed on July 18, 2017 by Rawstern, do not bind the judge who'll sentence him in December.

In addition, Rawstern was ordered to make restitution in an amount of $248,892.58. 

Pretrial Services requested Rawstern's pretrial supervision be terminated, and that Rawstern's passport be returned to him.

According to the October 1, 2014 indictment, from April 2008 through April 2010, Buckhannon and Rawstern and co-conspirators were managing members of two Bradenton, Florida-based hedge funds, Arcanum Equity Fund, LLC and Vestium Equity Fund, LLC. 

The duo allegedly engaged in a fraudulent scheme to misappropriate $34 million they raised from investors by misrepresenting how they would use the investors’ funds and misrepresenting that there were safeguards over the investors’ money, such as an independent trustee and independent fund administrator. 

Buckhannon and Rawstern then looted and bankrupted the hedge funds by taking payments on false and fictitious profits and taking improper and undisclosed loans. The indictment stated that as a result of the defendants’ conduct, investors lost approximately $13.1 million. 

In April 2010, the hedge funds voluntarily filed for Chapter 7 bankruptcy and are now under the control of court-appointed trustees. 

Buckhannon, who's currently peddling (along with Chris Paganes, a Michigan-based hedge fund associate) an unlicensed fertilizer in Michigan aimed at the micro grow marijuana market, is busy trolling dating sites while he awaits his October 31, 2017 sentencing. 

According to his August 1, 2017 plea memorandum, Buckhannon is likely to receive a 12 month sentence and an as yet undetermined restitution. 

If he'd gone to trial and been convicted on one count of conspiracy to commit wire fraud, Buckhannon could have faced up to 20 years in federal prison. 

Wednesday, September 27, 2017

CORRECTING THE RECORD: It Wasn't An “Affidavit Of Indecency”...But It's Still Vulgar

OK, it wasn't really an “affidavit of indecency”, just a colossal mistake.

Although I hoped I'd discovered a new legal tactic used on behalf of Roy Bradley's effort to appeal his tax fraud and conspiracy convictions to the U. S. Sixth Circuit, someone just made a sweet, sweet blunder.
The official case record was corrected late yesterday, with a “Financial Affidavit in Support of Pauper Motion” filed in place of the indecent proposal.

In addition, Bradley's motion to proceed in Forma Pauperis applies to fees only; the attorney, Mark Satawa, will be filing a later motion for indigent defense counsel at a later date. 

In case you just dozed off after “indigent counsel”, a criminal defendant has a constitutional right to an attorney at both the district court and appellate court level. 

Those defendants who are determined to be indigent (unable to afford an attorney) are provided court-appointed counsel.

Publicly-funded counsel, by the way.

Tuesday, September 26, 2017

IN FORMA PAUPERIS: That’s Latin For “Broke-Ass”

ATTORNEY REPRESENTING ROY BRADLEY FILES “AFFIDAVIT OF INDECENCY”? 

COME ON, EVEN I'M NOT FALLING FOR THAT!
  
I've heard of “in loco parentis”, but no affidavit of indecency. More likely, the sealed document Roy Bradley's attorney filed with the Sixth Circuit yesterday was an “affidavit of indigency” submitted after a liquid lunch. 

A defendant has a Sixth Amendment right to counsel upon demonstration of indigency. An affidavit demonstrating financial inability is normally completed during the initial appearance in the case. 

According to the docket below, excerpted from Roy Bradley's appeal of his tax fraud convictions to the United States Sixth Circuit Court of Appeals, Bradley's attorney filed an “indecent” document yesterday, September 25, under seal. In addition, Bradley's attorney filed a motion to proceed in forma pauperis.

Call me crazy, but it in the months before entering prison in early July, Roy Bradley and his wife, Tammy, had enough cash money to come out of pocket with nearly $12,000 in property taxes to redeem several of their properties from the brink of tax forfeiture foreclosure. 

Doesn't sound like they were on the yawning abyss of inevitable paupery, does it?
For example, official Bay County Register of Deeds records reveal that Roy and Tammy plunked down $4,767.02 on March 22, 2017 to snatch their Center Avenue home from the snapping jaws of tax foreclosure.

And about a month later, on April 27, 2017, $2,952.89 was paid by the duo to redeem 510 Columbus Avenue, a building transferred to Roy and Tammy Bradley on February 7, 2012 under mysterious circumstances by Steven Ingersoll.

It's too bad the so-called “affidavit of indecency” was filed under seal. 

It sounds a lot more interesting than this plain old vanilla financial form.


But the feds may have the last laugh on the Bradleys: on July 12, 2017, a month before Roy Bradley left home to check into the Grey Bar Hotel, they slapped a $54,235.52 judgment on his and Tammy's Center Avenue pad. 

Welcome to the jungle, baby, it gets worse here every day!