One day after he originally responded to the April 30, 2020 adversary complaint filed against him and Mark Noss in federal bankruptcy court by Kelly M. Hagan, the Chapter 7 Bankruptcy Trustee for the estate of Full Spectrum Management, Steven Ingersoll paid a whopping $3,488,049.51 to the IRS—satisfying his unpaid tax obligations for the years 2009, 2010 and 2011.
Ingersoll's 23-page do-over, dated September 13, 2020 and made public this afternoon, essentially asserts that Mark Noss had to keep his monthly $15,000 cash flow to Ingersoll secret because the license to use Ingersoll's horseshit Integrated Visual Learning must be “maintained in strict confidence”.
Such crap!
While his phony-baloney agreement with Ingersoll ostensibly required Noss to maintain any Proprietary Information provided to him from Ingersoll in strictest confidence (of which there was likely none), Noss screwed the pooch when he (and I quote) “never discussed or provided the agreement to the Bank (Traverse City State Bank) or GTA for review or approval”, despite requiring payments of $150,000 a year to Smart Schools, Inc., a Steven Ingersoll owned entity, using funds Noss was set to receive from the Grand Traverse Academy under Full Spectrum’s new agreement with GTA.
Translated, that means Noss hid the fact from the bank that he'd signed a secret agreement with Ingersoll that resulted in the diversion of nearly $400,000 to Smart Schools, Inc.
Had the bank known of the agreement, it's likely Noss would not have gotten the loan deal, carefully concocted on his behalf by Steven Ingersoll.
There are several “badges of fraud” that would draw the attention of a creditor or a bankruptcy trustee: Noss began the transfers to Ingersoll shortly after he assumed a substantial debt, and the transfers were concealed by Noss until the practice was exposed on March 15, 2016 by an internal whistleblower—an accountant who’d worked for FSM.
The purported “value” of Ingersoll’s business advice, cited by Noss after the payments were exposed, seem to fall short of the $12,500 monthly payments Noss made.
Instead of paying Steven Ingersoll or one of his myriad LLCs, which would require Noss to issue an IRS Form 1099, Noss paid 'Smart Schools Incorporated'.
If payments are made to a corporation, there's no IRS record of that income.
It's up to the corporation to report its income to the IRS—which “Ingersoll failed to include his receipt of $12,500 per month from FSM, yielding $150,000 per year, in the financial information received from Ingersoll by the government on October 15, 2015 in response to the court’s order directing Ingersoll to provide complete and accurate information regarding his income.” (March 29, 2016; Government’s Supplemental Memorandum Regarding Ingersoll’s Newly Discovered Obstruction Of Justice, United States of America v. Steven J. Ingersoll)
And that's all you really need to know from Ingersoll's 23-page self-penned response, replete with usual excuses (I was cleared by the History of Grand Traverse Academy, my hand-picked forensic accounting firm cleared me of any wrongdoing, my buddy Bruce Harger just loves my ass, blah, blah, blah) and a stupifyingly pompous reference to a short story written by Edgar Allen Poe (in addition to my Political Science major, I had a double minor--literature and speech).
But here's what you won't find in the imbecilic document authored by Ingersoll: any mention of the Thrun letter, a May 30, 2013 legal analysis (produced as a result of a May 20, 2013 meeting at the Grand Traverse Academy) delivered to Mark Noss by Margaret Hackett of the Thrun Law Firm, detailing the firm’s examination of Steven Ingersoll’s financial maneuvering and acts of self-dealing, revealing Ingersoll took advantage of his position as the Traverse City charter school’s Chief Administrative Officer.
Meg Hackett, a Grand Rapids attorney representing the Grand Traverse Academy board, testified during Steven Ingersoll’s federal fraud trial that during a May 20, 2013 Academy board meeting, Ingersoll asked the board to characterize his $3.5 million dollar indebtedness to the charter school as a “loan”.
For years, the Grand Traverse Academy had carried Ingersoll’s growing debt on its books, characterizing it variously as either a receivable, a related party receivable or a prepaid expense. Hackett testified that she was retained in 2009 by former Academy board president Mark Noss.
Although Hackett did not describe the work performed, court documents indicate she later produced a legal opinion in a letter described in court documents as the “Thrun Letter” just days after the May 20, 2013 meeting. Hackett's letter, dated May 30, 2013, was likely a legal opinion related to Steven Ingersoll’s $3.5 million dollar debt to the Grand Traverse Academy.
The letter was followed by another on June 13, 2013—a “demand letter” sent by another Grand Traverse Academy attorney, Doug Bishop, to Steven Ingersoll.
The Bishop letter said his firm had been “directed by the Board to make a demand for immediate payment of all amounts due from Smart Schools Management, Inc. and/or Steve Ingersol (sic). These amounts include, but are not necessarily limited to, any amount formally designated as a receivable on Grand Traverse Academy’s financial statements.” Bishop continued, saying in the June 13, 2013 letter that “the amount due is at least $3,548,319.00, which, to our understanding, was a figure calculated by Dr. Ingersol (sic) as indicated to be due as of June 30, 2012.”
And although Ingersoll has not yet been charged with embezzlement in connection with what attorney Margaret Hackett called during her trial testimony a “substantial unauthorized transfer of funds”, the Grand Traverse Academy Board decided not to seek recovery of that money.
And Ingersoll conveniently left out an admission he made under oath during his sentencing hearing: he fabricated the accounts receivable scheme as financial cover for his illegal diversion of funds from the Traverse City charter school.
Ingersoll made that admission under oath during questioning by Assistant U. S. Attorney Janet Parker on December 9, 2015.
In this excerpt from the official transcript, Parker took Ingersoll through a line of questioning that uncovered the method he used to steal millions from the Grand Traverse Academy.
In short, Ingersoll paid himself his entire management fee (before he’d earned it) in a lump sum at the beginning of each fiscal year based on an estimated budget.
At the end of each fiscal year, Ingersoll euphemistically identified his annual embezzlement as a “receivable”, then used school funds at the beginning of the next fiscal year to repay the so-called “receivable”, creating a new (and even larger) “receivable” each year:
Q. Are you familiar with the term kiting?
A. I know what that means.
Q. All right. What is your understanding of what that means?
A. A bank account that is out of money gets filled with money by drawing money from another bank account that is out of money, that then creates a, you know, a negative balance over here.
Q. Right. And then you make a draw against the first bank account to replenish the second bank account, back and forth, correct?
A. I don't think this is quite the same, if that's what you're implying.
Q. Well, I'm not asking your opinion on that. What I'm asking is why does the rebate continue to grow if you're paying it in full?
A. It was paid in full. The rebate is more a function of the operational activity through the year relative to the funding sources, that is the expenditures through the year versus -- revenues versus expenditures through the year. That's what determined the change in the rebate amount.
Q. But the rebate continues to grow because you've paid this year's money into last year's and now have to take more to keep the process going?
A. Well, the lion's share of the balance of that rebate occurred '07, '08 and '09 if you look at the --
Q. When -- I'm not asking you that.
A. Okay.
Q. It continued to grow. It grew -- by the time of the spring of 2012 it was $3.5 million?
A. Yes. [NOTE: As of June 30, 2012, the end of fiscal year 2011-12, the accounts receivable balance actually exceeded $4.0 million dollars.]
Q. Yes. It was smaller in the preceding year and even smaller in the year before that?
A. That is true.
Q. All right. So why?
A. The revenues were insufficient to cover the expenses and the amount of rebate -- the amount of infusion against the rebate that Smart Schools was able to put in -- the rebate grew by the fact that -- that the -- whenever the management fee was shrunken from 12 percent, that added to the rebate amount so every year –
Q. When, in your estimation, were you obligated to pay off that rebate to zero?
A. Say the question again, please.
Q. When were you obligated to pay that rebated sum to make it zero?
A. I don't think there was a definite date for that. I don't think that that rebate needed to be zero at any particular date. Well, at least until the separation of the -- I mean, the agreement was that at the end -- that became a conundrum of course because the plan was for me to -- once GTA was able to pay 12 percent, essentially –
Q. All right. Okay. I'm not sure that you're answering my question anymore.
A. Okay. All right.
Q. If you didn't feel that you were obligated to pay that to a zero by any particular date, what about that general accounting principle -- or government accounting principle 60 days?
A. I was obligated to pay that within a 60-day period.
Q. But then you create a new one?
A. Yeah, that's right.
Q. Just keep creating a new and larger one each year.
A. (Nodding head.)
The FSM bankruptcy trustee is seeking judgments against Noss and Ingersoll that collectively exceed seven-figures, and to disallow claims against the bankruptcy estate asserted by Noss.
In my opinion, Ingersoll make a rookie card-playing mistake: he showed an empty hand...even though it contained nearly $3.5 million in late July.
Sure hope that the FSM whistleblower accountant is OK and that he or she hasn't had any repercussions from the Noss/Ingersoll dynamic duo deceivers. Looking back, we can bet that Noss is sorry he hired that honest person. Hope there are more whistleblowers out there who come forward.
ReplyDelete