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Friday, July 4, 2014

TRUST, BUT VERIFY: "Clueless" Grand Traverse Academy Board Reportedly Trusts Mark Noss To "Follow Their Directive"

Although he never claimed credit for the old Russian proverb ("doveryai no proveryai") that translates in English to "trust, but verify", former President Ronald Reagan adopted it as his signature phrase.

But if Mr. Reagan had read yesterday's Traverse City Record-Eagle story, he may have suggested a variation for the Grand Traverse Academy's Board of Directors to consider: verify and verify.

While the story, "Charter school's finances handled by indicted founder's daughter-in-law", does break some new ground regarding the Board's 4-1 vote on June 27 to "urge Noss to reconsider some management employees who worked for Smart Schools", it also trods a well-worn trail already cleared by this blog's reporting.


For example, the story states that Flint-area optometrist and Board President Bradley Habermehl said he noticed after Ingersoll's indictment that correspondence about the school's finances came from Gretchen Ingersoll, Steven Ingersoll's daughter-in-law.

“After inquiring what the relationship was and what was going on, it came up she was still doing the books, and had been doing the books for Smart Schools,” said Habermehl.

While it's unclear from the Record-Eagle story whether or not Habermehl had previously been aware of Gretchen Ingersoll's involvement with Smart Schools Management's financial reporting, it shouldn't have been a surprise to Habermehl, who'd most recently served as the Board's Secretary and formerly as its Treasurer.

As shown at left, a Grand Traverse Academy 2014/2015 projected budget dated February 5, 2014 and still available this morning on the Academy's website, clearly shows Gretchen Ingersoll as its "Author".

Back on June 13, this blog revealed that Ingersoll's daughter-in-law, Gretchen, and Roy Bradley's daughter, Kristy, were both working for Ingersoll's Smart Schools Management, Inc. 

Gretchen Ingersoll, who works remotely, and Kristy Bradley manage the financial affairs for Ingersoll's Bay City Academy. [NOTE: Roy Bradley is Ingersoll's co-defendant, per the April 10 federal indictment.]

That same post also revealed that Gaylord resident and Edward Jones financial advisor Luke Noss, brother of Full Spectrum's Mark Noss, received the contract to establish the original Smart Schools Management, Inc. 401(K) on behalf of Steven Ingersoll, who remains listed as the plan's sponsor and administrator.

On April 28, this blog revealed publicly-available documents that disclosed Ingersoll's Smart Schools Management, Inc. failed during 2012 to transmit $42,962 (nearly half of the $96,592 in total contributions withheld from 2012 employee paychecks) into the respective employee 401(k) accounts within the legally-mandated time frame.

During 2012, the reports also reveal that Steven Ingersoll took an early, "in-service distribution" of $217,562 from the fund, and state the contribution delinquency as still "pending", apparently remaining unresolved.


Habermehl was quoted in the Record-Eagle story, saying the Academy Board voted 4-1 to "urge Noss to reconsider some management employees who worked for Smart Schools."

"It's just basically moving forward with a new management team. How are we moving forward with a new team when we have all the same high management employees running the show with Mark," Habermehl said, asking what can only be termed, in light of recent developments, a disingenuous question.

As I've reported ad nauseum on this blog, the personal and professional ties between Mark Noss and Steven Ingersoll go back over 30 years, and Noss's son-in-law, former insurance agent Brian Lynch, currently works for Ingersoll as the Superintendent/President of Educational Services for the Bay City Academy and Mancelona's North Central Academy. 

While friendships and close business relationships can be expected in small towns like Traverse City, so too can the continuous loop of organizational insularity.

Habermehl's question ("How are we moving forward with a new team when we have all the same high management employees running the show with Mark?") reminds me of this exchange between Captain Renault and an employee of Rick's CafĂ© AmĂ©ricain in the classic film, "Casablanca":
Renault: I’m shocked, shocked to find that gambling is going on in here!
Employee of Rick's: [hands Renault money] Your winnings, sir.
Renault: Oh, thank you, very much. Everybody out at once!

Habermehl was quoted in the Record-Eagle article saying the Grand Traverse Academy Board "hopes Gretchen Ingersoll will leave, as well as any other employees who crossed over from Smart Schools management."

"I have no clue which (other) employees. We know for sure Kaye Mentley and Gretchen Ingersoll," Habermehl said. "If there are other ones we want Mark to take that under consideration, as well."

Habermehl said board members wouldn't ask for a full list of employees, but "trusted Noss to follow their directive". He said he didn't know Gretchen Ingersoll's title or her full job description.

It appears, from the words attributed to Habermehl by the Record-Eagle, that a breakdown of accountability within the Board may have led the group to embrace the noxious artform known as "plausible deniability".

Plausible deniability is a condition under which a person or persons' culpability might be denied, or at-least mitigated, by pointing to a situation that either leads them to take the action they took, or to deny that they were ever responsible in the first place.  

But that's unlikely to work in this case.


Since neither Kaye Mentley or Mark Noss returned the Record-Eagle's "requests for comments", it's impossible to know how either one would answer the questions posed in this story.

However, it's clear from recent coverage that the fortunes of Steven Ingersoll and Mark Noss are inextricably bound together.

Ingersoll, along with five co-defendants, was indicted on April 10 in Bay City for activities relating to a $1.8 million Chemical Bank loan he received to remodel a former Bay City church building into the Bay City Academy.  The indictment alleged that Ingersoll, and four co-defendants, diverted nearly $1.0 million dollars into his personal bank accounts.

Buried within the federal indictment was the allegation that Ingersoll had used some of the money diverted to "reduce his indebtedness to the Grand Traverse Academy resulting from advances Steven Ingersoll had made to himself from funds belonging to the Grand Traverse Academy”.

Questions regarding the facts revealed in the Grand Traverse Academy's June 2013 fiscal audit still remain unanswered to this day, including a forensic accounting of the missing $2,338,980 (a management fee overpayment Ingersoll reportedly advanced to himself) and the slipshod method the Academy's Board chose to allow Ingersoll to "work off" the misappropriation.

Until the facts are revealed by an investigation, we may never know what the previous and current Academy Boards did upon discovery of the missing money, as detailed in the June 2013 audit.

The missing money will be a focus of the board's next meeting on July 18 at 12:30 p.m.

After seeing what happened after the Academy's Board trusted Steven Ingersoll with millions of taxpayer dollars, I recommend utilizing Mr. Reagan's updated signature phrase:

Verify...and verify.

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