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Thursday, July 9, 2015

FLIP-FLOP? Has The Grand Traverse Academy Board Changed Its Stance, And Is It Finally Ready To Seek Return Of $1.67 Million Dollars From Convicted Felon Steven Ingersoll. (Psst...Don't Believe The Hype!)


Interlochen Public Radio reported today the Grand Traverse Academy Board could finally be ready to recover $1.67 million dollars from convicted felon Steven Ingersoll...maybe.

However, IPR reveals the Academy Board President Brad Habermehl is “not confident they (the Board) will be able to recover money” from Ingersoll. 

And it’s no wonder the Board would say that — a slippery sidestep whose hidden meaning zipped right over the head of the reporter.

Habermehl knows more than he's letting on...way more!


On August 25, 2014, Academy Board attorney Kerry Morgan told the Traverse City Record-Eagle he'd been looking into how and whether it was even possible for the school to retrieve the outstanding $1.67 million from Smart Schools: “The fundamental question is whether there’s a legally enforceable obligation for that money to be paid.” 

In response to my September 2, 2014 email asking for clarification about a “legally enforceable obligation”, Morgan explained the concept: 

GTA had a management contract with Smart Schools Management, not Ingersoll. Smart Schools Management (SSM) is a corporation, Ingersoll an individual. GTA’s recovery if any must arise from under the management contract.

The fact that Ingersoll is the owner SSM does not make him personally liable on a contract between SSM and GTA. This is the nature of corporate liability.

Statements that ‘Ingersoll owes GTA x dollars’ are misleading. If the Ingersoll personally owes GTA any money it must arise from some legal obligation. An oral promise without valid consideration is simply not an enforceable legal obligation.”  

Take a real close look at this sentence: “GTA’s recovery if any (emphasis added) must arise from under the management contract.”

Looks like the Academy might be out of luck, but that's no surprise to anyone on the Board.

As I revealed exclusively on this blog September 2, 2014, the Grand Traverse Academy never amended Ingersoll’s Smart Schools Management contract with the agreed upon details of the three-year fee “repayment plan” outlined in the Academy's 2013 fiscal annual report, apparently leaving the charter school without a (let's all say it together) “legally enforceable obligation for that money to be paid.” 

Oh, and a friendly oversight that left a giant loophole big enough for Steven Ingersoll to walk through.

And how did Miss Fortune learn the Grand Traverse Academy had not amended its management agreement to include the repayment plan with Steven Ingersoll's Smart Schools Management?

Academy Board President Brad Habermehl confirmed that fact...directly to me in an email!

Habermehl, responding in an email to my Freedom of Information Act request seeking a copy of any agreement/contract confirming the details (and contingency plan) of Smart Schools' repayment of a $2.38 million amount classified in the Academy's 2013 fiscal audit as a "prepaid balance", confirmed there were "no documents that exist beyond the 2013 audit, which can be found on the Academy's website, pertaining to your request." 

In the July 18, 2014 Traverse City Record-Eagle, Habermehl was quoted musing out loud about a possible recovery plan: “Do we sue Smart Schools or take it to court? What are our options? The $1.6 million has been haunting us for over a year now.”

However, during the Academy’s Board meeting the previous afternoon (July 17), Habermehl read the following statement supportive of Ingersoll into the official record:

If not for the efforts and intellectual contributions of Dr. Steven Ingersoll and Kaye Mentley and Smart Schools’ willingness to rebate its earnings, GTA would not likely exist today. Over the years GTA needed substantial financial support and Smart Schools always supplied what the Academy needed.

Analysis of GTA’s audited financial statements and board minutes from June, 2004 through March, 2014 shows that Smart Schools gave GTA $3.3 million from its budgeted and contractually authorized earnings. Additionally, Smart Schools planned to rebate another $1.6 million from its future earnings which is classified on GTA’s books as a non-spendable asset.

Smart Schools founded and funded GTA from its origin. GTA flourished in large part because Smart Schools was willing to rebate its contract and budgeted authorized earnings during GTA’s lean years of infancy, expansion and State funding reductions.

With Smart Schools no longer associated with GTA the board will now go into closed session to consider disposition of the $1.6 million non-spendable asset.”

DEBT ARBITRATION: A Plan To Settle For Less?

IPR reports the Academy Board may bring in an “outside arbitrator”, although Habermehl says he’s “not confident the money will ever be recovered because of liens the government has placed on Ingersoll’s assets”. 

News flash! 

Although the IRS recently registered two federal income tax liens against Ingersoll and Smart Schools Management, Inc. ($124,455.02 on May 18 and $7,509.45 on May 4) in Grand Traverse County, the federal government has yet to place any liens against Ingersoll's assets.

That will only occur after Ingersoll is sentenced in September.

According to official Board documents acquired by multiple Freedom of Information Act requests (and federal court filings), here's what really happened during the years Habermehl airily dismisses as the "Ingersoll incident":

At the beginning of each fiscal year between 2007-2012, Steven Ingersoll advanced (in a lump sum), his annual Smart Schools Management/Grand Traverse Academy management fee.  

Although based on Board-approved preliminary budget figures, Ingersoll’s management fees are later adjusted downward after actual budgets are calculated. However, Ingersoll withholds the difference each year during this six-year period and withholds the money from the Academy.

Instead, Ingersoll books amounts owed to the Grand Traverse Academy as “accounts receivable” from Smart Schools Management, and his balance grows from $538,864 on June 30, 2007 to $3,551,328 by June 30, 2012.  

The Academy makes no attempt to demand repayment from Ingersoll until 2013, although Ingersoll does make a $704,000 payment to the Academy on June 30, 2011 using part of a $1.8 million dollar Chemical Bank loan he obtained for renovation of his Bay City Academy.

On May 20, 2013 (at Ingersoll’s request), the Grand Traverse Academy Board's then-President Mark Noss calls a meeting with the Board, Ingersoll and Academy attorney Margaret Hackett. 

Ingersoll, acknowledging to those in the meeting he’s under federal investigation for fraud and tax evasion, asks the Board to characterize his $3.5 million dollar debt to the school a “loan”.

On May 30, 2013, Hackett issues a legal opinion (referred to during Ingersoll’s federal trial as the “Thrun letter”) to the Academy Board. 

Contents of the letter have never been publicly revealed but, per Hackett’s testimony during Ingersoll’s trial, he told those attending the May 20 meeting that he “could not afford to pay that (his Academy debt) and his taxes all at the same time”, and needed to have the debt characterized as a loan. 

When asked by the government during Ingersoll’s trial if the Grand Traverse Academy, as a public school academy, was even allowed to make a loan, Hackett said no. Saying that the Grand Traverse Academy had “no legal authority” to loan money to Steven Ingersoll, Hackett explained that Michigan law prohibits a public body, like the appointed board of a charter school, from making any loans. 

And while former Academy attorney Doug Bishop issued a "demand letter" on June 13, 2013 to Ingersoll seeking return of over $3.5 million dollar, an agreement was later made to allow Ingersoll to work off roughly $2.38 million dollars over three years by forgoing his management fee payments. (The difference between the initial $3.5 million and the plan's $2.38 million is never explained.)

But the agreement is never formalized, put in writing and signed by both parties — leaving the Grand Traverse Academy without the protection of what attorney Kerry Morgan called a “legally enforceable obligation”.

And, without that obligation, there's no recovery.


So was it really an oversight...or a well-timed favor to a fellow crook friend and colleague?

We may never truly know...but I think I have a pretty good idea why Mr. Full Spectrum Management just took out a $417,000 mortgage against his home. 

With talk by Habermehl of the Academy's high school expansion plans, that $850,000 80-acre parcel adjacent to the Grand Traverse Academy is suddenly looking like a real good investment.


  1. Wonder what the $124,000 lien was against? That will look like peanuts in September.

    1. The IRS tax lien was filed in Grand Traverse County.

  2. Between Ingersoll's $2.7 million IRS underpayment debt and penalites (for 2009, 2010, 2011), along with the several million for the cost of the federal investigation and criminal trial, conservative estimates are that he'll totally owe at least $6 -7 million. Looks like the Feds will repossess everything he has.

  3. http://glisteningquiveringunderbelly.blogspot.com/2015/04/was-peanut-buttered-ahead-of-expected.html

    Could be that high. When the portion of the 2011 tax loss attributable to Roy and Tammy Bradley, as well as Gayle Ingersoll, is added to Steven Ingersoll’s individual total for 2009, 2010 and 2011, the aggregate total tax loss and restitution owed by Steven Ingersoll is $3,788,797.18.

    Cost of prosecution could easily add another million or two.

  4. Oh yes... let's not forget what Ingersoll will owe the State of Michigan!

  5. Maybe a state investigation of the irregularities of Mr. Noss having been on the GTA board and having the non-objective board award him the management contract for the GTA can cure Mr. Noss and his friends of further expansions of the GTA H.S. Maybe a few penalties would be in order and some more scrutiny would help halt future expansions? It would help if the Record-Eagle would do some objective reporting and enlighten the community about all the irregularities. Maybe that would help stop the cash flow into the GTA.

    1. That's a good idea, but the State of Michigan Department of Education and Lake Superior State University were both aware that Noss was a Board member when he was awarded the no-bid, two year management contract.

      The entire thing has gone on right under the noses of state agencies and the LSSU charter office which should have been providing oversight and investigation--but they didn't.

      If this blog had not revealed the fact that Noss, although he resigned from the Grand Traverse Academy Board during its early morning March 19, 2014 meeting, stayed firmly in control of both the Board and the management company for another 60 days, no one would know.

      But it appears even that doesn't matter--to the State of Michigan and the people whose pockets are being picked.

      There will be no penalties from Michigan, and the "future expansions" will continue as long as there's money to be made off the backs of taxpayers under the guise of "education".

      The Record-Eagle's editor, Mike Tyree, apparently has an axe to grind against TCAPS, and the paper's coverage of the Grand Traverse Academy's Board-abetted multi-million dollar embezzlement has been embarrassing.

      Either due to political pressure by GTA-related community influentials, lack of skill or just plain old laziness, the R-E missed one of the biggest stories yet to come out of Traverse City.

      And yet, the paper covered the TCAPS employee who embezzled roughly $58,000 like a blanket. While the story should have been covered, there's an even more important story lurking in the wings, just waiting.

      But why should they cover it, when I've already done their job for them?

      By systematically digging into Board and court documents, I've been able to confirm the Board was "officially" aware of Ingersoll's misappropriation in early 2013.

      And, judging from the 2007-2012 fiscal audits, I believe they knew for years Ingersoll was overpaying his management fees, advancing a lump sum based on a preliminary budget and withholding payment of the excess amount.

      That practice continued until Ingersoll had racked up a debt of at least $3.5 million dollars--but even then, we don't really know the true figure, do we?

      It appears that nothing will stop the cash flow--but it's not going to the GTA, it's going to Mark Noss at Full Spectrum Management.

      And while he's in charge, it's likely Steve Ingersoll is still pulling the strings.

      While "big city" corruption more often grabs the headlines, small towns (with institutions like the Grand Traverse Academy's Board and its apparent long-standing culture of corruption) are just as fucked--because no one wants to believe their neighbor or friend could be part of a "Small Town Shakedown" like the one that's still going on at the Grand Traverse Academy.

      Trust me, you haven't heard the last of this story.

      But don't waste your time posting comments about "state investigation" of Mark Noss or his friends.

      No one in Lansing gives a shit.