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Monday, February 8, 2016

ROTTEN TO THE CORE: All Of The Rewards Of Capitalism, With None Of The Risk

Steven Ingersoll is an opportunistic fraud. 

Now about his original "school for scandal", the Bay City Academy. 

After dodging its massive $1.3 million-dollar budget hole for months, the faltering charter school’s board finally approved a five-year deficit elimination plan on January 21. 

And while the school’s five-year plan has been described by its board president Craig Johnston, a boyhood friend and longtime business associate of convicted felon Ingersoll, as "not unsurmountable by a long shot", that five-year term is not a given.

In fact, Section 102 of the State School Aid Act (MCL 388.1702) states that a deficit is to be eliminated "not later than the end of the second school fiscal year after the deficit was incurred." 

According to the Michigan Department of Education’s Chad Urchike, commenting about the Bay City Academy’s plan exclusively in an email to Miss Fortune, current law “gives the State Superintendent authority to set the amount of time a school has to eliminate the deficit. This is something that is determined after the plan has been reviewed by the Department.”

On February 19, representatives of the financially unsteady charter school are scheduled to meet in Lansing with representatives from the Michigan Department of Education to review its deficit elimination plan. 

Maybe they’ll answer this question: why should Michigan taxpayers pour $16.5 million more dollars, beginning July 2016 and continuing through June 2020, into this rat hole of fraud? 

That’s exactly what the school’s board, headed by Steven Ingersoll’s boyhood friend, Craig Johnston, and Brian Lynch, a protégé groomed for years by Ingersoll to take over the Bay City Academy, are asking you to do.

Yes, you! 

Let’s take a look back on how this rat f**k began, and where it should end.

Two years ago (in January 2014), Steven Ingersoll announced the departure of his charter school’s popular superintendent. 

At the time, Ingersoll said it was an amicable decision between the superintendent and the Bay City Academy board, and claimed he “could return to the school as an educational consultant.” 

Roughly two months later, we learned the school’s test scores from the Michigan Educational Assessment Program, or MEAP, were in the gutter. 

In February 2014, the charter school fell well below state average in all 18 grades and subjects, ranging from math to science, to writing. 

For example, 7.5 percent of Bay City Academy fourth-graders tested proficient in math, compared to the state average of 45.3 percent. Fourth-grade writing scores at the school showed 10.3 percent proficiency, compared to the state average of 50.5 percent. 

On April 11, 2014 Bay City Academy board president Craig Johnston said he was surprised (surprised!) by the news of Ingersoll's indictment. He told a local newspaper the board would “let the legal system play out before making any decisions that could impact the charter school”, which then had three campuses in Bay City and one building in Mancelona. (Bay City’s Old Y campus, at 111 N. Madison Avenue, closed in late October 2014.) 

Employing sharp elbows and a forked tongue (in true Ingersoll surrogate form), Johnston has become the master at taking a mess that he helped create and deflecting it to some other person or entity. 

DEFICIT ELIMINATION PLAN: A Five-Year Plan (To Continue Enriching A Few Select Ingersoll Insiders)

Although a recent article in a local newspaper referred to "a five-year deficit elimination plan", Michigan law requires a two-year plan that eliminates a district's deficit. According to Chad Urchike, of the Michigan Department of Education's State Aid and School Finance who confirmed the information in an email to me, current law “gives the State Superintendent authority to set the amount of time a school has to eliminate the deficit. This is something that is determined after the plan has been reviewed by the Department.” 

In other words, an extension past the normal two-year term can only be granted by Brian Whiston, Michigan State Superintendent of Public Instruction, after a two-year plan's initial approval. 

However, according to the Bay City Academy's five-year deficit elimination plan, the $1.3 million debt will not be paid off until the end of the 2019-2020 school year. 

And it's predicated on increasing the overall student population of the Bay City Academy, possibly with a high school! 

Yeah, a high school. 

How crazy is that? 

Here are the pertinent financials:
YEAR            DEFICIT               REVENUE 
15/16             $1,365,776            $3,511,579 
16/17             $1,205,767            $3,674,666 
17/18             $1,128,611            $2,950,605 
18/19             $   870,331            $4,220,365 
19/20             $   428,291            $4,458,000 

You'll see that the deficit is estimated to drop by roughly 12 percent between 15/16 and 16/17. Between 16/17 and 17/18, the estimated decline is 6.4 percent, but the plan shows the deficit reduction escalating between 17/18 and 18/19, declining by nearly 23 percent. 

The plan estimates another 50 percent decrease between 18/19 and 19/20 before being eliminated by the start of the 2020/2021 school year. 

Is it just me, or does this accelerating deficit decline seem suspicious? 

And even more suspicious when it's predicated on taxpayers dumping nearly $16.5 million dollars into a school with a precarious (and financially compromised) situation even its school board president, Craig Johnston, blames on the school's previous management company, Steven Ingersoll's Smart Schools Inc.? 

An issue like this, one of great public consequence, should not be left to a bunch of Ingersoll insiders and cronies, still clinging together like iron filings on a magnet. 

Especially when that group includes two key people who were in control of the school during much of its existence, presiding over its decline. 


Craig Johnston and Steven Ingersoll's ties go back to their respective childhoods, continuing into their adult years and business careers. 

On December 30, 2009, Craig Johnston formed the Bay City Academy Steering Committee, Inc. on behalf of Steven Ingersoll.

Later, Johnston formed the Bay City Academy "domestic nonprofit corporation" on February 8, 2011. 

Yeah, Johnston has some obvious holes in his phony baloney indignation about the school's Ingersoll "stigma".

According to the Bay City Academy's recently released 2014/2015 financial report, the charter school incurred a significant operating deficit in 2015, resulting in a cash flow shortage. 

As of June 30, 2015, the Academy's current liabilities exceeded its current assets by $1,374,477, pretty steep for an operation with $3,980,670 in total revenues. 

In addition to calling out Steven Ingersoll's longtime pattern of paying his Smart Schools Management expenditures without providing a whiff of documentation, the report places blame for much of the financial fiasco squarely at the feet of the school's board of directors.

Under Michigan state law, the board has the ultimate oversight responsibility for the school district's operations. 

Stating that the finding was a result of observation and inquiry with the Academy's administration, the auditors determined the deficit was result of an over-reliance on Smart Schools Management for financial oversight. 

As a result, there was “a lack of appropriate administrative oversight by the Board of Directors over the Academy's finances during the year. 

The effect of this condition resulted in actual expenditures exceeding budgeted amounts, and a year-end deficit fund balance.”

In late 2015, Johnston told a local newspaper there was "a stigma around this school that needs to change". 

That "stigma" has a name: Steven Ingersoll. 

Johnston's solution? 

Rebranding the school, including a new name, logo and uniforms for the students. 


Rebranding a failure without substantive sweeping organizational change is just a joke. 

Back in early 2015, after Ingersoll was convicted, Johnston said he was disappointed in learning of Ingersoll's conviction. "That would really be the only reaction," he told a local newspaper. "I'd wish that to not be the case. We'll have to determine the effect that will have on Bay City Academy. This is unprecedented." 

However, in 2014, at the first Bay City Academy board meeting after Steven Ingersoll's April 10, 2014 indictment, Johnston said there had “been plenty of fodder and unhappy, controversial moments for us, there’s no question about that. That being said, there have been significant changes for the better.” 

How many sides does this guy’s mouth have? 

Even back in 2014, Johnston was publicly posturing, pushing the board to do its best to appear to separate Ingersoll from the school in an effort to craft a more positive perception. 

The board’s decision to retain Ingersoll’s Smart Schools management company after his indictment, Johnston said at the time, was one based on the educational model the school provided. 

“We removed the part of Smart Schools we didn’t like,” said Johnston, apparently referring to Ingersoll. 

“But we like what they have to offer intellectually.” 


Has he seen those MEAP scores? 

But in private, behind the closed doors of the Bay City Academy board's meeting room, the financial damage was already done...and it was done while Craig Johnston and another Ingersoll crony, Brian Lynch, were firmly in control of the charter school Steven Ingersoll founded. 

And, in my opinion, Steven Ingersoll is pulling the strings, running the school behind the scenes while his hand-picked surrogates dance, dance, dance!


Serial schnorrer Ingersoll is no slouch in the grift department.

[Taxpayers — you know what? Never mind. Do what you gotta do, because you’re never going to stop being mad about this…and rightly so.]  


  1. Welcome back, this is one of your best articles yet.

  2. The aggressive approach is awesome, mlive report a few days ago has many heated responses

  3. Blows my mind that these dirty rotten scoundrels have not had their asses hauled off to jail and their money siphoning schemes shut down.

    1. Ah, but BCA is the tip of the taxpayer funded charter school feeding trough. Investigate this one, and you have to look at the others doing the same thing, some for decades. The MDE knows better than to do that. Deep pockets would make life very unpleasant.

    2. We must demand the MDE start doing its job in oversight and we must put legitimate pressure on them and on our legislators (both parties) to do some serious investigation. The chartering universities and others that grant/sponsor these charters for these schools must also be held responsible and fined or their funding removed or reduced for not properly overseeing many of these fraud machines.