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Monday, March 27, 2017

EXPLODING LIKE A HILLBILLY'S RIFLE: Grand Traverse Academy's $1.6 Million Ingersoll-Related “Bad Debt” Cover-Up Draws Fresh Scrutiny; Bogus Calculation Underestimated Write-Off. Actual Amount Over $3.0 Million!

After dithering publicly for months back in 2014 about its purported “plan” to collect an estimated $1.6 million owed to the Grand Traverse Academy by Steven Ingersoll's Smart Schools Management, Inc., the Traverse City charter school's 2014 fiscal audit revealed the board decided to just “write it off” to bad debt. However, the true amount actually exceeded $3.1 million.

A now-debunked $1,813,330 “repayment” by Ingersoll was incorporated into the board's calculation — an amount credited against his debt, estimated by Ingersoll at $3.58 million as of June 30, 2012. 

That credit purportedly left a $2.3 million balance that Ingersoll would repay by “partially reducing cash transfers for future management fees through June 2016”. In plain language, the Grand Traverse Academy board would simply deduct the $2.3 million overcharge — in three installments—from Smart Schools' expected future management fees. 

(Except that when you add $1.8 million and $2.3 million you get $4.1 million, and not $3.5! But, hey, who's counting? Not the geniuses on the Grand Traverse Academy board!)

According to the June 30, 2013 financial audit, the prepaid management fee “reductions” were scheduled to be received from Ingersoll's Smart Schools Management, Inc. as follows: 

2014: $774,000 
2015: $960,000 
2016: $604,980

Ingersoll's management contract was never amended to incorporate the change in terms.

(In 2009, the Grand Traverse Academy board approved a new management agreement with Ingersoll's Smart Schools Management that was scheduled to run through June 30, 2016; it was subsequently terminated on March 19, 2014.)

Ingersoll was later generously credited for $715,960 in management services provided through March 2014 by Smart Schools management.  

However, legitimate bank records revealed Ingersoll did not really repay $1.8 million to the Grand Traverse Academy as he'd claimed.

And although the board, headed by Ingersoll crony, Mark Noss, asserted Ingersoll would work off his debt by foregoing management fee payments for the three remaining years of his contract, it secretly approved a $332,000 payment to him in November 2013.

When you incorporate the real numbers in your calculation, the amount the Grand Traverse Academy board should have written off its balance sheet  to “bad debt” was not $1.6 million, it was over $3.1 million!


In a “demand for payment” letter sent by attorney Doug Bishop on behalf of the Grand Traverse Academy board, Ingersoll was ordered to immediately repay the outstanding $3.58 million.

Bishop's letter included this provision: 

“To the extent that it is your position that this obligation has been reduced by any sum, we will require documented proof of all claimed repayment transactions, transferring funds from Smart Schools Management, Inc. to Grand Traverse Academy. Such documented proof must include, at a minimum, confirmation of the Grand Traverse Academy account to which the payment was made and the Smart Schools Management, Inc. from which the payment came. The documentation should include documentation of wire transfer or copies of checks or other transfer documents.”

But that's not what happened.

Steven Ingersoll responded on June 16, 2013, with a letter ominously reminding Bishop (and by extension, the Grand Traverse Academy board) of the “symbiotic” financial relationship between the charter school and Ingersoll's management company.

And instead of providing legitimate bank records as Bishop had demanded, Ingersoll just created his own (below).

However, according to a government document filed during Ingersoll's sentencing hearing, Ingersoll did not repay $1.8 million.

Instead, he used a series of back-and-forth transfers to make it look like he had, while stealing another $114,700 from the Grand Traverse Academy. (The chart below was created by IRS investigators, using legitimate bank information.)

And finally, the Grand Traverse Academy board secretly approved an estimated $332,000 cash payment to Ingersoll, concealing that information from the public. 

So let's do some calculations: if you take the $3.58 million dollar figure and disallow the specious $1.8 million deduction granted to Ingersoll based on faked bank records, you're left with $3.58 million.
Then, subtract the $332,000 secret cash paid to Ingersoll during the fiscal year ending June 30, 2014 from the $774,000 management fee credited against Ingersoll's debt during that year, you'll get to $442,000.

That $442,000 represents Ingersoll's only truly legitimate repayment of his estimated $3.58 million debt, leaving $3,138,000 outstanding — not $1.6 million. 

I invite any member of the Grand Traverse Academy board of directors, including Traverse City real estate attorney Mike Rogers, to refute my calculations.

If you do, I'll publish them.


  1. Why has nothing ever been done about this. The school board and the management are sucking the money out of the school leaving the teachers in the bag. Time to get this investigated and get these crooks out of education. Dirty board members, dirty management company and dirty administration taking from the education of children, teachers and taxpayers. When is this nonsense going to be stopped. I wonder how many city officials are in on this too. White collar welfare, good lord TC get a clue and save your schools and your children.

    1. Yeah, and one of the board members is a lawyer!