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Saturday, March 25, 2017


On November 1, 2015, I published a the first installment of a two-part report on Steven Ingersoll's sentencing hearing, and detailed how the Grand Traverse Academy board (then lead by the current head of its management company, Mark Noss) not only enabled Ingersoll's multi-million dollar looting of the charter school, its members collectively played a significant role in the subsequent cover-up.

I'm republishing the post, with one important addition: an exclusive federal court document confirming Steven Ingersoll did not repay $1,813,330 during 2012 from his Smart Schools Management, Inc., a purported amount which ultimately served to reduce his debt to the school from $3.58 million to $2.3 million, according to the Grand Traverse Academy's official June 30, 2013 annual financial statement

But do the math (adding $1.8 million and $2.3 million), and you'll get $4.1 million, the actual Grand Traverse Academy accounts receivable amount as of June 30, 2012.

The table below shows a trend analysis with unexpectedly large fluctuations in amounts identified as accounts receivable and prepaid expenses—found in the Academy’s quarterly financial reports that were prepared between September 2011-March 2014 by its management company, Steven Ingersoll’s Smart Schools Management, Inc. (Additional numbers were generated by Mark Noss/Full Spectrum Management, LLC.)

Shouldn’t those reports have drawn more attention and spurred action by the school's board of directors? 

You'd think!

Ingersoll (facilitated by Noss) instead swindled the Traverse City charter school out of at least $110,000 during 2012, while using self-created “bank documents” in a bizarre (and successful) scheme to convince the Academy Board he’d repaid $1,813,330.

And, guess what?

With Noss' help, it worked!

In my exclusive examination of the actions undertaken by the Grand Traverse Academy board in the months after receiving the May 30, 2013 Thrun Law Firm legal opinion (news that only appeared on this blog), I revealed Ingersoll falsified bank documents — using those bogus documents to cover his tracks.

Beginning in 2007, and continuing for six years until 2012, at the beginning of each fiscal year (July 1), Steven Ingersoll advanced his entire annual Smart Schools Management, Inc. fee directly from the Grand Traverse Academy’s bank account before he had earned it — and before he was entitled to receive it. 

Although based on Board-approved preliminary budget figures, Ingersoll’s management fees are later adjusted downward after actual budgets are calculated. 

However, Ingersoll never repaid the differences between the amounts he'd advanced himself based on initial estimated budgets, and the actual management fee he was contractually allowed to receive each year. 

However, instead of implementing the recommendations outlined in a 15-page May 30, 2013 legal opinion it received from the Thrun Law Firm, the Grand Traverse Academy Board instead inexplicably formed what appears to be an alliance of convenience with Steven Ingersoll, including a colossally deceptive statement read publicly during the Academy's July 17, 2014 board meeting by its President, optometrist Brad Habermehl. 

According to the May 30, 2013 Thrun Law Firm Letter to former Grand Traverse Academy Board President Mark Noss, the issue before the Board “relates to funds withdrawn from the Academy’s general fund by Steven Ingersoll and/or representatives of SSM, which exceed the amount appropriated or authorized by the Board to be paid to SSM for either management fees or the reimbursement of Academy expenses.” 

The letter estimated Ingersoll’s debt to the Traverse City charter school at $3,548,319 (based on information provided by Ingersoll’s handpicked CPA, Tony Henning), and during a May 20, 2013 meeting, Ingersoll admitted owing at least $3.5 million dollars but asked to have his debt reclassified as a "loan". 

As Henning had relied solely on “financial reports and representations of Steve Ingersoll” to determine the amount, Thrun repeatedly urged the Grand Traverse Academy Board of Directors to “independently verify the full sum due” instead of merely accepting Henning’s number. 

Thrun represented the interests of the Academy and the Board, not Steven Ingersoll and Smart Schools Management, affirming in its May 30, 2013 letter that “Steven Ingersoll openly admitted, when asked by us during the May 20th meeting, that a conflict exists between his personal interests and the interests of the Academy.” 

On December 6, 2013, Mark Noss sent an email (reproduced above) to Steven Ingersoll regarding a dispute that arose after the Grand Traverse Academy Board’s November 8, 2013 meeting. 

According to government documents released in connection with Ingersoll’s sentencing hearing, Noss was responding to an email Ingersoll sent to him on November 24, 2013, denouncing CPA firm Dennis, Gartland & Niergarth's presentation of the “final audit and unexpected finding that implied ‘abuse’ of public funds.” 

In his email, Ingersoll complained to Noss that DGN had based its finding “on their stated position that SSM had not transferred cash to service the FYE accounts receivable balance on GTA’s books at FYE 12.” 

Ingersoll disputed DGN’s contention that he had not transferred cash from his accounts to the Grand Traverse Academy to “service the FYE accounts receivable balance” during the fiscal year that ran from July 1, 2011 through June 30, 2012. 

In his email to Mark Noss, Ingersoll reminded Noss that “I disputed that contention both verbally and in management’s written response. The auditors verbally repeatedly stated that there was no evidence of cash transfers. I have stated that bank statements that they should have reviewed would confirm those transfers. I have attached the confirming bank statements for your review. Please share these statements with your board member colleagues to give them comfort that those transfers did occur.” 

Here are the so-called bank statements Ingersoll sent Noss, who later emailed them to the entire Grand Traverse Academy board:

You'll notice that while the statement period date is May 1, 2013, the document is clearly a cut-and-paste job created using cherry-picked transactions from July, August and September, with the actual years missing. 

In addition, although an effort has been made by Ingersoll to make this “Account Summary” appear official, “GTA Account at Fifth third” is an incorrect presentation of the financial institution's actual name, Fifth Third. 

Noss responded to Ingersoll on December 9, assuring him that he has “sent these bank statements to all board members and followed up with phone calls to each member to discuss this. Every board member saw and understood that these transfers took place and agreed that no ‘abuse of funds’ took place. We are all comfortable that we made the right decision in accepting management’s response to the audit.” 

According to a sheaf of official documents released October 19, 2015 by the government, just prior to the start of Ingersoll's sentencing hearing, the net impact of the transfers made by Ingersoll from July 1, 2012 to December 31, 2012 between the accounts for the Grand Traverse Academy and Smart Schools Management, Inc. was that Smart Schools Management, and therefore Ingersoll, received over $110,000 more from the Grand Traverse Academy than the Academy had received from Smart Schools Management. 

Here is that government document, with information drawn from both Grand Traverse Academy and Smart Schools Management, Inc. bank accounts:

The official document shown above reveals that while Ingersoll indeed transferred $1,748,300 from Smart Schools to the Grand Traverse Academy, he transferred $1,863,000 back to his Smart Schools bank account, effectively stealing another $114,700 from the Traverse City charter school.

But Mark Noss (and the board’s attorney, Doug Bishop) could have uncovered Ingersoll's scheme if they'd demanded Ingersoll provide copies of actual bank statement records for both Smart Schools Management and the Grand Traverse Academy instead of the fabricated financial documents Ingersoll had proffered. 

Or requested those records themselves directly from the financial institution. 

But they didn’t. 

Instead, mere months after receiving the devastating Thrun letter (which outlined Ingersoll's fiscal abuses in excruciating detail), both men apparently chose to accept Steven Ingersoll's claims — overlooking his self-serving financial statements and making no effort to independently confirm what Ingersoll had claimed. 

Why would they do that? 

“We are all comfortable that we made the right decision in accepting management’s response to the audit. Thanks, Mark” 

Management's response to the audit—the one based on false financial information from Steven Ingersoll—and not the independent opinion of its auditor, DGN. 

Why would they do that?

1 comment:

  1. As always, Miss Fortune, great research and analysis. Honest people and good taxpaying public are so glad you are around. As for the crooks and scoundrels, they're not happy because you shed light on their darkness and schemes.