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Tuesday, August 8, 2017

COOKING THE BOOKS-PART 1: Grand Traverse Academy's History Of Financial Statement Fraud; In 2011, Steven Ingersoll Inflated School's Financial Postion & Falsified Financial Reports To Avoid Violating Bond Covenant

“Ingersoll transferred $700,000 to GTA so that GTA would not have a large amount of missing funds at the end of the fiscal year. Ingersoll knew that a budget deficit would trigger additional state oversight.”

“Notably, the June 30, 2011 transfer—of $700,000—continued on to Grand Traverse Academy (“GTA”). This transfer from Steven Ingersoll and ending at GTA was not the repayment of a shareholder loan, but rather a convenient way for Ingersoll to return funds to Grand Traverse Academy before the close of the fiscal year. The government maintains that Ingersoll had previously taken funds from Grand Traverse Academy without board authorization, and that he used those funds to finance the Bay City Academy project. The transaction on June 30, 2011—in which Ingersoll returned money to GTA—was a way for Ingersoll to avoid detection of his unauthorized use of GTA funds.”
 Government Sentencing Memorandum
December 15, 2016

The seeds of the Grand Traverse Academy's current financial crisis were sown nearly ten years ago.

Under the not-so-watchful eyes of the Grand Traverse Academy's board of directors, Lake Superior State University's charter school office and the Michigan Department of Education, Ingersoll manipulated the charter school's financials and willfully painted a rosy financial picture to avoid triggering a bond covenant. 

In addition, the available evidence shows that Ingersoll covered over the GTA's true financial condition, successfully avoiding a budget deficit until he'd skedaddled from the scene in 2014.

The story snaps together like ClickBlock magnetic toys, and the evidence was there in 2011.

Ingersoll papered over a budget shortfall with a $700,000 infusion of cash from his personal bank account on June 30, 2011.

As you can see in the Grand Traverse Academy's June 2011 Fifth Third Bank statement, Ingersoll transferred $700,000 from a personal bank account he shared with his wife, Deborah, into the GTA account.

Why did he do that?

Here's why: if he hadn't, the school would have violated a bond covenant to maintain a minimum percentage of the unassigned fund balance. 

Based on the parameters defined in the bond issue, the school should have had 10 percent of its operating expenditures remaining in the fiscal year ending June 30, 2011.

But the Grand Traverse Academy didn't meet that target: without Ingersoll's cash infusion, it had roughly $450,000.

From Note 17, as excerpted from the GTA's June 30, 2011 report, you can see how that $700,000 transfer inflated the true financial situation, allowing it to avoid a violation. 
All of this monkey business happened during the same year Ingersoll booked a bogus $800,000 lease receivable, $954,367 in prepaid expenses and over $2.5 million in accounts receivable. 

A complete report on the Grand Traverse Academy's tumbling fund balance, and financial statement fraud, later today!


  1. What a crook Ingersoll is! Wonder how rosy red his cheeks are in federal prison.

  2. Love the rosy red cheeks you put on him.

    Stevie, the red-nosed ganster
    Had a very shiny nose...
    Glows with his red-hot temper when he doesn't get his way and his fraudulent schemes.