The Grand Traverse Academy Board may have committed securities fraud between 2007-2016 by making misleading public statements as the Michigan charter
school’s financial condition was deteriorating due to the fraudulent conveyance of approximately $5.0 million from the school by its
former manager, Smart Schools Management, Inc.’s Steven Ingersoll.
In addition, financial information available to municipal bond investors was
either incomplete or outdated, as the Academy Board provided fraudulent
financial statements as part of its required continuing securities disclosure
documents.
Those statements concealed Ingersoll’s misappropriation by
disguising his accumulating debt to the charter school variously as “accounts
receivable”, “related party receivables”, “prepaid expenses” or “lease
receivable”.
As an example, the Grand Traverse Academy’s June 30, 2012
Balance Sheet (below) shows an “Accounts Receivable” balance of $4,050,884.10;
another issued on September 30, 2013 shows a “Prepaid Expenses SSM”
balance of $2,068,620.27.
The misleading statements, made in the Academy’s financial reports, annual
and mid-year financial statements, and two publicly-disseminated Board
documents, “History of Grand Traverse Academy” and “Continuity At Grand
Traverse Academy”, were approved by the Academy’s Board in what appears to be a conscious effort to conceal the school’s true financial picture.
Board officials, most notably its former president, Mark Noss, and his successor, Bradley Habermehl, resorted to repeated misleading public statements in an attempt to hide the strain in the school’s finances caused by the approximately $5.0 million ultimately misappropriated by Ingersoll.
The Grand Traverse Academy falsely depicted positive balances when the
charter school had actually accumulated balance deficits that ultimately drove it into
a financial deficit in the fiscal year ending June 30, 2014.
The multi-year scheme appears to have included a staff member of the Grand Traverse Academy’s
authorizer, Lake Superior State University. The head of the university’s
Charter School office, Dr. Bruce Harger, was a covert business partner of
Steven Ingersoll’s.
In addition, Steven Ingersoll himself negligently signed the March 2007 bond
offering on behalf of its issuer, the Grand Traverse Academy, knowing about the
financial drain while promising not to violate the bond’s general fund
minimum balance covenant.
The fraudulent financial statements submitted
as continuing securities disclosure documents concealed Ingersoll’s
misappropriation of nearly $5.0 million, and the Academy Board’s decision
not to seek recovery of that money.
With the cooperation of the Grand Traverse Academy's Board of Directors
and Lake Superior State University's charter school office, Ingersoll
manipulated the charter school's financials and willfully painted a rosy
financial picture to avoid triggering a bond covenant.
I heard the divorces are going to bring RX Governor Engler back in in some capacity that's where the charter school started quite a coincidence since Engler is the one that helped Ingersoll get started I believe
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