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Sunday, March 22, 2020

MAKIN' IT RAIN!: Independent Bank Investigated Mark Noss For Months Before His Full Spectrum Management's February 2019 Bankruptcy Filing; Bank Reveals Potentially “Fraudulent” Transfer By Noss Of A Whopping $700,000 In “Owner’s Draw” Payments Funneled To Himself From A Noss-Owned Business Between April 21, 2014—December 2016


WILL NOSS PAYMENTS SPUR A FEDERAL TAX EVASION INVESTIGATION? 

Did Mark Noss (longtime board member and former manager of the Grand Traverse Academy) craft a sophisticated scheme to direct money to Steven Ingersoll and, in the process, evade collection of his own income taxes by the IRS?

A Supplemental Motion for Approval of Compromise, filed by the Full Spectrum Management, LLC bankruptcy trustee on March 19, 2020 along with a Scheduling Order in the Chapter 7 bankruptcy case, revealed startling information: Independent Bank had actively been investigating “fraudulent transfer claims” against Mark Noss and several of his business entities, along with Steven Ingersoll, Smart Schools Management and other related entities months before Noss filed the Full Spectrum bankruptcy petition on February 19, 2019.

The Settlement Agreement involved two distinct claims the estate (Full Spectrum Management, LLC) may pursue against Dr. Mark D. Noss, Mark D. Noss, O.D., LLC, MDN Development, LLC, and other Noss-related entities. 

The first set of claims involved the collection of accounts receivable and/or promissory notes owed by the Noss entities to Full Spectrum Management. (These claims are subject to the Security Interest and Assignment granted to Independent Bank.)

Prior to the February 19, 2019 Full Spectrum bankruptcy petition filing, Independent Bank was investigating and pursuing those receivables. 

According to the March 19 motion filed by the bankruptcy trustee, those claims have very little value, if any, to the bankruptcy estate. (This is because any anticipated recovery on the receivables—totaling $213,369—is far less than the roughly $800,000 Noss/Full Spectrum Management owes to Independent Bank.) 

As part of the bankruptcy trustee’s settlement with Independent Bank, the trustee would take no further action in exchange for 25% of the bank’s gross recovery.

The second set of claims the bankruptcy estate holds are fraudulent transfer claims against Noss, the Noss entities, Steven Ingersoll, Smart Schools Management and other related entities (“Fraudulent Transfer Claims”).

The Receivables and Fraudulent Transfer Claims identified by Independent Bank consist of, but may not be limited to: 

-Dr. Mark Noss: “Owner’s Draw” of $655,500 Noss made to himself between April 21, 2014-December 2016. (An owner's draw, usually just called a "draw", is an amount taken out of money taken out from a sole proprietorship or partnership by the owner for his personal use. It's called a draw because money is drawn out of the business.)

Noss designated the amount an “account receivable” and it appeared to the bank to be a fraudulent transfer. It is unclear from the filing from which business Noss drained the cash he transfered to himself.

-Dr. Mark Noss: loan to Full Spectrum Management, LLC for $28,604, which is an “account receivable” to Full Spectrum to be collected. 

-Full Spectrum Eyecare (an Assumed Name created February 18, 2011 under “Mark D. Noss, O.D., L.L.C.”): Full Spectrum Management lists a loan owed to it by Noss/Full Spectrum Eyecare for $84,632.

-MDN Development, LLC (formed by Noss in 2015 to construct an expansion of the Grand Traverse Academy, an 18-month fiasco that ended in failure): owned exclusively by Noss, it owes Full Spectrum Management, LLC an “account receivable” of $99,133.

A total of $213,369 of “loans” to Noss, MDN Development, LLC and Full Spectrum Eyecare are “accounts receivable” owed to Full Spectrum Management. 

In addition, the Supplemental Compromise motion reveals fraudulent transfer claims against Dr. Steven Ingersoll, and his businesses Smart Schools Management, Inc. and Smart Schools Management of Bay City, LLC for approximately $332,541 received from Noss/Full Spectrum Management between March 19, 2014-April 2016. 

On January 27, 2020, attorney Kelly M. Hagan, the Chapter 7 trustee in the Full Spectrum bankrupty case, filed a Motion for Approval of Compromise. 

The motion sought approval of a proposed settlement with Independent Bank. 

Creditors Mark D. Noss, Mark D. Noss, O.D., LLC, and MDN Development, LLC (collectively, the “Objecting Creditors”) filed an objection to the trustee’s motion. 

A hearing on the trustee’s motion was held on March 12, 2020. 

The bankruptcy trustee was ordered to supplement or amend her motion to clarify the relief requested and the rationale for the request by March 20, 2020. 

Objecting Creditors were ordered to file a response to the trustee’s supplemental filing by March 27, 2020. 

After a review of the supplemental filings, the bankruptcy court judge will either rule on the trustee’s motion or schedule a further hearing. 

Objecting Creditors may file a response to the trustee's Supplemental Motion no later than March 27, 2020. 

After the parties file their supplemental pleadings, the bankruptcy judge will review the record and will either rule on the trustee’s motion or schedule a further hearing. 

More on this as it develops.

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