UN-BALANCED SHEETS: Bending The Rules & Coming Up To Speed

“The transactions coded with a “B” are payments made by FSM to SSM for the services performed by SSB’s accountant, the Defendant’s daughter-in-law Gretchen Ingersoll, for a total of $61,309.” 

Defense supplemental brief regarding obstruction of justice; July 5, 2016 

Among the documents and exhibits filed on Tuesday, July 5, 2016 by Steven Ingersoll's defense was a 19-page supplemental brief, providing the counter to a prosecution memorandum filed on April 29, 2016. In addition, the defense filed an annotated version of the government's summary of transfers from Mark Noss/Full Spectrum Management to Ingersoll and various entities he controls.

The defense provides a key, but we're looking today at payments made by Noss for the services provided by Gretchen Ingersoll:

“The transactions coded with a “B” are payments made by FSM to SSM for the services performed by SSB’s accountant, the Defendant’s daughter-in-law Gretchen Ingersoll, for a total of $61,309.” 

Except that Gretchen wasn't an accountant, she was a daughter-in-law with a general business degree.

And, if paying "the accountant during the transition period until FSM’s accountant was up to speed" was truly the purpose of those $4,950/$4,667 amounts, why didn't Noss just pay Gretchen Ingersoll directly?

Surely he's heard of an IRS Form 1099, right?

And Miss Fortune would like to know how many accountants went through those swinging Full Spectrum doors between April 2014-March 2015?

Hmmm.

INGERSOLL CASE BACKGROUNDER: For Those Who Are Just Joining This Party!

At the start of each fiscal year, beginning July1, 2007 and continuing for six years until 2013, Grand Traverse Academy (GTA) manager Steven Ingersoll advanced his entire annual Smart Schools Management, Inc. fee from the Traverse City, Michigan charter school’s bank account before it had been earned — and before he was contractually entitled to receive it. 

Although based on a percentage of the GTA board’s preliminary budget figures, Ingersoll’s management fee was adjusted downward after actual budgets were calculated. 

However, Ingersoll never really repaid the difference between the amount he'd advanced himself and the actual management fee he received. 

So how did the receivable grow from $538,864 on June 30, 2007 to $3,551,328 on June 30, 2012 if Ingersoll, as he’d claimed to the GTA board, booked each year’s fee overpayment as a receivable and paid it off at the beginning of the next fiscal year? 

Simple: after Ingersoll had paid the previous year's receivable balance using Michigan state aid money provided to the Grand Traverse Academy, he transferred that money back from the Academy’s bank account to one of his Smart Schools accounts, and created a new, and even larger, receivable balance. 

(Ingersoll finally admitted the scheme on December 9, 2015 while testifying under oath during his ongoing sentencing hearing.)

Representatives of the GTA board, including its then-president Mark Noss, and Steven Ingersoll met with attorneys from the Thrun Law Firm on May 20, 2013. 

During the meeting, Ingersoll admitted owing the charter school at least $3.5 million but asked to have the debt classified as a “loan”. 

According to the May 30, 2013 Thrun Law Firm’s 15-page legal recommendation to Noss/GTA, the issue before the Board related “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 CPA Tony Henning. 

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

Representing the interests of the GTA and its board, not Steven Ingersoll and Smart Schools Management, Thrun affirmed 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.” 

However, the Academy Board ignored Thrun’s recommendation to verify Ingersoll’s numbers, instead using CPA Henning’s exact $3,548,319 amount in a June 13, 2013 “demand letter” issued by GTA attorney Doug Bishop to Steven Ingersoll. 

On June 30, 2013, the GTA board and Ingersoll agreed on a “repayment plan”, revealing the details in the Academy’s 2013 financial statement. 

The agreement allowed Ingersoll to “work off” his balance by foregoing management fee payments over the remaining three fiscal years of his management contract. 

However, GTA board president Mark Noss oversaw an early morning meeting on March 19, 2014 where the board voted unanimously to officially "withdraw from the management contract with Smart Schools Management, Inc." 

Minutes later, the board accepted the resignation of "Mark Noss as the President of the Board." 

Although Noss tendered his resignation during this meeting, the resignation was not effective immediately. 

GTA records reveal Noss continued to serve in a dual role as a board member until its May 2014 meeting, nearly two months after signing a multi-year, multi-million dollar management contract. 

Steven Ingersoll was indicted on April 9, 2014 and charged with three counts of wire fraud, two counts of tax evasion, one count of conspiracy to defraud the government, and one count of attempted conspiracy. (Four co-defendants, including Ingersoll’s wife Deborah, were also charged on various fraud and conspiracy counts). 

An April 24, 2014 superseding indictment further charged Steven Ingersoll with tax evasion regarding his attempt to “disguise the money allegedly received from Grand Traverse Academy” — which was also named by the government as the motive for Ingersoll’s bank fraud conspiracy and tax evasion conspiracy. 

Steven Ingersoll was convicted of three counts of fraud and tax evasion on March 10, 2015. Ingersoll’s sentencing hearing began on October 21, 2015 and is scheduled to resume July 11, 2016. 

On March 15, 2016, an accountant formerly employed by Mark Noss at Full Spectrum Management revealed to the GTA board and the charter school’s authorizer, Lake Superior State University, that Noss had been making $12,500 monthly payments to Ingersoll since April 2014, shortly after Noss assumed control of the GTA. 

Using information provided by the whistleblowing accountant, (who resigned shortly after making his revelations public), federal prosecutors were able to substantiate that between April 8, 2014 and March 1, 2016, Steven Ingersoll received a total of $627, 624.14 from Full Spectrum Management, the educational services provider owned by Mark Noss and holder of the management contract for the Grand Traverse Academy or Grand Traverse Academy itself. 

All of that money went into accounts owned by Steven Ingersoll and his solely owned entities. 

An excerpt from that April 29, 2016 document states: 
“In assessing the credibility of Habermehl as a witness and Noss as an affiant in this matter, the court must consider the relationships they have with Ingersoll and how their financial and personal relationships with Ingersoll have influenced the representations that Habermehl and Noss have made to the court. The evidence discussed above casts doubt on the credibility of Ingersoll, Noss and Habermehl.”

BORN ON THE 5th OF JULY: Traverse City Attorney Jan Geht Launches TCAPS Board Campaign With 'Gehtbetter.com'; 'Conduit' Theorist Geht Currently Defending Former Grand Traverse Academy Manager, Convicted Tax Cheat Steven Ingersoll

“Running for the TCAPS Board of Education is my way of continuing to serve our community by drawing on my extensive experience as a problem solver. I bring two decades of success as an accountant and as a lawyer at the highest levels of each profession. I have faced down tax-evading Fortune 500 companies while working at the U.S. Department of Justice.”

Jan Geht 

Jan Geht for TCAPS Board of Education

And if that isn't chutzpah, then I don't know what is! 

The classic definition of chutzpah comes from the late screenwriter Leo Rosten, who put it this way: "that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan."

Miss Fortune wishes Mr. Geht good luck with his ballsy move, even though it's so cringe-worthy you can almost feel it.

REIGN OF ERROR CONTINUES: “The Fungibility Of Money Within SSM”

Full Spectrum Management LLC 2014 Net Income: $396,441.11

Although he claimed (presumably with a straight face) during the December 17, 2015 Grand Traverse Academy board meeting that he "has no business relationship with Dr. Ingersoll at the present time", mountains of evidence strongly indicate that Mark Noss's statement was deliberately dishonest.

The cracks in his facade finally fractured on March 16, 2016 when a former Full Spectrum Management employee blew the whistle in an email to the GTA board and key contacts in Lake Superior State University's Charter School office.
 
The email was later filed by United States prosecutors in Steven Ingersoll's federal sentencing case on March 29, 2016.

Miss Fortune is reviewing the documents filed yesterday in U. S. District Court by Ingersoll's defense attorney and will begin reporting shortly.

UNDER SEAL: U. S. Government Files Petition To Order Tax Documents, Prosecution Memorandum In Steven Ingersoll Case Be Kept Out Of The Public Eye Prior To Resumption Of Sentencing Hearing

BREAKING NEWS! 

According to a petition filed this afternoon in the Steven Ingersoll case, the government requested an order from U. S. District Judge Thomas L. Ludington authorizing federal prosecutors to file a "consolidated set of documents relating to the intended tax loss calculations and a memorandum summarizing the government’s position" under seal.




Ingersoll's ongoing sentencing hearing is scheduled to resume next Monday, July 11, 2016.

Today's petition asked Ludington to order the documents be filed under seal because "the documents and memorandum contain tax information", which the government presumably doesn't want made publicly available on this blog.

Just sayin'. 

UPDATE: July 8, 2016 1:37pm--Ludington grants prosecution request, directs government to file consolidated documents/memorandum under seal.