TAUNTING MISCREANTS SINCE 2012! AN INDEPENDENT, AD-FREE NEWS SITE--SHINING A LIGHT ON THE DARK UNDERBELLY OF FRAUD, CONS AND SCAMS FROM NORTHERN MICHIGAN TO LAS VEGAS, NEWPORT BEACH HAS ENDED ITS RUN. PUBLISHED CONTENT WILL REMAIN ONLINE, BUT MISS FORTUNE HAS SIGNED OFF! Due to lack of technical support by Google, I'm unable to respond to your comments.
On December 29, 2016, S&P Global Ratings issued a press release you may have missed: “Grand Traverse Academy, MI Bond Rating Lowered To ‘BB’ On Weakened Liquidity; On Watch Negative”.
S&P Global Ratings lowered its rating on the Grand Traverse Academy's series 2007 public school academy revenue and refunding bonds to 'BB' from 'BB+', and placed the rating on CreditWatch with negative implications.
Non-investment grade bonds or “junk bonds” usually carry ratings of “BB+” to “D” (Baa1 to C for Moody’s) and even “not rated.”
Bonds that carry these ratings are seen as higher risk investments that are able to attract investor attention through their high yields. However, investors of junk bonds should note the implications and risks that are involved with investing in bonds that are issued by companies with liquidity issues.
“The lower rating reflects our conservative view of the school's weakened liquidity which still remains extremely thin for the rating category,” said S&P Global Ratings credit analyst Melissa Brown.
“The CreditWatch action reflects our uncertainty with regards to the impact of GTA's potential additional debt plans on its credit profile, which in combination with the school's already weak liquidity position, could pressure operations and maximum annual debt service (MADS) coverage from levels that are currently sufficient for the rating.”
The junk rating was issued while the Grand Traverse Academy determined its now-disgraced former manager, Mark Noss, would not construct an expansion at the Traverse City campus and were instead seeking project financing with Tortoise Credit Strategies:
We understand GTA expects to borrow $4 million to finance its high school wing expansion and math and science center. At the time of our last review, management expected to enter into a lease to buy arrangement for the new facility, but we understand the school has since decided to purchase the property outright via a direct loan with a hedge fund.
Management indicates that discussions related to the borrowing are still preliminary, but expects to finalize negotiations in the coming weeks and to close on the loan in early February 2017.
Depending on the debt structure, we could view this as a substantially riskier profile with exposure to contingent liabilities, particularly since GTA's unrestricted reserves are not at a sufficient level to cover this potential exposure.
Based on the final financing plan and the detailed credit pressures, we could potentially lower the rating by multiple notches. Given our level of knowledge in respect to the details of the contingent debt, we have not incorporated the impact of the debt into our analysis of the current rating.
Did you catch this: “we could potentially lower the rating by multiple notches”?
S&P's take on the additional $4.0 million debt was that it could have driven the Grand Traverse Academy's rating even lower! What's lower than junk?
(S&P Global Ratings provides a Credit Rating only when, in its opinion, there is
information of satisfactory quality to form a credible opinion on creditworthiness,
consistent with its Quality of the Rating Process – Sufficient Information (Quality of
Information) Policy, and only after applicable quantitative, qualitative, and legal
analyses are performed. Throughout the ratings and surveillance process, the analytical
team reviews information from both public and nonpublic sources. As of May 2017, the Grand Traverse Academy's rating remains BB.)
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.
While readers of this blog have been busy commenting on Grand
Traverse Academy superintendent Susan Dameron's “heads are rolling” post, I'm pondering the resolution of the legal battle Mark Noss launched earlier this year.
You remember, don't you?
In a January 5, 2017 letter to the GTA board, attorney Jon Bylsma demanded payment for his client, including all expenses “incurred by Dr. Noss or his entities in reliance on the Academy's assurances, understandings, and written Lease Agreement”.
Bylsma, referencing the lease for the GTA math and science center expansion (originally set to be constructed by MDN Development, LLC, a private, for-profit entity controlled by Noss), asserted that “Dr. Noss, through his entity, MDN, has incurred several hundred thousand dollars of expenses in connection with the Math and Science Center. This has been done at the request of the Board, and pursuant to the authorized and executed Lease Agreement.”
Did the GTA cough up the cash for Noss, and did its board decide to assume the obligation to repay nearly $900,000 still owed by Mark Noss on a Traverse City State Bank line of credit loan Steven Ingersoll opened in 2007? Don't know? Well, neither do I!
And what about that PNC Bank loan, huh?
Still nothing publicly announced.
But here's the letter Mark Noss sent to the GTA board back in June, an unsuccessful attempt to maintain his cushy management agreement. If I hear anything, I'll let you know!
Today is the first Monday in October, the day the new Supreme Court term begins.
In honor of the Supremes, I'm debuting a new feature: Docket Day. This inaugural edition features Deborah Ingersoll, wife of convicted felon (and federal inmate) Steven Ingersoll.
BACKGROUND
Deborah Ingersoll was charged one count of attempt and conspiracy to commit fraud in the federal indictment unsealed on April 10, 2014.
In May 2011, the government alleged that a “flurry of activity” was undertaken by Deborah Ingersoll. Trotting around to various branches of the Fifth Third Bank, she made multiple cash deposits— all under $9,000.
Assistant United States Attorney Janet Parker stated in the indictment that Deborah Ingersoll did the same in August 2011 at Huntington Bank, with the deposits ranging from $8,500 to $9,000.
Bank records later showed the money was withdrawn by the Ingersolls and used for a “personal real estate purchase”.
On March 4, 2015, at the close of the government’s case in chief, each defendant made
an oral motion for a judgment of acquittal. Steven Ingersoll’s, Gayle Ingersoll’s, Roy Bradley’s, and Tammy Bradley’s motions for judgment of acquittal were granted in part with respect to Count 1 (conspiracy to commit bank fraud) and denied in part.
Deborah Ingersoll’s motion for judgment of acquittal was granted.
DIARY OF A DEADBEAT
At 9:15 a.m. on Saturday, September 16, Deborah Ingersoll answered the door at her Center Avenue home in Bay City to accept a special delivery—and it wasn't a fragrant bouquet of flowers.
Mrs. Ingersoll's visitor wasn't a florist, it was a process server, there to deliver a Summons and Complaint filed by Crown Asset Management, LLC in Bay County's 18th Circuit Court on July 3, 2017. Crown is seeking to recover a $26,087.48 credit card debt Ingersoll failed to pay Citibank N. A. (Citi ThankYou® Preferred).
Crown Asset Management is a debt purchaser who routinely files collection lawsuits here in Michigan. Like other debt purchasers, Crown Asset Management purchases credit card debt and files credit card collection lawsuits.
Deborah Ingersoll has until October 6 to file a written response to the court and serve a copy to Crown Asset Management.
If she does not answer within the stated 21 day period, or take other action in the time allowed, Ingersoll could have a judgment entered against her for the outstanding credit card debt.
Ingersoll made her last credit card payment, $651.30, on March 6, 2015—four days before her husband, Steven, was convicted of tax fraud and conspiracy in U. S. District Court.
And her last purchases?
Deborah Ingersoll ordered two Experian credit reports, for a grand total of $25.90, on February 26, 2015.
Here's the thing: credit card debt may be discharged whenever you file for Chapter 7 or 13 bankruptcy. When debt is discharged, your creditors are prohibited from attempting to collect unpaid credit card debt and other debts listed in your bankruptcy; this includes contacting you by phone or by mail.
