}

Friday, May 30, 2014

72 DAYS...AND COUNTING: Where Is The Full Spectrum Management/Grand Traverse Academy Contract?

It's been 72 days since optometrist and longtime Steven Ingersoll business associate, former Grand Traverse Academy board president and treasurer, father-in-law of Ingersoll employee Brian Lynch...(I could go on, but you get the point), Mark Noss was awarded a multi-year contract as the Grand Traverse Academy's new for-profit education management organization (EMO)--recently hatched, the-ink-was-still-wet-on-its-incorporation-papers Full Spectrum Management, LLC.

And a lot people, including Miss Fortune, are wondering why Lake Superior State University (LSSU) appears unwilling to even acknowledge the contract's existence, let alone provide a copy as they're legally required to based on a Freedom of Information Act request.

According to its charter agreement, the Academy was required to submit a copy of Full Spectrum's new contract to LSSU's Charter School Office Director, Nick Oshelski for review.

Or was it just a "secret handshake" agreement? (Ack-acka-dak, dack-dacka-ack.)

Guess I just have to wait and see what the subpoenas turn up!

Thursday, May 29, 2014

ANOTHER "SCOOP"! Just How Much Did Steven Ingersoll and Grand Traverse Academy's Kaye Mentley Make As "Consultants" To California's Great Valley Academy?

Take a guess, because it's probably more than the average Grand Traverse Academy teacher made in the last three years--combined!

Get out your waffle cones, because here comes another tale of "double-dipping".

In a post "National Bank of Steve?" that appeared May 6 on this blog, Miss Fortune exclusively that during the year Steven Ingersoll racked up nearly $29,000 in delinquent Bay City property taxes (2102), he was flush enough to loan $300,000 to a California charter school that had retained him and Grand Traverse Academy Superintendent Kaye Mentley as "development consultants".  

Although I'd expected that detailed financial disclosure information regarding Great Valley Academy's "consulting" expenditures for Ingersoll and Mentley could only be teased out of the Academy's audit reports, I was wrong.  

And while my request to the California Department of Education for copies of the GVA's financial audit reports has been processed and approved, I was able to locate the amount paid to Smart Schools Management, Inc. by the Great Valley Academy in a Form 990 filing.

And here it is! 

Shown below is an excerpt from GVA's June 2009 Board meeting minutes, with parent Jordan Visola's comment. She inquires about the "$110,000 fee for Smart Schools of Michigan", which turns out only to be a partial payment to Steven Ingersoll and Kaye Mentley.

During its fiscal year 2009 (from July 1, 2008 through June 30, 2009), the Great Valley Academy paid $147,427.00 to Ingersoll and Mentley via an entity described in the report as "Smart Schools of Michigan, Inc.".


A search of Michigan's official business entity/corporation database does not show an entity with that exact name, so it's likely to be an abbreviation.

After all, Ingersoll has plenty of "smart" names to chose from here in Michigan:

*Smart Schools Education, Inc.

*Smart Schools Foundation


*Smart Schools Management Of Bay City, LLC

*Smart Schools Management, Inc.

*Smart Schools North, LLC

*Smart Schools, Inc.
 

In addition, the GVA's founder Eldon Rosenow (like Ingersoll, an optometrist) was paid a whopping $335,163 in "consulting" fees.

A wise New Yorker once told me the definition of a "consultant": someone who borrows your watch to tell you the time...and then keeps the watch! 

Maybe "consultant" Steve Ingersoll can tell Miss Fortune why he filed paperwork with the State of Michigan on April 23--after he was federally indicted--to keep his "GTAS, LLC" shell corporation current.

You remember GTAS, LLC don't you?   

It was paid nearly $250,000 taxpayer dollars during the 2012/2013 school year to provide "janitorial services" for the Grand Traverse Academy.

Somebody get me a broom!




Tuesday, May 27, 2014

INGERSOLL FEDERAL BANK FRAUD TRIAL PROCESS GEARS UP: Initial Pre-Trial Conference Scheduled; Bradley Asbestos Removal Trial Gets Another Delay to Explore "Global Resolution Of All Charges"

BREAKING NEWS! Bradley gets more time to explore "global resolution"; signals a plea deal could be in the works

A pretrial conference notice filed this afternoon 
in U. S. District Court in the Eastern District of Northern Michigan confirms that an initial scheduling conference (for lead defendant Steven Ingersoll, his wife Deborah and co-defendants Gayle Ingersoll and Roy and Tammy Bradley) is on the calendar for Thursday, May 29 at 9:00am.

The conference call is expected to decide preliminary matters, such as evidentiary and witness testimony. Criminal pretrial conferences may also be used for discovery.

Roy Bradley's federal asbestos-related jury trial, scheduled to begin today after an April 29 postponement, has been delayed again--until August 19.

Court documents filed in the asbestos on May 20 indicate Bradley's attorney in that case stated that it was "in the best interest of Mr. Bradley that counsel on both cases confer to discuss defense strategies and explore the potential for a global resolution of all charges involving Roy Bradley". 

Given the timing of events, the volume of discovery, and the complexity of the fraud case, the documents state the "attorneys have not had an opportunity to confer". Bradley stated on the record that he is "willing to waive his right to a speedier trial" and to have his asbestos trial delayed until August 19, 2014.

Bradley asked that his original attorney, Andrew D. Concannon, be allowed to withdraw from the case, and the judge granted Conannon's oral motion to withdraw. 

The court appointed Elias J. Escobedo, Jr. of Waterford, Michigan, to represent Bradley in the asbestos case.

DIVERSIFY: Here's How To Cash In On The Charter School Movement

Peter Greene, veteran teacher and author of the "Curmudgucation" blog, brilliantly skewers the "all hogs to the trough" gluttony infecting the modern charter school movement with this tart post.

I've excerpted a bit here, but I encourage you to read the entire post yourself!

In the past, many charters were launched that focused solidly on providing unique and exciting educational experiences for their communities. These schools were innovative. These schools were connected to their communities. These schools were icing on the public school system cake. And these schools were run by chumps. There's only one question you need to answer to gauge the success of your charter school-- am I making money.

Here's how to properly cash in on the charter school movement.

Diversify!

Not the school-- your portfolio. Set up multiple companies. Create a holding company that owns the building, and charge the school rent and facilities fees. Create a school management company, and hire yourself to run your school. Form your own custodial contracting company. Write your own textbooks, and then sell them to yourself. Buy a loaf of bread and a jar of peanut butter and set yourself up as a lunch concession with ten dollar sandwiches.

Don't Overlook the Obvious

"Non-profit" just means "not wasting money by throwing it away on stockholders." Taking money hand over fist that you can't call profit? Just put it all in a big wheelbarrow and pay it to yourself as a salary. There's no legal limit to what you can be paid as the charter school operator. The only limits to your salary are the limits set by your own sense of shame. If you have no shame, then ka-ching, my friend. Ka. Ching.

Ain't Too Proud To Beg

Have a fundraiser. When you wave schools and children at people, they fork over money like crazy, whether you actually need it or not. The only way it could work any better would be if you found a way to work in the American flag and puppies.


CHARTER$ CA$HING IN ON KID$: H.R. 10 Sails Through House of Representatives

In the know...or in the dark?

"Success and Opportunity through Quality Charter School" bill exempts charter schools from federal requirements, basic tenets of transparency and accountability that are required of any publicly-funded institution. 

Just days after the release of “Charter School Vulnerabilities to Waste, Fraud And Abuse”, a report authored by the Center for Popular Democracy and Integrity in Education, the U. S. House of Representatives voted to give the charter school industry an early Christmas present. 

By a vote of 360-45, the House on May 9th passed the bipartisan “Success and Opportunity Through Quality Charter Schools Act” (H.R. 10) to expand access to charter school funding. The bill would expand federal funding for charter schools by some $50 million; however, it offers no provisions to expand transparency and accountability for the charter schools receiving this money. When such provisions were proposed in the House, they were voted down on the shaky grounds that they were “burdensome and unnecessary” (even though public institutions must comply with such standards).

A majority of Democrats — 158 in favor and 34 against — joined all but 11 Republicans in support of the measure.

Of the five Michigan U.S. Congressional representatives who actually bothered to show up and vote (Justin Amash, Dan Benishek, John Conyers, Dan Kildee and Gary Peters), only two voted no: Kildee and Amash. The rest, including Peters, a Senate candidate who touts the fact his father worked as a public school teacher for more than 30 years, voted yes.


The bill, authored by House Education and the Workforce Committee Chairman John Kline (R-Minn.) and the panel's top Democrat, Rep. George Miller (Calif.), would consolidate the two existing federal charter school programs into one to award grants to state entities.

The measure would also authorize the secretary of Education to maintain a federal grant competition for charter schools that did not win state grants.

Republicans have touted the issue of school choice and access to charter schools as a way of limiting the federal government's role in education policy. Charter schools receive public funding, but operate independently and therefore are not subject to federal regulations.

"Expanding education opportunity for all students everywhere is the civil rights issue of our time," House Majority Leader Eric Cantor (R-Va.) said. "I say we help those students by expanding those slots so they can get off the waiting lists and into the classrooms."

The House rejected, 190-205, an amendment offered by Rep. Kathy Castor (D-Fla.) that would require the secretary of Education to develop conflict of interest guidelines for all charter schools receiving federal funds, such as disclosing individuals with financial interest in a given charter school.  Dubbing the amendment “an overreach of federal authority”, Kline said the proposal would be “unnecessary”.


Members also rejected, 179-220, an amendment offered by Rep. Sheila Jackson Lee (D-Texas) to require charter schools to publish data regarding student enrollment criteria, discipline policies and orientation materials on their websites.

Kline said that requiring charter schools to publish such information would impose “an unnecessary workload not required of public schools”.


ANSWER TO A PRIVATIZER'S PRAYER

Miller and Kline clearly displayed a sense of humor when naming the bill, which is basically an answer to a public education privatizer’s prayer—“success and opportunity” to get what they can from public school funds.

According to the bill, tax dollars would be used to “provide financial assistance for the planning, program design, and initial implementation of charter schools” and expand the number of charter schools. The bill “encourage States to provide support to charter schools for facilities financing in an amount more nearly commensurate to the amount the States have typically provided for traditional public schools”. 

The bill also supports “the startup of charter schools, and the replication and expansion” of charter schools and assist “charter schools in accessing credit to acquire and renovate facilities for school use”.

Our elected representatives have shown they’re willing to hand over what hasn’t been grabbed yet and serve it up to private corporations on a school lunch tray.


Studies show that charter schools have been determined to be no better academically than traditional public schools and their spread has created greater racial segregation. Charter schools will often “push out” low achieving students in hopes of improving the school’s academic profile while minimizing costs by educating fewer challenging students. Charter schools also “cream skim” the best students from public schools, leaving the more challenging students behind for traditional public schools to educate.

And, most importantly here in Michigan, charter school scandals reveal that tax payer dollars are going directly into the pockets of the charter school “education service providers” (like Smart Schools Management, Inc.) rather than to the teachers, the students and the facilities.

After all, the Grand Traverse Academy is still without a library nearly 14 years after it opened.


At a time when so many public schools are drastically cutting their basic budgets, why would Congress provide millions more to private school management companies that have not proven they are better alternatives? And why would education reforms undermine local school governance and democratic education?

Maybe you can ask your favorite Senator, because a version of the House bill (sponsored by Senators Mary Landreiu of Lousiana, Michael Bennet of Colorado and Mark Kirk of Illinois and Lamar Alexander of Tennessee) is making its way to a Senate vote.


NEXT STOP: THE SENATE
 
Landrieu said the legislation would permit the development of 500 charter schools per year across the country. States that are using charter schools to turn around long-struggling traditional public schools, or that have policies in place to help charter schools secure facilities, would have an advantage in the grant competition.

Without measures in place to maintain transparency, the potential for conflicts of interest and abuse of public funds looms large. In court, charter groups have successfully argued that charter schools are not public entities but private organizations, despite the fact that they subsist largely on public funds (funds that would otherwise go to cash-strapped public schools). State regulatory agencies have no power to audit the financial records of charter schools.

And just try pointing out to our representatives that failing to require transparency in the use by charter schools of public funds betrays a central conservative value: fiscal responsibility.


Charter schools are taxpayer-funded but independently run. Most are not unionized, and their rapid growth across the country in recent years — helped along by the strong support of the Obama administration — has stoked endless debate in education policy and political circles.

Democrats in the House received no regulatory reforms in return for this give-away to education service providers.

They’re either the world's worst negotiators and biggest suckers…or they don’t really want charter schools to be regulated and transparent.

Friday, May 23, 2014

OTHER THAN FULL AND OPEN COMPETITION: Miss Fortune Explicates Grand Traverse Academy Board Meeting Minutes And The "Urgency Exception"

The Grand Traverse Academy's May 2 board meeting minutes have finally been made available and, like a mankini, they reveal much...but still conceal the most important thing.

What remains hidden is a "tick-tock" precisely describing the process employed to transition from federally-indicted Steven Ingersoll's Smart Schools Management, Inc. to former board president Mark Noss's newly-minted Full Spectrum Managment, LLC. 

And how could "urgency" have truly driven the board's decision to hire former board president Noss, when it's been firmly established both on this blog and in the Traverse City Record-Eagle that the Academy's board and legal counsel had prior knowledge of Ingersoll's $2.38 million dollar management fee "overpayment"? And how could a purported "urgent" contract have been awarded with a two-year term when most formal governmental "urgency exceptions" cap contracts at one year?

THE MINUTES

The "proposed minutes" of the board's May 2 meeting have just been released, and one statement attributed to Academy attorney, Doug Bishop, caught my attention immediately: "Contract with Full Spectrum done out of urgency."

Leaving aside the potent argument that can easily be made against Bishop's self-serving bias of "urgency" (Ingersoll's $2.38 million dollar management fee "overpayment" was publicly revealed in the Academy's 2013 fiscal audit nearly six months ago), Bishop's statement seems to imply that a form of explicit approval exists supporting the astonishing decision to award a noncompetitive multi-year, multi-million dollar contract to a former board president who resigned mere days before the contract was granted.

But according the laws that govern Michigan charter schools, it's unlikely that any formal "urgency exception" was sought and granted. 

NON-COMPETITIVE CONTRACT: WAS IT REALLY AN "UNUSUAL AND COMPELLING URGENCY"?

There are several justifications a public body can give for entering into a noncompetitive contract. One is that there is only one vendor qualified to provide the goods or service the public body requires. But another is that there is an “unusual and compelling urgency” that requires the public entity to award the contract without competitive bidding. In these cases, there is usually a risk of financial or other injury to the entity caused by a delay in the competitive bidding process.

However, it appears that Michigan charter school regulations (and the charter agreement governing the Grand Traverse Academy) do not include a specific provision for an "urgency exception".

Michigan’s statutes grant the board of a charter school the ability to enter into binding legal agreements with persons or entities as necessary for the operation, management, financing, and maintenance of the charter schools.

The law requires authorizers to review – and allows them to disapprove – any agreement between a charter school and an educational management company before such an agreement is final and valid. (The law provides that disapproval may only occur if the agreement is contrary to the contract or applicable law.)

Statutes prohibit specifically identified family relations between members of the board of directors and officers and members of any educational management company involved in the operation of the school (with such provisions detailed in charter contract). However, it does not require existing and potential conflicts of interest between the two entities be disclosed and explained in the charter application.

The law requires authorizers to ensure that charter school governing boards operate independently of any educational management organization.

In addition, the Academy's agreement with authorizing entity Lake Superior State, clearly establishes the "education service provider" (ESP) contracting process. The following excerpts from the current agreement explain the steps, including required "due diligence": 


A. Academy Board Due Diligence
1. Prior to executing an agreement with an ESP, the Academy Board shall perform sufficient due diligence to establish that the ESP has the appropriate financial resources, educational services, and managerial experience to provide the contracted services. Prior to contracting with an ESP, the Academy Board shall obtain sufficient information to conclude that the ESP agreement, on the terms to be approved, is in the best financial and educational interest of the Academy. 


At a minimum, and prior to the execution of an ESP agreement, the Academy Board shall provide the following information to the Charter Schools Office in addition to the proposed contract:
- List of all ESP owner(s), directors and officers.
- Type or form of entity (for-profit corporation, non-profit corporation, limited liability
company, etc.).
- Name of the ESP's primary banking institution.
- Legal counsel for the ESP. Name, address, and telephone number of firm and name of contact person.
- Accounting firm for the ESP. Name, address, and telephone number of firm and name of contact person.
- A written statement regarding the ESP's experience in providing educational services and a description of the types of educational service to be provided to the Academy.


2. Academy Board members, Academy Board employees, and their respective spouses and immediate family members may not have any direct or indirect ownership, employment, contractual or management interest in any ESP that contracts with the Academy. 

The Charter Schools Office may formally waive this condition for persons who have an ownership interest in an ESP that contracts with the Academy if it concludes that the ownership interest is minimal.

REVEAL THE DOCUMENTS? NOT LIKELY

Although I confirmed on May 21 that Michigan Attorney General, Bill Schuette, had launched an investigation of the Academy's missing millions, it's unlikely the Academy's superintendent, its current and former board members and legal counsel will reveal any more answers until they're subpoenaed.

But there's nothing stopping them from revealing more details right now.

Tick-tock, tick-tock, tick-tock!

Thursday, May 22, 2014

JUST SAYIN': Unanswered Questions-Part 1

You'll laugh.

You'll cry.  

You'll feel like you've been left alone in a room filling with some sort of gas that makes your brain feel all wibbly-wobbly.

You'll plotz from so much fun!

Let's get started.


Some people may feel they have all the answers, but not Miss Fortune!

Here's one question I'd love to have answered (Mr. Angrypants, are you listening?): how can it be that virtually no other news source has picked up the story of what could prove to be Michigan's largest charter school fraud?

[Crickets.] 

A public school academy is a public trust, and that trust must be validated by openness (except of course where students’ right to privacy must be protected).  Information on finances, curriculum, assessment, teacher qualifications, program, student demographics, and other operational issues must be widely and publicly available.

This information about any school that receives public funds must not only be shared with the school community, but also with the public at large, and must always be subject to commentary

Wednesday, May 21, 2014

BREAKING NEWS: Michigan Attorney General's Office Investigating Grand Traverse Academy's Missing Millions

EXCLUSIVE: Michigan Department of Education official confirms Academy subject of "an ongoing investigation".

Miss Fortune received confirmation yesterday that the office of Michigan Attorney General Bill Schuette is conducting an "ongoing investigation" into the alleged misappropriation of federal and state money from the Grand Traverse Academy by Steven Ingersoll's Smart Schools Management, Inc.

The investigation was confirmed in an email from Michigan Department of Education spokesman, Bill DeSessa, who was responding to my inquiry seeking to determine if the Academy filed a "report on finding of suspected fraud and/or embezzlement" relating to its June 2013 audit of financial statements.



As previously reported on this blog, the Academy's 2013 financial audit revealed that the Academy was carrying a whopping “prepaid expense/expenditure balance” of $2,338,980 for overpayments made to Ingersoll's Smart Schools Management, Inc.

In the auditor’s report, Smart Schools Management agreed that it “owed Grand Traverse Academy an amount classified as a prepaid balance” ($2,338,980), and worked out a repayment plan with the Academy. The plan called for Smart Schools Management to "work off" the prepayment by “partially reducing cash transfers for future management fees through June 2016”.

When reached for comment late yesterday afternoon, Joy Yearout, a spokeswoman for Attorney General Schuette declined to comment, stating that the Attorney General's office "can neither confirm nor deny the existence or nonexistence of a pending investigation".

Based on the information I've already revealed on this blog, it's likely that any investigation would include related-party transactions between Ingersoll's for-profit management company and the Academy, conflicts of interests that may have impeded financial oversight by the Academy's board of directors (current and former) and an in-depth forensic accounting of bank transfers.

More information on this breaking news as it becomes available.

Tuesday, May 20, 2014

CRUMBLING CASH COW? Per Wickstrom's Phony Drug Rehab Empire Hit By Scientology Suit Shockwave!

You can avoid reality, but you cannot avoid the consequences of avoiding reality.
-Ayn Rand
 

If you want to get rich, start a religion that has a covertly hidden drug rehab program woven into the income stream. It is easy and fun!





Just pay the Church of Scientology $$$$ for the right to sell books and courses written by the cult leader, L. Ron Hubbard, and claim they get people off of drugs and alcohol.

Then give yourself whatever credentials you want - no one cares!

As I reported yesterday, Per Wickstrom's Best Drug Rehabilitation, Inc. and the facility's Deputy Executive Director, Jason Burdge, are among the 82 named defendants in a massive trademark violation lawsuit.

But Wickstrom's habitually inflated his own credentials, even describing himself in a recent "video news release" as a "therapist"!

Let's take a look back, in the first of a new "Glistening, Quivering Underbelly" series I like to call 'Blustering and Bloviating'.

Sounding like a stupid man's idea of what a thoughtful person sounds like, Wickstrom explained in the video how he developed the treatment programs for his Manistee, MI-based facility, Best Drug Rehabilitation.

Wickstrom stated that "Best Drug Rehabilitation offers a myriad of programs. What we did is, we sat down—a bunch of us therapists—and we decided to look at what works and we all raised our hand: how did you get sober?"

Oh, no, he didn't!


This misleading reference by Wickstrom implying that he's a "therapist" is wrong on many levels.

According to the State of Michigan's certification/licensing laws, "therapist" and "counselor" are considered protected titles of therapeutic intervention. Here in Michigan, as in most of the 50 states, there are three licensed groups of individuals—social workers, psychologists and psychiatrists.

It appears to Miss Fortune that Wickstrom has none of the requirements—a college degree, a professional license or accreditation—necessary to properly refer to himself as a "therapist".

A slip of the tongue...in a scripted video?

Maybe, but your girl Miss Fortune is not buying it.

So, how did Wickstrom get sober? In the past, he's publicly credited Narconon...ironic now that his public pronouncements might be used against him "in a court of law"


Wickstrom's public support of Narconon and its role in his own life most famously appeared in a November 15, 2012 Huffington Post story, "From Addict to Entrepreneur: How I Overcame My Greatest Obstacle".

In that post, Wickstrom credited Narconon with helping him overcome his battle with addiction:

"Narconon saved my life. After graduation, I had to make a choice about what I wanted to do with my career: I could either go back to selling things (I was a terrific salesperson for GM), or I could dedicate my life to helping people. I realized that I was given a second chance at life and thus, found my higher calling: a dedication to helping people beat their addiction, just like I did.

I opened up my own Narconon center and saved more than 6,000 people throughout the course of several years. It felt great to help people and make a true difference in this world."


Gee, that's great! 

Wonder if he'll be able to save his own ass?

NEW FACEBOOK PAGE SPURRING LIVELY DISCUSSION: "NOT Grand Traverse Academy" Becoming Go-To Community For Steven Ingersoll Fraud Controversy


"Being a victim doesn't mean the school is a bad one. And siting [sic] the record eagle as source is not the best source to use."
NOT Grand Traverse Academy Facebook  page comment

As Euripides wrote twenty five hundred years ago: A man’s most valuable trait is a judicious sense of what not to believe. And it is a valuable trait to be able to tell what is the truth and what is not.

A newly-launched Facebook page, Not Grand Traverse Academy, jumped into the Steven Ingersoll controversy, focusing on the financial irregularities reported on this blog and the Traverse City Record-Eagle. Truth seekers of all stripes have joined the discussion, but some of them may have missed a crucial point: the near total lack of transparency by the Academy's board of directors.

Although Miss Fortune has no connection with the NGTA Facebook page, I approve of its message: encouraging the community to ask questions of its public officials—most notably, the Grand Traverse Academy's board of directors.

While some comments reveal an understandable desire to protect the Academy—its teachers, students, and hard-working staff—others belie the fact that the information revealed on this blog has come from public documents, including the Academy's financial audit reports.

For example, the June 2013 report stated the following: “Smart Schools Management, Inc.’s ability to prepay their fee and withhold payment of overpaid fees enables Smart Schools Management, Inc. to abuse their access to public funds.” 

 And I have a few questions of my own:

1)  How was it possible for nearly $2.4 million dollars to be "overpaid" by Steven Ingersoll from the Academy's bank accounts without anyone noticing or interceding?

2)  Did the Academy board, as required by the Michigan Department of Education, report Ingersoll's suspected fraud to the department's audit division?

3) How much money is Mark Noss's Full Spectrum Management being paid as a management fee?

Monday, May 19, 2014

CRYSTAL BALLS

The overlapping double-bubble chart (Venn diagram to all you smarty-pants readers) that is the Grand Traverse Academy's Steve Ingersoll fraud scandal just got more complicated.

Miss Fortune has discovered yet another link between Ingersoll and Mark NossIcon Curriculum Mapping software.

Ingersoll created an educational model encompassing "visual learning and associated hierarchies of muscular and cognitive development". The model includes Integrated Visual Learning (IVL) and Icon Curriculum Mapping, which form the basis of charter schools in Michigan and California. Bay City Academy and Grand Traverse Academy here in Michigan and Great Valley Academy in Modesto, California, are based upon Ingersoll's educational model.

In the screen capture at left, Ingersoll demonstrates his "Icon Curriculum Mapping Software", currently in use the Grand Traverse Academy.


The cross-pollination between Ingersoll and Noss just went to another level. An offshoot of the Excel Institute's Icon Learning tutorial service was grafted onto the Smart Schools tree of knowledge and grew another branch
—called Icon Curriculum Mapping software.

And although the licensing fee is roughly $1,200 a year per school (payable to Steve Ingersoll's Smart Schools Management, Inc.), what's another few grand among friends?

And you thought a new broom would sweep clean? 

Not with a crew as incestuous as the Borgias!

BREAKING NEWS: Per Wickstrom's Best Drug Rehabilitation and BDR's Deputy Executive Director Jason Burdge Among Defendants In Massive Federal False Advertising, Trademark Violation Case Brought By 'National Association of Forensic Counselors'

"Defendants misuse of NAFC mark, certifications, logos"

A massive trademark violation lawsuit filed late Friday afternoon in US District Court in Oklahoma's Eastern District by the National Association of Forensic Counselors, Inc. and the American Academy of Certified Forensic Counselors, Inc. threatens to blow the lid off a long-rumored Narconon practice: inflating the credentials of its staff members by using expired or phony accreditation certificates. 

Among the 82 named defendants (including the Thumbelina of Scientology, David Miscavige) are Per Wickstrom's Best Drug Rehabilitation, Inc. and the Manistee facility's Deputy Executive Director, Jason Burdge (left). 

Prior to joining Best Drug Rehabilitation, Burdge worked at Narconon's Arrowhead facility located near Canadian, Oklahoma.

As reported last February by Tony Ortega on his blog, The Underground Bunker, the National Association of Forensic Counselors had been looking into allegations that Narconon employees improperly received Certified Chemical Dependency Counselors (CCDC) credentials. Two former Narconon officials, Luke Catton and Eric Tenorio, came forward to say that they were given answers before taking exams by the test proctor, a man named Kent McGregor.

This blog covered the story in April 2013, featuring A Forever Recovery's Pamela Anderson's certification by Mr. Pita himself, Kent McGregor.

Karla Taylor, head of the National Association of Forensic Counselors, was furious that Narconon websites were misusing the NAFC’s logo and giving the appearance that the NAFC has accredited Narconon’s program, which is not the case.

Taylor also received a formal complaint alleging that Narconon employees fraudulently obtained individual certifications as Certified Chemical Dependency Counselors (CCDC). Taylor said at the time that she was taking the complaint very seriously and that several Narconon employees have already been sent revocation notices, and that she’d be investigating the rest of Narconon’s CCDC certifications.
 

Although Taylor did not identify the complainant, Eric Tenorio reportedly told Tony Ortega that he was the one who alerted NAFC that its logo and certifications were being used improperly by Narconon.

Tenorio got involved with Narconon in 1996 at its first Oklahoma facility, in Chilocco. He eventually became the executive director of Per Wickstrom's Narconon Stone Hawk center here in Michigan. Tenorio left Scientology in 2010.


BEST DRUG REHABILITATION 

The complaint includes Best Drug Rehabilitation among a list of drug treatment and rehabilitation facilities identified as "part of the Narconon Network run by Narconon International". Also named was Albion, Michigan's Freedom Center, formerly known as the Narconon Freedom Center. 

Per Wickstrom's TIA Corporation owns the Freedom Center building.

Best Drug Rehabilitation is also mentioned in the allegations against its current Deputy Executive Director, Jason Burdge. 

JASON BURDGE 

Burdge, previously through Narconon Arrowhead and currently through Per Wickstrom's Best Drug Rehabilitation, advertised himself as a C.C.D.C. (Certified Chemical Dependency Counselor) long after his certification expired in 2010.

Best Drug Rehabilitation posted a scanned copy of Burdge's NAFC certificate on Best Drug Rehabilitation's website for over a year after his departure from Narconon Arrowhead--and the expiration of his certification.


Burdge's actual expired certificate, as it appeared on Best Drug Rehabilitation's website, is shown at left.










Burdge submitted a falsified application to NAFC in 2013 falsely claiming he held an Oklahoma license and certification. His application was denied on April 1, 2013.


Burdge (right) and an unidentified woman
WHY A TRADEMARK  VIOLATION LAWSUIT?

There is a reason why this case being pursued as a "trademark violation": in addition to protecting trademarks, the federal Lanham Act (15 U.S.C. §§ 1051,et seq.) provides a wide range of protections and remedies for and from acts of unfair competition and false advertising. 

Unlike common law unfair competition claims, which typically do not provide for awards of attorneys' fees, the Lanham Act affords courts with discretion to award judgments to successful plaintiff parties for the recovery of reasonable attorneys' fees and costs. 

The false advertising was the widespread misuse of the NAFC's trademark symbol to insinuate certification.

What's more, because Wickstrom's Best Drug Rehabilitation and Burdge have misused accreditation and symbols from the NAFC, former patients who relapsed or have complaints about the facility may file consumer complaint lawsuits.


Gird your loins, Per Wickstrom! Your saddle's about to get chapped.

Tuesday, May 13, 2014

30 DAYS: An Exclusive Update On The Grand Traverse Academy's $2.3+ Million Dollar Financial Scandal

SCHOOLED!

Exactly 30 days ago, on April 13, this blog broke the news that federally-indicted charter school manager Steven Ingersoll had racked up a $2,338,980 "prepaid expense/expenditure balance" for overpayments made by Ingersoll from the Grand Traverse Academy's bank accounts to his Smart Schools Management, Inc.

Miss Fortune takes a brief look back at the scandal, the self-serving misstatements made by the Academy's Superintendent/Principal Kaye Mentley and its attorney, Doug Bishop, the smokescreen that still surrounds the hiring of Ingersoll's alter ego, Mark Noss, and the distinct possibility that Ingersoll's financial wake could swamp the Academy.


IF YOU STOLE MILLIONS FROM YOUR COMPANY, WOULD YOUR BOSS LET YOU PAY IT BACK BY DEDUCTING IT FROM YOUR PAYCHECK? NO? THEN MAYBE YOU'RE WORKING IN THE WRONG PLACE!

The official 2013 Grand Traverse Academy audit report stated that in addition to receiving “prepaid management fees”, Smart Schools Management also had the ability to “transfer funds between the Academy’s and Smart Schools Management, Inc.’s bank accounts” without prior approval.

The audit report reveals that on behalf of his firm, Ingersoll "took cash advances" for the management fee each year in the beginning of the school year based on the budgeted figure and “without further Board action”. 


That observation has never been publicly refuted by either the Academy board or Steven Ingersoll. 

In fact, the audit report revealed that Smart Schools Management agreed that it “owed Grand Traverse Academy an amount classified as a prepaid balance” ($2,338,980), and worked out a repayment plan with the Academy. The plan called for Smart Schools to "work off the prepayment" by “partially reducing cash transfers for future management fees through June 2016”.

In plain language, the Academy would simply deduct the $2.3 million overcharge--in three installments--from Steven Ingersoll's expected future management fees. And that plan may have worked had Ingersoll not been indicted on multiple fraud and income tax evasion counts. 

CRACKS IN THE FACADE: LET'S GET OUR STORIES STRAIGHT 

As the Traverse City Record-Eagle began its belated review of the situation and began contacting key players for comments, you could almost hear the cracks in Kaye Mentley's carefully crafted facade begin to form.

Ingersoll's attorney, Jan Geht, was quoted in the Record-Eagle deftly throwing the board under the bus by claiming that "Academy officials prepaid Smart Schools $2.3 million", while former Academy board president Mark Noss said in the same article he did not see a problem with the practice, which he said had been going on for years without being flagged by an auditor.

“There was never an advancement or more money provided to Smart Schools that they weren’t entitled to,” Noss said.

Except that pesky $2.3 million dollar fee overpayment that Steven Ingersoll admitted he owed the Academy in June 2013. 

The overpayment that was detailed in a November 2013 audit report, the result of months of back-and-forth with board and its president, Mark Noss.

HOW DO WE UNSCREW THIS THING?

After Ingersoll informed the Academy in March of his impending indictment, the search for his replacement begins...and quickly ends. 

Not wanting a new management company to come in and start rooting around like a truffle hog (who knows what else they'd find?), the board keeps it in the family.

Mark Noss forms an education management company on March 19, filing incorporation paperwork with the State of Michigan that afternoon. Later that day, the Academy announces that it awarded Noss a two-year contract to manage school. However, no financial details have been revealed by the Academy, and the Michigan Department of Education still hasn't received a copy of Noss's agreement.

Every family has a Fredo, right?

SECRETS REVEALED

But it doesn't exactly go like it was planned. On April 23, Miss Fortune reveals the appearance of quid pro quo corruption: Mark Noss's son-in-law, Brian Lynch, was named the Bay City Academy's new Superintendent and President of Instructional Services by its board of directors.

Steven Ingersoll founded (and funded) the Bay City Academy, he owns the buildings, and his Smart Schools Management collects every cent of the taxpayer millions flooding into the school every year as its management fee. 

That's right, Smart Schools receives all revenues as its management fee, from which it pays all operating costs for the Bay City Academy.

Like the rent on the buildings (owned by entities controlled by Ingersoll), the leased equipment (nearly $6,000 a month) and the Academy's accounting operation--all owned, operated and paid for by Steven Ingersoll to Steven Ingersoll.

Bay City Academy officials issued a press release on March 24 about Ingersoll’s departure and the appointment of Lynch, stating:

“Mr. Lynch will direct the implementation of Dr. Ingersoll’s Smart Schools education model. The latest multiyear, multi-site data from the State of Michigan shows the Smart Schools Model has produced the highest math and reading test scores of all charter schools in Michigan. Bay City Academy will reach these same levels of excellence under Mr. Lynch’s expert leadership.”


They left out a couple things: although Lynch had formerly taught at the Grand Traverse Academy, he'd returned to Ingersoll's company after a stint as an insurance agent; his teaching certificate had lapsed and he was not certified as a superintendent; and that he was staying in Bay City at a bed-and-breakfast owned by the disgraced Mr. Ingersoll.

Oh, and one more thing: he's married to Dr. Rebekah Noss, a partner with her father, Mark, in a Traverse City optometry practice.

PREPAYMENT OR EMBEZZLEMENT: WHO WILL BE THE JUDGE?

And here's where we are 30 days on: stuck in neutral with the words of hack PR flack (and Academy Superintendent) Kaye Mentley stinging in our ears, telling us she’s "not concerned about the $1.6 million owed by Ingersoll and Smart Schools."

“At this time the payment schedule that was arranged has been kept,” she said. 


Well, at least she finally admitted that Ingersoll took the money, even though her "payment schedule" claim is as specious as it is mendacious.

The feds talk to each other, Kaye.

I'm willing to bet that an investigation into the Grand Traverse Academy's financial activities is already underway.

We might have to wait another 30 days to hear, but let's hope the Grand Traverse Academy doesn't throw a "shredding party" like the Bay City Academy did after Ryan Schrock left.

Miss Fortune will be watching and reporting...even if no one else does.

Monday, May 12, 2014

SOLD! Zia Shlaimoun's Malibu Mansion Sells for $15,000,000 on April 25; Shlaimoun Reportedly Headed Back to London

The former Malibu, California home of Zia Shlaimoun, located at 30553 Morning View Drive, sold on April 25 for a reported $15,000,000.

Miss Fortune will have more details as soon they are confirmed by Shlaimoun's attorney.

Friday, May 9, 2014

CROOKED CHIROPRACTOR NEWS! Case of Robert Buckhannon Ponzi Scheme Associate Kari Sonovich Piles Up 76,000 Pages of Discovery; Trial Delayed; Buckhannon Likely To Land On Witness List

The embers of Battle Creek's torched On Deck Bar & Grill have long since cooled, and the "did-they-or-didn't-they?" Rob and Kelly soap opera has moved from the front pages...right?

Well, not so fast! Miss Fortune has learned that Kari Sonovich, a California woman arrested February 6 on three counts of wire fraud, has been granted a five month trial delay, postponing her April 22 status conference to September 30 so her attorneys could plow through over 76,000 pages of discovery the federal government produced in the case.

So, Miss Fortune, what does Kari Sonovich's trial have to do with Robert "the crooked chiropractor" Buckhannon? 


Baby, his pivotal role in one massive wire transfer adds up to 872,306 reasons!

Mix yourself one of  the On Deck's late and unlamented signature cocktails--the Arcanum & Vestium, named after Buckhannon's cratered hedge funds--and read on!

WHAT DO YOU GET WHEN YOU MIX A PONZI SCHEME, A CROOKED CHIROPRACTOR, A LAPTOP...AND A MYSTERIOUS $872,306 WIRE TRANSFER?

According to Sonovich's January 30 indictment, between July 2008 and April 2009, she recruited investors to invest with her Las Vegas company, B&B Consulting Group LLC, by telling them she could place their funds with an international trader who operated at an extremely high level, promising returns of up to 500 percent every 90 days. 

Some investors in Sonovich’s scheme became involved at the same time that an earlier Ponzi scheme in which they had invested was collapsing.  

Buckhannon associates Anthony Vassallo and Kenneth Kenitzer ran that Folsom-based Ponzi scheme through their company Equity Investment Management & Trading (EIMT). Both were convicted for that scheme, Vassallo is serving a 16-year prison sentence and Kenitzer was sentenced to a 6-year prison term on February 14, 2014.

Sonovich recruited EIMT investors while she was in Las Vegas, Nevada and Sacramento, California beginning around July 2008 and continuing at least through April 2009. Sonovich claimed that she could help the EIMT investors recoup their losses by investing with a “Sir Joseph Birch”, a man who supposedly had a warehouse full of gold bars. 


But Sonovich didn’t tell the former EIMT investors who gave her in excess of $3 million dollars was that she did not wire the funds to the shadowy financier “Sir Joseph Birch”—she sent most of the money to her personal bank account and that of Brandy White Elk, a “managing member” of B&B Consulting described in the indictment as “B. W-E.”.

However, in three instances, funds were wired directly to an overseas account associated with a man who calls himself “Sir Joseph Birch”.

In one of those instances, the wire originated from an individual, “R. B.” The indictment states that “R. B.” was “induced to wire the funds to J.B. by individuals acting in coordination with Sonovich”, who gave “R. B.” the impression that the wired funds belonged to EIMT, whose investors, after the collapse of EIMT, wished the funds to be transferred to “Sir Joseph Birch”.

The “R. B.” in the Sonovich indictment is Battle Creek chiropractor, Robert Buckhannon, and the story of that March 2009 transaction was vividly portrayed by writer Joshua Davis in the December 2011 issue of Condé Nast’s WIRED Magazine in a profile of Dave Sanders. 

WIRED...AND BUCKHANNON'S $872,306 

Sanders, the senior vice president of sales and marketing at a company that sold fiber-optic and copper cable, put together a money-recovery team to help investors recoup investments lost to Anthony Vassallo’s Ponzi scheme, EIMT.

Sanders met with investor Vassallo investor Russ Putnam in December 2008, who introduced him to Kari Sonovich and Brandy White Elk. Putnam told Sanders the two were friends of his sister-in-law and owned a mortgage brokerage in Vegas. When they’d heard about Putnam’s troubles, they’d offered to use their real-estate know-how to track down property investments Vassallo had made, Putnam later told IRS investigators.
 

Sanders met Anthony Vassallo at Putnam’s home that night, and in January 2009 Sanders escorted Vassallo to a Sacramento-area bank to retrieve the $1.2 million of investor money he’d stashed there.

Kari Sonovich began pitching Russ Putnam on her investment opportunity—with a “successful British securities trader” named Sir Joseph Birch. Sonovich said he was a financial adviser to the Vatican and had special access to the markets that allowed him to make enormously profitable trades. Sonovich claimed Birch could help Putnam make some of his money back.

According to the WIRED article, Sonovich and White Elk were staying with Putnam, Sonovich and White Elk were staying with Putnam, and to Dave Sanders the women seemed to be getting increasingly close to Vassallo. Putnam’s wife, Charity, would later report to IRS investigators that White Elk confessed that both she and Sonovich were having sex with Vassallo.
 

Before long, according to interviews and court documents, it came to light that Vassallo was using the opiate-based painkiller Oxycontin. Charity told IRS investigators she thought Sonovich “could control Vassallo with his drug addiction … and took full advantage of it.”

WIRED reported the alleged coercion quickly produced results. Sonovich revealed that Vassallo had $872,306 on deposit with an investment firm in Las Vegas.


Vassallo’s money was managed by Robert Buckhannon. 

EXCUSE ME WHILE I WHIP THIS OUT...OF MY SATCHEL! 

In a meeting held on Sunday, February 9, 2009, Sanders and his team met with Buckhannon after he’d shown up at the office of Brandy White Elk expecting to meet with Vassallo and a prospective investor.

According to WIRED, Sanders told Buckhannon he had to immediately initiate a wire transfer of $872,306, the amount Buckhannon allegedly owed Vassallo’s investors. If Buckhannon cooperated, he’d have no further problems. If he refused, court documents show, a member of the recovery team told him that federal agents would harass him and that his business would be ruined.


Sanders handed Buckhannon wiring instructions for SJB’s purported account in the UK (provided to him by Kari Sonovich), and Buckhannon hastily pulled a laptop out of his satchel. He used an open Wi-Fi connection to log in to his bank account and ordered the transfer. When it was done, he showed them the confirmation screen, Sanders recalls.

Anderson and Sanders looked at each other. They didn’t think it would be this easy.

“You’re free to go, then,” Anderson said.

In March 2009, the federal government filed civil and criminal complaints against Vassallo, charging him with multiple counts of fraud, conspiracy, money laundering, and securities violations.


The court appointed Stephen Anderson, a retired banker, to act as a receiver to recover funds for investors, and he soon went after Buckhannon’s firm.

The receiver demanded that the company return money that Vassallo had invested, but a few days before an evidentiary hearing was to be held before a federal magistrate judge, Buckhannon’s firm hastily declared bankruptcy and hasn’t repaid any of the money.

The $872,306 that disappeared into the purported "Sir Joseph Birch" fund, per Sonovich's direction, has yet to be recovered.
 

The Buckhannon-related Vasallo, Kenitzer and Sanders cases generated approximately 65,000 pages of discovery, and Buckhannon is expected to be called as a witness.


If convicted, Sonovich faces a maximum statutory penalty of 20 years in prison and a fine of up to twice the losses resulting from the scheme. 

Thursday, May 8, 2014

AN EXTERNAL DISTRACTION: Lake Superior State University's "Oversight" of Grand Traverse Academy Highlights Inherent Weakness in Michigan Charter School Statutes

During last week's Grand Traverse Academy board meeting, the Lake Superior State University representative termed the growing Steven Ingersoll scandal is merely an "external distraction", leaving the impression that doting apple-polishing is part of the University's charter agreement.

Miss Fortune examines what "oversight" Lake Superior State University delivered to the Academy between 2009-2013 for the $1,229,989 it received...and finds that it came up short.

BACKSTORY 

According to state statutes, Michigan’s authorizing bodies play three essential roles in the establishment and monitoring of charter schools.

First, authorizing bodies act as chartering authorities, issuing contracts to nonprofit corporations that allow the corporations to operate as public schools and receive state school aid funding.

Second, authorizing bodies perform certain oversight functions, including monitoring the actions of charter school boards of directors and their compliance with the contract and all applicable law.

Third, authorizing bodies act as fiscal agents for charter schools, receiving state school aid payments and forwarding those payments to the schools.


Michigan charter school authorizers receive administrative fees for their services, currently set at 3 percent of total state aid.

Lake Superior State University received $1,229,989 between 2009-2013 for their "oversight" of the Grand Traverse Academy, or an average of approximately $246,000 per year.

Granted, it's likely that Lake Superior State reviewed thousands of pages of documentation for each charter school it authorized every year, the University's incompetent monitoring of the Academy's financial and operational condition may have cost Michigan's taxpayers millions of dollars. 

HIDING IN PLAIN SIGHT

Steven Ingersoll was federally indicted on April 10, and three days later this blog broke the news that Ingersoll had racked up a $2.3 million dollar management fee overpayment.  The story finally hit the pages of the Traverse City Record-Eagle nearly two weeks later.

But it wasn't really news, was it? 

The Grand Traverse Academy 2013 financial audit report has been publicly available online since at least mid-November, nearly five months ago. T

Included in the Academy's 2013 audit was the shocking revelation that the Academy was carrying a whopping “prepaid expense/expenditure balance” of $2,338,980 for payments made over the past few years to Steven Ingersoll's Smart Schools Management, Inc.

Even more shocking was Ingersoll's ability to "prepay their (Smart Schools') fee and withhold payment of overpaid fees".

The Traverse City certified public accounting firm Dennis, Gartland & Niergarth raised several troubling internal financial control and compliance issues in its 2013 audit report to the Academy.

Among its major concerns were the advance by the Academy of prepaid fees to Smart Schools Management, the possible “abuse” of Smart Schools Management in their “access to public funds” and the negative unassigned balance in the Academy’s General Fund.

Although the Academy paid Lake Superior State University $256,753 in 2013 for services including "oversight", you didn't hear a word about Ingersoll's ability to prepay his firm's management fee and withhold payment of those overpaid fees until April 13, 2014...nearly five months after the report was issued.

Part of Lake Superior State's contractually-dictated "oversight" function includes reviewing the Academy's audited financial reports as submitted, including the auditor’s management letters. 

Whoops, must have missed that one! 

And what has Lake Superior State University done since Ingersoll disclosed his impending indictment back in March?

Not much, by the looks of it.

Although the charter agreement between Lake Superior State and the Grand Traverse Academy clearly specifies strict "due diligence" requirements for the hiring of an education management company, Lake Superior State University sat on the sidelines as the Academy awarded its former board president's newly-hatched management company a two-year agreement.

And although it's been nearly two months since the hiring  of Mark Noss's Full Spectrum Management firm was announced, the Michigan Department of Education still has not received a copy of his management contract.

CRONIES R US

With Steve Ingersoll as a precedent and a board stacked with cronies and yes-men (and women), it's unlikely that the Academy will institute any new financial restrictions on Noss or develop a conflict of interest policy with real teeth...and Lake Superior State University will be right there, cheering them on and taking another couple hundred grand.

Even though insolently proud Kaye Mentley, the Academy's Superintendent, claims she's "not concerned" about the millions owed by Ingersoll, Miss Fortune says go ahead and throw all the shade you want.

Pretty rich for someone who participated (along with Steven Ingersoll) in a $1.6 million dollar "character study" funded by Uncle Sugar designed to improve a student's character by teaching that their choices have repercussions!

An "external distraction" can turn into "internal destruction" in the blink of an eye.

Kiss kiss!

Wednesday, May 7, 2014

SHIP4CHARITIES SINKS! Chris Paganes' Faux Charity Website Shipwrecked; Sinking "Ship" Disappears

On its website, Ship4Charities.com described itself as “a shipping logistics company that donates to charity for each package shipped.” The site, launched in February 2011 by disgraced former investment adviser Chris Paganes, has quietly dipped below the waves like a listing cruise ship.

An in-depth investigation by Miss Fortune indicated that the organization was executing an elaborate charity donation scam, one using legitimate charities as its bait.

CHARTER SCHOOLS GONE WILD! Study Finds Charter Schools Vulnerable to Waste, Fraud & Abuse

A new report released yesterday—National Teacher Dayby Integrity in Education and the Center for Popular Democracy presents evidence that inadequate oversight of the charter school industry hurts both kids and taxpayers and reveals that fraudulent charter operators in 15 states are responsible for losing, misusing or wasting over $100 million in taxpayer money.

The report draws upon news reports, criminal complaints and more to detail how, in just 15 of the 42 states that have charter schools, charter operators have used school funds illegally to buy personal luxuries for themselves, support their other businesses, and more. The report also includes recommendations for policymakers on how they can address the problem of rampant fraud, waste and abuse in the charter school industry. 

According to the study, fraud and mismanagement of charter schools fall into six categories:

  • Charter operators using public funds illegally — outright embezzlement
  • Using tax dollars to illegally support other, non-educational businesses
  • Mismanagement that put children in potential danger
  • Charters illegally taking public dollars for services they didn’t provide
  • Charter operators inflating their enrollment numbers to boost revenues
  • General mismanagement of public funds
Despite rapid growth in the charter school industry, no agency, federal or state, has been given the resources to properly oversee it. Given this inadequate oversight, the fraud and mismanagement that has been uncovered thus far might be just the tip of the iceberg.

To understand why there are so many problems in the charter industry, one must understand the original purpose of charter schools. 

Lawmakers created charter schools to allow educators to explore new methods and models of teaching. To allow this to happen, they exempted the schools from the vast majority of regulations governing the traditional public school system. The goal was to incubate innovations that could then be used to improve public schools.  The ability to take calculated risks with small populations of willing teachers, parents, and students was the original design. With so few people and schools involved, the risk to participants and the public was relatively low.

This report focused on just some of the consequences of having inadequate charter regulations. In addition, it focused on just one symptom – the growing problem of fraud, waste, and abuse perpetrated by some charter school operators. 

The problem is pervasive; despite being limited to fewer than half of the states with charter schools, the report found over $100 million in public tax funds lost to waste, fraud, and abuse. (The report examined schools in the following states: Arizona, California, Colorado, District of Columbia, Florida, Hawaii, Illinois, Louisiana, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Texas, and Wisconsin.)

And, more importantly, the research revealed that charter operator fraud and mismanagement is endemic to the vast majority of states that have passed a charter school law.

Here are a few examples:

-Masai Skiefs, former CEO of the Harambee Institute of Science Technology Charter School in Pennsylvania, who pled guilty to stealing $88,000 for various purposes, including a down payment on a house.

-William and Shirley Pierce, former operators of Right Step Academy Charter School in Minnesota, who were sentenced to 37 and 30 months in federal prison, respectively, for using public dollars for a Caribbean cruise vacation, $17,561.87 to pay off personal credit card debt, and $11,125.00 to purchase season tickets to the Minnesota Timberwolves, among other things. 

-Joel Pourier, former CEO of Oh Day Aki Heart Charter School in Minnesota, who embezzled $1.38 million from 2003 to 2008. He used the money on houses, cars, and trips to strip clubs. Meanwhile, according to an article in the Minneapolis Star Tribune, the school “lacked funds for field trips, supplies, computers and textbooks.” A judge sentenced Mr. Pourier to 10 years in prison.

The report reveals a number of cases where charter operators were caught using public funds to illegally support their own personal businesses. 

For example, in 2012, the former CEO and founder of the New Media Technology Charter School in Philadelphia was sentenced to prison for stealing $522,000 in taxpayer money to prop up a restaurant, a health food store, and a private school. 

In Florida, the former director of Life Skills Center Charter School, John Wyche, was sentenced in 2011 to serve more than six years in prison for misusing more than $750,000 in state education monies to sustain a failing apartment complex that he owned.

MICHIGAN CHARTER SCHOOL EMBEZZLEMENT PROSECUTION


Although the report did not include an examination of Michigan charter schools, the felony embezzlement conviction of former George Washington Carver Academy Treasurer Shantell Bell is mentioned. Bell, 37 at the time of her crime, previously served as the treasurer of George Washington Carver Academy in Highland Park.  In March 2009, Bell fabricated a check request in the amount of $25,000 to purchase "textbooks."  After receiving the check, which was made out to the alleged textbook company, Platinum Title Services, Bell exploited her authority as treasurer to have the school's bank convert it to a cashier's check.  

Bell then used the cashier's check to purchase a home in Detroit. Platinum Title Services was not a textbook company as Bell told school officials, but rather, an Ohio-based title company used to complete Bell's real estate transaction. The crime was discovered after Bell's ex-boyfriend reported her actions to the Academy.  The Academy later reported the crime to the Michigan State Police.  

Bell was sentenced in September 2011 to five years probation, with the possibility of six months in jail if she failed to meet the terms of her probation.  Bell was ordered to sell the home purchased with embezzled funds, which she used as a rental property.  The proceeds from the sale of the home were returned to George Washington Carver Academy. 

The charge was filed by Michigan Attorney General Bill Schuette's Public Integrity Unit. "Criminals who abuse the public trust for their own personal gain will be brought to justice," said Schuette in the sentencing announcement.  "We must root out corruption at all levels of government to ensure the public is served." 

TRANSPARENCY RECOMMENDATIONS

 Given the number of years, and the apparent severity of the fraud at the Grand Traverse Academy, millions of taxpayer dollars might have been saved had there been adequate oversight.

The report, available for download at this link, offers suggestions:


-Amend state charter law to explicitly declare that charter schools are public schools, and are subject to the same non-discrimination and transparency requirements as are other publicly funded schools;
 

-Require that each charter school’s original application and charter agreement be available to the public online, through the websites of both the individual school, and the charter authorizer; 

-A full list of each charter school’s governing board members, officers, and administrators with affiliation and contact information, should be available on the school’s website, as well as from the authorizer; 

-Require members of charter school governing boards, charter school administrators, charter school employees, as well as public officials to file full financial disclosure reports, as well as to report on any potential conflicts of interest, relationships with management companies or other business dealings with the school, its management company or other charter schools. These reports should be similar to or the same as the reporting requirements of traditional school district Board members. Make these documents available to the public online through the charter’s authorizer;

-Require minutes from charter school governing board meetings, the school’s policies, and information about staff to be made available on the charter school’s website; 

-Require charter schools to be fully compliant with state open meetings/open records laws, with compliance monitored by authorizers. Failure of schools to release documents pertaining to governing board meetings, school policy and data, or to allow members of the public to file formal freedom of information requests to obtain these documents must be swiftly addressed and corrected by the authorizer; 

-Charter school financial documents should be made available to the public annually, on the authorizer’s website. These documents should include detailed information about the use of both public and private funds by the school and its management entities. These reports should include full disclosure of the sources of private funds, and the duration of commitments of private funds;

-Require disclosure of all vendor or service contracts over $25,000 and prohibit any vendor or service contracts to any entity in which the charter school operator or a member of the governing board has any personal interest. 

Even Miss Fortune couldn't have said it better.

Is anyone listening?