}

Monday, June 30, 2014

SEVERANCE PACKAGE: What's In YOUR Wallet?

Even actor Samuel L. Jackson (Captial One's "Now tell me; what's in your wallet?” commercial spokesman) couldn't successfully pry the truth out of this former charter school CEO.

The website, CT News Junkie, reported  that former Jumoke Academy CEO Michael Sharpe abruptly resigned last week from the award-winning charter middle school in Hartford’s troubled North End. It seems that Sharpe spent two-and-half-years in jail after pleading guilty to embezzling $125,000 from California’s Bay Area Rapid Transit, where he was employed as BART's former Real Estate Manager.

The embezzlement charge covered 17 thefts between March 1986 and March 1988 in which Sharpe took kickbacks from two contractors and a building inspector. Sharpe also pleaded guilty to conspiring with one of the building inspectors, David W. Collins, to defraud BART. The sorry saga continued as Sharpe returned to the slammer a few years later after violating probation.

However, Connecticut school and state officials professed ignorance of Sharpe's criminal past. To make matters worse, FUSE, the management group that runs the publicly-funded Jumoke, last week refused to disclose the terms of Sharpe's departure, arguing—reportedly with a straight face—that any severance package is "considered a private personnel matter."

Now tell me; what's left in your wallet? 

Sunday, June 29, 2014

PURGE? Grand Traverse Academy Board Considers Cutting Ties

Looks like the folks at the Record-Eagle may be reading this blog after all!

At 6:57am this past Friday, June 27, I published a heads-up, alerting my readers 
to a special meeting of the Grand Traverse Academy Board scheduled for 12:30pm that afternoon. 

Record-Eagle reporter Michelle Merlin attended the meeting, and filed a story revealing the Academy's Board "met for about three hours in a closed session Friday afternoon to discuss a resolution to further distance themselves from Smart Schools."


The Record-Eagle article explained the resolution urged former Board President Mark Noss (head of the Academy's recently-formed Full Spectrum Management, LLC) to "reconsider any employees, especially those in management, with close ties to Smart Schools." The resolution singled out Kaye Mentley, the Academy's current director, as a potential target of "appropriate action", while acknowledging "ambiguities" among the school and its former and current management company. 

The Record-Eagle story did not, however, delve into the "degree of separation" required to be "reconsidered". Regular readers of this blog already know of the close ties to Smart Schools within Noss's immediate family, and Noss's longtime personal and professional history with Ingersoll. It appears "ambiguity" is not enough to make you a target.

Let's step back for a moment and savor the ironies that abound in the resolution.

While I have to give it up to the Board for going there (publicly acknowledging—even if by a small degreethe self-fulfilling conflicts of interests running rampant in this market-based, publicly funded school), in my opinion it still can't see the forest for the trees.

Kerry Morgan, the Wyandotte-based attorney identified in the Record-Eagle story as retained to "handle the matter" of Mentley, specializes in "wrongful termination" as one of his chief areas of practice. Morgan's website indicates significant experience in both employment and educational law.

Although Michigan's current charter school laws don't allow letting much sunshine in, an observer could deduce that Mentley has an iron-clad termination clause in her contract with Smart Schools Management, Inc. Without seeing the contract, it's impossible to know the length of the contract and or size of the severance package Mentley could receive if Smart Schools was summarily cut loose. [UPDATE July 3: Mentley, who announced her departure from the Grand Traverse Academy on July 2 via email, had apparently been under contract with Full Spectrum Management, not Smart Schools Management, Inc., at the time of her firing.]

From the facts already known, I suspect Mentley's legal representative and the Academy's Board are negotiating her termination, tiptoeing around the "what did she know and when did she know it" controversy still surrounding Ingersoll's $2.38 million dollar management fee overpaymentstill firmly lodged in the middle of the room like that proverbial elephant.

And while it's unclear from the Record-Eagle story if the resolution was approved by the Academy's Board, the interlocking "ambiguities" replete within the Board (and its former and current management companies) are its remaining "pain points"areas of unpleasantness that need to be fixed, yet continue to be avoided.

Friday, June 27, 2014

POULTRY IN MOTION: How Traverse City's Chicken-S**t Media Deliberately Missed The Area's Biggest News Story In Years

Why does a chicken cross the road?

Because it's not a media watchdog, that's why!






The news media's role as watchdog is vital in smaller communities, especially when exposing organizations with a long-standing culture of corruption. I figured I'd get a backlash for my reporting on Steven Ingersoll and the Grand Traverse Academy, which was far more aggressive than most small-town papers are willing to stomach. 

And I did.

In truth, it appears that many people likely had known something wasn't right. But not many were willing to do anything about it—until this blog started pushing the issue. 

Here's what I did: I started by asking tough questions that no one else asked. 

The first one centered on the allegation in Steven Ingersoll's federal indictment that claimed Ingersoll had used some of the nearly $1.0 million dollars he'd diverted from a bank loan to "repay an indebtedness to the Grand Traverse Academy".

Knowing that I likely wouldn't be able to find the evidence the feds had developed, I still looked to see if I could find why Ingersoll was "indebted" to the Academy.

I didn't find my answer. Instead, I found the story of the year—hiding in plain sight, and nestled within the pages of the Grand Traverse Academy's 2013 financial audit report.

The bombshell exploded off the pages of the audit report, which detailed how Steven Ingersoll had overpaid himself nearly $2.5 million dollars—of taxpayer money—and "withheld repayment".

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

But the Academy Board did nothing—except provide Ingersoll with a method to "work off" his nearly $2.5 million dollar debt by “partially reducing cash transfers for future management fees through June 2016”. 


Although the audit report was publicly available online for anyone who cared to look for it, it appears that the Academy Board did not report the potential fraud to the Michigan Department of Education as required by law.

I published my first story three days after Ingersoll's indictment was unsealed and revealed what I believed to be at the very least a massive misappropriation of public funds.

The next day, I sent an email to Academy spokesperson, attorney Doug Bishop, asking for a statement on the allegations I'd published in the previous day's story. Even though I published the email on my blog, I never received a response from Bishop.

Although the Traverse City Record-Eagle published a story on April 11 about Ingersoll's indictment, and finally followed up with a short piece on the Grand Traverse Academy's missing millions on April 26, it's clear that, like Sergeant Frank Drebin in the spoof "Naked Gun", its editorial management staff feels there's "nothing to see here...move along!"

But there was ample opportunity for follow up—and not just by the newspaper.

For example, the Record-Eagle's April 11 story indicated Bishop and Grand Traverse Academy Board President Brad Habermehl were not singing from the same hymnal when discussing Ingersoll's departure as the Academy's management provider. 

While a quote attributed to Bishop indicated that Ingersoll "probably thought his situation might be a distraction",  Habermehl claimed instead that "declining MEAP scores prompted board members' decision to leave Smart Schools, not because of anything related to Ingersoll's legal woes."

Nothing to see here...move along!

Did everyone miss that...or were they just repeating "la, la, la" with fingers firmly stuffed in ears?

And finally, I don't know how anyone can read Kaye Mentley's airy, dismissive statement in the April 26 Record-Eagle referring to the missing millions and not do a major spit-take: Mentley was quoted saying "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.


Nothing to see here...move along! 

Why was Mentley, formerly employed by Steven Ingersoll's Smart Schools, representing the Academy?  

Shouldn't an Academy Board member—with a fiduciary duty to put the public's interest before their own have fielded those questions?

And shouldn't someone have figured out that the specious "payment schedule" mouthpiece Mentley referred to was toast on March 19 when the Academy booted Ingersoll to the curb and ushered in former Board President Mark Noss and his new management company? 

Nothing to see here...move along!   

GRAND TRAVERSE ACADEMY: Special Meeting Today!

There's a "Special Meeting" of the Grand Traverse Academy's Board of Education scheduled for 12:30pm this afternoon in the school's Elementary Computer Lab. 

It's likely that the Academy's Board will be reviewing budget projections and staffing for the next school year, as 2014-2015 appropriations were approved during the Board's last meeting on June 6. 

As I reported on this blog, the  Academy's March 19 contract with Noss set Full Spectrum's "minimum annual compensation" at $650,000 and capped it at $2,000.000.

You will note in the excerpt shown below that former Board President Mark Noss and his Full Spectrum Management, LLC ("Executive Administration") has been appropriated 12 percent of the Academy's gross revenues—or just under $100,000 per month.



Monday, June 23, 2014

DETROIT FREE PRESS BLOCKBUSTER CHARTER SCHOOL INVESTIGATIVE SERIES: First Installment

Michigan taxpayers pour nearly $1 billion a year into charter schools—but state laws regulating charters are among the nation's weakest, and the state demands little accountability in how taxpayer dollars are spent and how well children are educated.

A yearlong investigation by the Detroit Free Press reveals that Michigan's lax oversight has enabled a range of abuses in a system now responsible for more than 140,000 Michigan children.

Miss Fortune has long been aware this series was in development, and is pleased to share a link to the first in an eight-part series:
http://www.freep.com/article/20140622/NEWS06/306220096/Michigan-charters-1-billion-taxpayer-dollars.  

So, who else wants to sue me for defamation now? 

For those just joining the party, here's a reprint of my "60 Days" Ingersoll/Grand Traverse Academy Board fraud recap:

With the story breaking nationally on Diane Ravitch's blog, here is Miss Fortune's list of  "Ten Most Wanted" facts (in no particular order) about the growing financial scandal threatening the Grand Traverse Academy.


THE $2.38 MILLION DOLLAR MANAGEMENT FEE OVERPAYMENT...AND ITS SOLUTION

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 he made from the Grand Traverse Academy's bank accounts to his Smart Schools Management, Inc. The story has never been publicly refuted by either the Academy board or Steven Ingersoll. The Academy's June 2013 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”.

THE INGERSOLL INDICTMENT

On April 10 Ingersoll, his wife Deborah M. Ingersoll, his brother Gayle R. Ingersoll, Roy C. Bradley Sr. and his wife Tammy S. Bradley were each charged with conspiracy to commit bank fraud. Steve Ingersoll, Roy Bradley and Gayle Ingersoll were also charged with conspiracy to evade federal income tax laws. (The bank conspiracy charge alone carries a maximum penalty of 30 years in prison.)  

The indictment, unsealed April 11 in U. S. District Court in
Bay City, alleged that Ingersoll, and the four others named, diverted about $934,000 from a school construction project, converting it into personal income for Steven and Deborah Ingersoll. 


Steven Ingersoll allegedly used part of the construction loan proceeds, backed by the U. S. Department of Agriculture and diverted to his joint, personal Fifth-Third Bank account, to "reduce his indebtedness to his Traverse City charter school, the Grand Traverse Academy".

Those thirteen words were the impetus for my investigation, which revealed Ingersoll's fee overpayment and the Academy Board's complicity.

THE FULL SPECTRUM SELECTION: FORMER ACADEMY BOARD PRESIDENT CHOSEN TO RECEIVE $4.0 MILLION DOLLAR, NO-BID, MULTI-YEAR "URGENT" CONTRACT

As this blog reported on April 17, the seat Traverse City optometrist Mark Noss used in his role as President of the Grand Traverse Academy's Board of Directors had barely cooled before he began heating up a new perch—head of the Academy's new education service provider, Full Spectrum Management, LLC (FSM). 

Full Spectrum came kicking and screaming into the world on March 19 at 4:31pm when Traverse City attorney David Rowe faxed the incorporation paperwork to Lansing. By awarding a multi-year contract to FSM on March 19, formed by recent Academy Board President Mark Noss expressly for the purpose of entering into this management agreement, it appears that the Academy has merely made a change in form and not substance.


Among the highlights, detailed extensively in an earlier post on this blog, are:

-annual compensation (termed "reasonable compensation" in the contract) ranges from $650,000 to $2,000,000 per year.

-prepaid fees: while the Michigan Revised School Code prohibits local school districts, including public school academies, from advancing monies to private entities, the Academy's contract with FSM includes a clause that enables the Board to continue that prohibited practice.

-arms-length negotiation.

MICHIGAN ATTORNEY GENERAL INVESTIGATING GRAND TRAVERSE ACADEMY'S MISSING MILLIONS

As this blog reported on May 21, 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. 

Confirmation of the investigation was delivered in an email from Michigan Department of Education spokesman, Bill DeSessa, who responded 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. 

It appears the answer to my question may be "no".


THE GRAND TRAVERSE ACADEMY 2012/2013 AUDIT

A close examination by Miss Fortune of the Grand Traverse Academy’s financial report for the year ending June 30, 2013 (issued on November 7, 2013 by Traverse City certified public accounting firm Dennis, Gartland & Niergarth) revealed the Academy was “out of compliance” with the Michigan Uniform Accounting and Budget Act in several critical areas.  

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 SSM, the possible “abuse” of Smart Schools Management in their “access to public funds” and the negative unassigned balance in the Academy’s General Fund. 


The auditor’s report bluntly informed the Grand Traverse Academy that SSM’s ability to “prepay their fee and withhold payment of overpaid fees” enabled SSM to “abuse their access to public funds”.

By allowing Ingersoll to "advance monies" to his private entity, Smart Schools Management, Inc., the Grand Traverse Academy was “out of compliance” with Michigan’s Revised School code.


And the Board is still doing the same thing with Mark Noss.

CONFLICTS OF DISINTEREST: LET'S GET OUR STORIES STRAIGHTISH

A Traverse City Record-Eagle report, published nearly two weeks after this blog broke the $2.38 million dollar overpayment story, revealed that Academy officials claimed they severed ties with Ingersoll at his suggestion to prevent his pending case from casting a shadow over the school.

Mark Noss was quoted as saying he "knew nothing of the transactions that placed Ingersoll on federal prosecutors’ radar". And Kaye Mentley said she was "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.


In an April 11 Record-Eagle story, Doug Bishop, the attorney for Grand Traverse Academy, said Ingersoll suggested the school switch management companies. "I don't know exactly, but I think he probably thought his situation might be a distraction," Bishop said.

But if you scan down a few graphs in the same article, you'll read that new Grand Traverse Academy Board President Brad Habermehl said he learned of the charges against Ingersoll on April 11. Habermehl claimed that "declining MEAP scores prompted board members' decision to leave Smart Schools, not because of anything related to Ingersoll's legal woes."

“The board felt the direction we were heading in was not the direction that brought success to the school. We just started seeing where Smart Schools were taking on other projects and some other schools,” the Record-Eagle quotes Habermehl. “We wanted a little bit more of an active role, active support in management of the school where we would see implementation of structure that brought that school its notoriety." 


Habermehl became President after serving as the Board's Secretary.

But in the same story, Academy Superintendent Kaye Mentley said Smart Schools handled the school's financial and human resources duties, and had little to do with the school’s curriculum. 

However, Mentley did not explain why the Academy paid Ingersoll's Smart Schools Management, Inc. a $300,000 fee for "curriculum materials" in 2013.

“Our audits indicate all our procedures and finances are appropriate and in order,” Mentley said.


ALL IN THE FAMILY: THE SON-IN-LAW ALSO RISES
 
In an April 23 post, Miss Fortune introduced Brian T. Lynch, recently named by Steven Ingersoll to serve as the Bay City Academy's new Superintendent and President of Instructional Services by its board of directors.

Lynch, a Traverse City resident, married Dr. Rebekah Noss in 2009. Rebekah is an optometrist at Full Spectrum Eyecare, sharing the practice with her father, Dr. Mark Noss.


While visiting Bay City, Lynch stays in a stately bed-and-breakfast, courtesy of its owner—Steven Ingersoll.
 

LACK OF LOCAL MEDIA INTEREST
 

Embezzlement (call it misappropriation if you're squeamish) doesn’t happen by accident, particularly in a small group where many people have been working together for years.

It’s fostered by a culture of concentrated power, secrecy and financial negligence, sometimes dating back years.


It's stunning that none of the local Traverse City media picked up this story and ran with it, instead leaving the heavy lifting to an "anonymous blogger" who's been threatened with a defamation suit.

The entire situation may have been discovered much sooner, or perhaps even been prevented altogether, if anyone had lifted even one finger to investigate this culture of complicity.

A CONFEDERACY OF DUNCES

As English satirist Jonathan Swift, author of 'Gulliver's Travels', famously said: "When a true genius appears, you can know him by this sign: that all the dunces are in a confederacy against him." Traverse City—a beautiful town with sophisticated big-city cultural and food scenes—has to have more geniuses than dunces.

WHAT DO YOU THINK?

Miss Fortune would like to hear from you—even if you use an anonymous email address. You can reach me at tcmissfortune@yahoo.com.
 
For more on this story, go "back to school" with a convenient study guidemy 30 day update.

Saturday, June 21, 2014

PSST! Taxes, Schmaxes! Only The Little People Pay 'Em!

ANSWER: THE LAST NAME IS SPELLED N-O-S-S!  
July 5 Update: Lein released after State of Michigan receives payment from Noss

Miss Fortune has discovered that a prominent Grand Traverse Academy power couple (hint: not the Ingersolls) was slapped with a tax lien by the State of Michigan on April 24 for not paying the $3,120.51 they owe.



Must have have slipped through the financial diligence gill net.

(Post originally appeared on June 2; this updated June 21 version replaces the original.)

Monday, June 16, 2014

STAR-SPANGLED BANTER: Miss Fortune Takes Her Own Advice

6/19 UPDATE: In addition to Schuette, I've alerted Michael Flanagan (Michigan's Superintendent of Public Instruction), Motoko Rich of the New York Times, Peter Payette of Interlochen Public Radio, and investigative reporters for both the Detroit News and Detroit Free Press.

Last week, I posted a story exploring the inherent conflict of interest in the choice by Steve Ingersoll's Smart Schools Management, Inc. of Luke Noss as the organization's 401(K) investment advisor/broker.

After revealing the information, I urged my readers to "speak out", knowing that I would soon be adding my voice.

A few minutes ago, I did just that.

Here is the header and an excerpt from an email I sent to Bill Schuette, Michigan's Attorney General. Written under my own name (redacted), I revealed my involvement in the story and requested that Schuette make his investigation public.


In addition to revealing that my blog first published the news of Ingersoll's "overpayment", my letter was an in-depth look at the handling of the issue by the Grand Traverse Academy's Board (past and present members), the abortive "repayment plan", and the shotgun-wedding style management contract awarded to Board insider, Mark Noss.

But here's what I didn't reveal to Attorney General Schuette: my efforts to ensure that this story gets the national scrutiny it deserves.

I suspect that when Schuette's office starts hearing from the New York Times, national broadcast and cable news departments, and various members of the Education Writers Association he may decide to sit up...and do something.

It's a star-spangled summer—let's all take a page from the Tea Party's handbook and speak out!

Trust me...it feels great.