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:
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
THE INGERSOLL INDICTMENT
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
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.
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".
thirteen words were the impetus for my investigation, which revealed
Ingersoll's fee overpayment and the Academy Board's complicity.
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).
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.
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.
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.
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
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.
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.
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
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”.
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.
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.
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."
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.
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.
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.
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
(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.
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.
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
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 firstname.lastname@example.org.
For more on this story, go "back to school" with a convenient study guide—my 30 day update.