The final installment, Part 5, of Miss Fortune's exclusive exposé “My Bread Is Buttered On Both Sides: Emails From One White Guy To Another White Guy”.
MEANS, MOTIVE, OPPORTUNITY
Don't tell — unless they ask. That worked until it didn't.
It's like a magic trick, except now you'll know exactly how they did it — and how they're still doing it.
Collusion, corruption, conspiracy...Miss Fortune reminds you fuckers who I am!
A couple weeks ago, the Traverse City Record-Eagle published an editorial, “Time to install oversight in charter school systems”.
After virtually ignoring the Grand Traverse Academy multi-million dollar embezzlement story for years (under the malevolent sway its former, pugnacious Executive Editor Mr. Fisticuffs), the newspaper has been taking teensy-weensy widdle small-town daily baby steps — but it's too late, baby.
And although I've spent the last two years catching shit on all sides, I don't care. If I gave two shits about the haters, I would have dropped this months ago. But I stayed in long enough to dig up the emails I've published in this series, including Steven Ingersoll's classic bitching-and-moaning gem to Bruce Harger where he called me a vicious and libelous blogger and whined about my bias and disgraceful online behavior. (Funny, he said that like it's a bad thing!)
If it seems like I have contempt for local reporting on this story, it's because I do. Frankly, most of what's been written is fucking stupid, especially when you consider the newspaper has had the block (and ball) busting May 30, 2013 Thrun Law firm letter to the Grand Traverse Academy board nearly as long as I've had it, but did very little with it.
For years, Harger and Ingersoll carried on an email exchange that would rival a pair of middle-school girls, while flip-flopping like a crack house mattress on the finances and the IVL-ing of the Grand Traverse Academy, and no one paid attention.
Apparently, not even the school's board of directors.
In its editorial, the Record-Eagle stated:
“Ingersoll was convicted in federal court in March 2015 of tax fraud conspiracy and two counts of tax evasion, and soon will receive his sentence on those convictions after nearly a year of additional testimony.
The trial and reams of previously private documents and emails placed into evidence for the case shed light on the inner workings of Ingersoll’s charter school management company, Smart Schools Management, and the system that authorizes and oversees such schools.
It’s information that the taxpayers who fund the school’s $10 million annual budget have no right to see under ordinary circumstances because laws written to govern charter schools require little, if any, disclosure from the companies that operate them.”
Here's a clue: I know most of you don't want to read long, boring things, but I found my initial clues in the Grand Traverse Academy's annual financial reports, all available on online.
Even though charter management companies (like Steven Ingersoll's Smart Schools Management and little buddy Mark Noss' Full Spectrum Management) can hide their finances behind an iron curtain of secrecy, charter schools have boards, and the GTA board was certainly aware of Ingersoll's growing debt.
Over a five year period (beginning in 2009), the Grand Traverse Academy consistently carried on its books large amounts classified either as "amounts receivable from sources other than governmental units" or "related party receivables". All this information was available to the board, the general public and even weak-kneed print reporters.
In its 2010 audit, the Grand Traverse Academy revealed it was owed $2,715,251, an amount classified as "amounts receivable from sources other than governmental units".
The 2011 audit revealed that the Grand Traverse Academy was owed a whopping $2,500,000 from "related parties", the first use of that classification.
In 2012, the "related party receivable" amount had ballooned to well over $3.5 million dollars. That "related party receivable" amount was attributable to Steven Ingersoll, who admitted his debt during a May 20, 2013 meeting with Mark Noss, Kaye Mentley and attorneys from the Thrun Law firm!
Yup, the entire board (including those who weren't at the May 20 meeting) received the Thrun Law firm's May 30, 2013 15-page letter!
In its 2013 audit, the Grand Traverse Academy revealed that the $3.5 “related party receivable” had been reclassified as a “prepaid expense” and had shrunk to $2.3 million dollars. In its 2013 audit, the Grand Traverse Academy utilized an agile bit of financial alchemy, transforming the multi-million dollar Ingersoll-generated "receivable" (or embezzlement) into a "prepaid expense" — helping to camouflage Ingersoll's misappropriation with the guise of an asset.
Dazed, or maybe just stunned by all the big numbers, the Record-Eagle editorial stumbles badly when it claims that “the school overpaid Ingersoll more than $3.5 million in money that originated in taxpayers’ pockets. It’s a tab Ingersoll tried to repay, but when he fell short by $1.6 million, the school’s board decided to forgive the remaining debt.”
First, the school didn't overpay Ingersoll, he took the money himself. Ingersoll admitted the multi-year
Secondly, Ingersoll never tried to repay his debt. Instead, the Grand Traverse Academy board tied up a solution with a big red bow and cobbled together a plan that would allow Ingersoll to work off his debt in 2013 by foregoing his management fee for three years. But even then, when the board knew Ingersoll was under federal investigation and unlikely to be around for three more years, it slipped Ingersoll $332,000 so he could pay a personal debt.
I've known that for years. Why didn't the Record-Eagle?
And finally, the GTA board did not 'forgive' Ingersoll's massive debt. Rather, it wrote off the $1.6 million off to bad debt. Writing the amount off to bad debt doesn't forgive the debt. In fact, the GTA board voted to seek restitution in December 2015, with the board's attorney (Kerry Morgan) confirming the move to me exclusively in a December 22, 2015 email.
Why didn't the Record-Eagle know that? Come on!
Do you honestly think a small-town newspaper is going to ruffle any Chamber of Commerce-type feathers? With marching orders coming from the local cherry-polishing festival folks, and with local real estate selling like crazy, a local newspaper's not going to rock any boats.
Here's another Ingersoll report from the scene:
Sentencing Hearings update February 23-24, 2016
February 23, 2016:
The Judge called the lawyer’s into chambers for an hour long conference to start the day.
The topic of the argument was the complete lack of evidence supporting the government’s belief that the reimbursed construction funds constituted taxable revenue when in Russo’s January 28th testimony they could offer no evidence supporting that belief.
The government offered no other rationale other than their suspicions aroused by the circuitous path that the funds had traveled.
The Judge indicated that while they still had opportunity to try to develop some argument to reverse his current stance; those are not taxable funds.
Following the conference, the government reached a new low when Jules DePorres questioned IRS agent Russo on re-direct introducing the insanely ridiculous theory that I had threatened to “off” my Brother, Gayle in order to prevent him from filing his 2011 tax return.
These idiots know no bounds and have no shame.
They claim to have come by this farcical information by way of an interview with Sally Sanders, who denies such claims although confirms she was at the time unhappy having been recently let go.
The Judge’s chuckling response to this keystone cop routine was to sarcastically ask the Agent while looking directly at Gayle (who was as usual sitting in court), if either Gayle or Ms. Sanders were still alive? That of course was the end of that bit of absurdity.
I was then called to the stand to describe the overall plan for starting Bay City Academy. After all day of testimony, the topic narrowed to the last remaining issue, the taxable nature of the movement and use of funds within my wholly owned entities in context of starting BCA. This last critical topic will turn on a taxation concept known as constructive dividends.
The government’s position has collapsed from claiming the funds to start the Academy were taxable because they were stolen from GTA and Chemical Bank to they are taxable because they were unclaimed income because they came out of SSM/SSI irrespective of use.
The tax question hinges on whether I was acting as an agent of and for the benefit of the corporations supplying the funds or for me personally.
So questions and answers defining the corporate “mind” will be determinant.
I believe my testimony makes clear that I was acting on behalf of the company. Buying “drug” houses in Bay City’s hood could hardly be construed as a personal investment strategy.
Why else would I engage in the spending pattern described by the following school development plan map?
The Judge finished the day calling for a status conference with the lawyers on March 9th followed by more testimony. He is clearly moving to the finish line.
I suspect the conference will center on this last remaining issue with Parker’s likely savage cross examination of me to conclude the hearings. Even after what appears to be an unbroken string of victories, it remains difficult to “read” the Judge’s mind.
Ingersoll Sentencing Evidentiary Hearing Testimony
January 5, 2015
Testimony once again went well.
The government called three auditors all of whom ended up affirming my position during the government’s direct examine. Heidi Wendel, author of the 2013 GTA commissioned forensic audit confirmed that no funds were unaccounted for. She confirmed that the board was aware of the financial relationship between SSM and GTA and was generally favorable in her two hours of testimony.
Tony Henning, GTA’s long time annual auditor, stood fast in defending his audits of GTA as proper and successfully debunked the government’s ridiculous and oft-repeated theory of co-conspirator.
In fact, the Judge even questioned the government as follows, “Who then does the government consider the victim? Is the board a party to the conspiracy or are they just negligent in their fiduciary duty? Is the witness (auditor) also a co-conspirator, how about the authorizing University, the State departments of Education and Treasury?”
Other important highlights included the Judge asking Jan Geht “What impact do the rebates have on SSM’s taxable income? Are the rebates a charitable contribution?” Geht’s response was “No your Honor the rebates directly reduce SSM’s taxable revenue.” Judge Luddington [sic] also questioned the government “Is it the government’s position then that no rebates should have been booked and GTA consequently just closed down?”
Finally, the government called the 2015 BCA auditor, Dave Quimby. Quimby is a partner in the respected, politically influential accountancy that happens to reside across the street from my house! The senior partner in this firm has been on the opposite side of many political issues with me for 25 years.
This firm was chosen after I had withdrawn from BCA’s management immediately after conviction. The selection of this firm was politically purposeful to distance BCA from me and the outcome did not disappoint. Quimby did his best to cast me as villain but ended up inadvertently supporting me by virtue of in-artful government direct examination.
Jules DePorres in an attempt to draw attention to the government’s perception of improper accounting relative to supportive rebated earnings at the end of FY14 elicited testimony from Quimby to the effect that it was the rebates that saved the school from deficit and that yet another accounting firm (Vredveldt) had accounted for these rebates in the same manner as Henning and Wendel had in past years at GTA.
Frustrated by that poor outcome, DePorres sunk further in the quicksand of his theory (egged on by the whispering Parker) by dramatically asking “Yes but what about the deficit that befell BCA in 2015?”
This unfortunate/fortunate question led to Quimby’s reluctant response “the deficit occurred because Smart Schools was no longer present at the end of the 2015 fiscal year to supply rebates.”
On Thursday the government is charged with proving their sentencing enhancement accusation that I supplied leadership of the criminal conspiracy followed by the beginning of the main sentencing guideline event; determination of tax loss.
This topic likely turns on the characterization of the flows of money from my wholely owned Smart schools corporations SSM (C-corp) and its parent SSI (S-corp) to me and my various Bay City LLCs involved in the development of BCA as the central element of the Front Porch Renaissance Plan.
Were those funds expended to the primary benefit of Smart Schools or Steve Ingersoll?
That is the question that will determine my fate.
Here's one final tidbit: notice how Ingersoll capitalized the "B" in brother? I believe Steven Ingersoll himself wrote this comment submitted to my blog on January 11, 2016, purporting to be from his brother, Gayle.
Aside from the same petty criminal language, Mr. Anonymous capitalized the "B" in brother. Something tells me Gayle Ingersoll wouldn't know an "unqualified auditor opinion" if it bit him on the ass!