Up North Progressive

Like a Grateful Dead free-form jam that seems to go on forever, Bay City Academy founder Steven Ingersoll’s federal sentencing hearing spectacle returns to U. S. District Court on Tuesday, January 26 for a three-day run. The disgraced charter school honcho’s month-long trial in Bay City ended on March 10, 2015, with a jury convicting him on two counts of attempting to evade taxes and one count of conspiracy to defraud the United States. The same jury also found one of Ingersoll’s co-defendants, Roy C. Bradley, Sr. guilty of conspiracy to defraud the government.

Delayed by months due to legal maneuvers (including Ingersoll’s request for a new trial, which was denied on July 13, 2015 by Judge Thomas L. Ludington), the sentencing hearing finally began on October 20, 2015. Testimony was heard over three days in early December (including Steven Ingersoll’s), along with three additional days in early January. Government prosecutors are presently focusing on whether Ingersoll should be assessed two additional guideline points for abusing a position of trust with the Grand Traverse Academy. 

In its April 10, 2014 indictment, the government alleged that Ingersoll diverted $934,000 of a $1.8 million Bay City Academy-related Chemical Bank loan in an attempt to reduce his estimated $3.58 million debt to the Grand Traverse Academy, another charter school formerly managed by Ingersoll. Ingersoll’s resulting federal trial was the largest ever related to a Michigan charter school.
Although former Grand Traverse Academy superintendent Kaye Mentley famously circled the wagons in the days after Ingersoll’s indictment, claiming in an email blast that Ingersoll’s “charges have nothing to do with the Grand Traverse Academy”, it appears (as I predicted nearly two years ago) this case has everything to do with the Traverse City charter school Ingersoll helped found.

As an example, in June 2011, Steven Ingersoll and Roy Bradley submitted a draw request of $704,000 from the Chemical Bank line of credit as a reimbursement for money spent with the Macomb Group on heating equipment and boilers for the Bay City Academy.  By signing the draw request, Ingersoll and Bradley were “swearing” to Chemical Bank the amount requested was accurate. However, trial testimony revealed that the Macomb Group’s invoice amount “was half” the $704,000 Ingersoll and Bradley requested.

The $704,000 moved from Roy Bradley, and was then wired to Gayle Ingersoll’s account before finally being wired to a personal account held by Steven and Deborah Ingersoll.

The money was then transferred by Steven Ingersoll back to the Grand Traverse Academy’s bank account on June 30, 2011—plugging a gaping financial hole on the last day of the charter school’s 2010-2011 fiscal year, ensuring the school avoided a deficit.

According to the official December 8, 2015 hearing transcript, Burton optometrist Brad Habermehl, president of the Grand Traverse Academy board of directors, flip-flopped like an Asian carp on the stand before finally admitting he and Ingersoll — along with former Lake Superior State University’s former charter office head Bruce Harger — were launching a private school venture with two other partners.

But Habermehl’s admission came only after he was confronted by the prosecution with a series of emails that revealed he’d solicited a $300,000 “loan” from a business associate on behalf of his “friend and colleague” Steven Ingersoll, beginning on November 24, 2014.

Even more shockingly, Habermehl’s March 15, 2015 follow-up email to his business associate revealed he continued to tout the school project as “a very good investment with a good return” just days after Ingersoll’s March 10, 2015 conviction. Habermehl flatly denied to his associate knowing about “the extent of his (Ingersoll’s) problems” when Habermehl initiated the investment pitch in November 2014. 

But contemporaneous reporting, including the Traverse City Record-Eagle, refutes Habermehl’s assertion.

Habermehl was quoted in the April 11, 2014 edition of the Record-Eagle, telling the paper he’d just learned of the charges against Ingersoll that day, but claiming that “declining MEAP scores” prompted the Grand Traverse Academy board’s decision to sever ties with Ingersoll’s Smart Schools Management. And on December 27, 2014, roughly one month after proposing Ingersoll’s loan collateral “terms” to his business associate, Habermehl was quoted by the Traverse City Record-Eagle, telling the paper that Ingersoll’s “ordeal” had left the Grand Traverse Academy “stronger”. 

However, in his March 15, 2015 email to a business associate, who’d already rejected the deal, Habermehl claimed that Ingersoll’s conviction had “no effect on this school project”, even though Ingersoll remained one of the project’s five partners.

While the government has not publicly disclosed a witness list, Mark Noss, former Grand Traverse Academy board president and head of its current management company, Full Spectrum Management, is expected to be among those taking the stand this week.

Although Noss and Habermehl have long displayed the synchronicity of a 90s boy band’s dance moves while defending Ingersoll, claims Noss made in two recent affidavits are directly contradicted by an affidavit and the trial testimony of Thrun Law Firm attorney Margaret (Meg) Hackett.

In his September 10, 2015 affidavit, Noss claimed the “conclusions reached by Meg Hackett and the Thrun Law Firm” in its May 30, 2013 legal analysis were “erroneous and inconsistent with the ultimate conclusion reached by the accountants”. Asserting that “Meg Hackett was not retained by the GTA board”, Noss accused Kaye Mentley of going rogue and hiring Hackett’s firm. (The Thrun law firm issued a 15-page analysis to the Grand Traverse Academy board, after meeting with Noss, Kaye Mentley and Steven Ingersoll on May 20, 2013. In the letter, Thrun detailed the meeting where Ingersoll acknowledged his estimated $3.5-million-dollar debt to the Grand Traverse Academy, while asking to have his debt reclassified as a “loan”.)

But in her February 23, 2015 affidavit, Hackett stated the “Thrun Law Firm, P.C. was first retained as legal counsel for the Grand Traverse Academy in September of 2009 and the Academy’s Board of Directors has retained that attorney-client relationship from year-to-year to date.” In addition, Hackett testified under cross examination during Steven Ingersoll’s trial, repeatedly asserting Mark Noss was her client, and not Kaye Mentley as Noss claimed.

Reminds me of the story comedian Richard Pryor told in his filmed comedy performance, “Live on the Sunset Strip”. He told of his wife catching him with another woman. He denies anything is going on, and asks his wife, “Who you gonna believe, me or your lying eyes?”

When the hearing resumes Tuesday, January 26, three remaining issues are scheduled to be addressed:

1. The prosecution’s contention that additional guideline points should be assessed for Steven Ingersoll’s leadership role in a criminal conspiracy
2. The assessment of Ingersoll’s tax loss from 2009 to 2011 to establish the correct base level offense
3. Ingersoll’s “financial solvency”

It’s too bad no one will be there in court, telling us what new Grand Traverse Academy board secrets were revealed.