Steven Ingersoll, charter school founder, was convicted by a federal jury for financial misdeeds.
Blogger Miss Fortune reports:
A federal jury found Bay City Academy founder Steven J. Ingersoll guilty of three of the six criminal counts he faced stemming from his rapacious tear through the finances of both the Bay City Academy and Grand Traverse Academy charter schools.
The jury found Ingersoll guilty of two counts of attempting to evade or defeat tax and one count of conspiracy to defraud the United States. The jury exonerated him of three counts of fraud by wire, radio, or television.
Throughout the trial, federal prosecutors argued that Ingersoll shifted money among business and personal accounts to avoid taxes.
Steven Ingersoll in 2010 purchased a former church at 400 N. Madison Ave. on Bay City’s East Side and later entered into a construction contract with Roy Bradley in order to convert the structure into the Bay City Academy charter school. Federal prosecutors alleged Ingersoll in January 2011 obtained a $1.8 million construction line of credit loan from Chemical Bank in Bay City for his endeavors with the church-academy, then used the money for his own purposes.
Ingersoll used $704,000 of this money to pay part of a $3.5 million-debt he owed to another charter school he founded, Grand Traverse Academy in Grand Traverse County, but first had it bandied around the bank accounts of his other entities and those of the Bradleys and his brother, prosecutors alleged.
Diane Ravitch's blog 
Good. They should find them all guilty, all of those who misappropriate(d) funds, overpay themselves, run real estate scams, and walk away with the booty while leaving neighborhoods, kids, parents, and their lowly employees in the lurch, then set up shop in a new state. Shame on them all.
Wait for it. The charter defenders will be here shortly.
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I’ve wondered for a long time if one could transfer funds from one charter to another and the answer seems to be “yes” and since this a tax and bank fraud case not a charter fraud case that must be legal.
“Ingersoll used $704,000 of this money to pay part of a $3.5 million-debt he owed to another charter school he founded, Grand Traverse Academy in Grand Traverse County, but first had it bandied around the bank accounts of his other entities and those of the Bradleys and his brother, prosecutors alleged.”
Can one transfer funds collected for a charter in one state to a charter in another state?
So, for example, if I collect 12k per student in CT can I expand my charter chain into MI (where students receive only 7k) and transfer some of the CT funding to MI?
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Chiara,
The law regarding the use of charter funds varies from state to state. In many states, charters keep public money even when they go out of business. In some states, charters get a startup grant (up to a quarter million dollars) and if they never open, they keep the money. In Arizona, charters may use public money to buy a vacation condo in Florida and it is the property of the charter owners, not the state. In Ohio, there is little or no transparency for charter spending. Not even the boards of the White Hat charters know where the money goes, and 10 of them sued the “owner” to find out. Depending on state law, charters may be free to operate with neither accountability nor transparency.
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I get all that, but I’m curious, specifically, on whether student funds can be transferred from school to school or even state to state, because obviously public school can’t do that- I can’t take funds from my Ohio district and go build a public school in Lansing.
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Chiara, I don’t know how any state would be able to track whether a charter chain is shifting funds to its operations in other states. Presumably a state audit might find that, but many charters resist any audits, and those that are operated by for-profits say they are shielded from audits because they are private contractors.
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Chiara, charter laws here in Michigan are the most lax in the country. Ingersoll’s case (described by one lawmaker as the “poster child” for Michigan’s poor authorizer oversight) is complex.
Since I’ve written extensively about it on my blog, including breaking the news that Ingersoll owed $3.5 million to the GTA, I’ll try to give you a topline summary: Ingersoll was one of the founders of the GTA, along with his longtime business partner, optometrist Mark Noss.
Ingersoll and Noss run several businesses and jointly hold the copyright, registered to a Delaware corporation, for the Integrated Vision Therapy text forming the basis for the GTA’s instruction method.
Ingersoll’s company Smart Schools Management, Inc. managed the GTA from 2000 until just before his indictment in April 2014. During an early morning meeting on March 19, 2014, Mark Noss (then President of the GTA board) was awarded a two-year, $4.0 million dollar contract to manage the GTA. Noss continued to serve in a dual role as GTA board president and management company head for nearly two months.
Bank records show that Ingersoll, who had the unfettered ability to transfer funds from the GTA to his Smart Schools accounts without board approval, transferred millions more than was budgeted over a 5 year period–ending up in June 2013 with a $3.5 million dollar “related party receivable”.
During Ingersoll’s trial, Margaret Hackett, a Grand Rapids attorney, testified that during a May 20, 2013 meeting, Ingersoll pleaded with the GTA board to “characterize his debt as a loan”. Ingersoll told the board he could not afford to pay back his debt and pay his federal taxes, acknowledging he was under federal investigation.
The money was moved from the GTA to Smart Schools Management, Inc and other Ingersoll-controlled entities before ending up in Ingersoll’s personal bank accounts.
The GTA board stood behind their man until Hackett’s testimony–claiming that Ingersoll was a “philanthropist”.
To date, the GTA board has not sued Ingersoll for the nearly $1.7 million he still owes.
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The bank lending the money got a free ride. The whistleblower was the local union of construction workers. The unraveling began with the charter operators hiring nonunion workers to dispose of asbestos in rehabbing a church to serve as a school. Their methods were illegal.
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tsk, tsk – its those pesky UNIONS. I kid, I kid.
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thump, thump, thump another one bites the dust….
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Guilt charge for illegal charcoal burning…
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