This is one of the most bizarre stories of charter malfeasance that I have ever heard of.
Steven Ingersoll, the founder of a charter chain in Michigan, is currently serving a 41-month term in prison for tax fraud. In a series of complicated transactions, Ingersoll tapped the schools’ funds and transferred millions to his own bank account. The board of the chain consisted of his friends, and they were okay with the arrangement; apparently, they forgave him for funneling millions of dollars from the schools for his personal enrichment and did not demand repayment. Ingersoll owned the properties on which the charters paid rent. Ingersoll is an optometrist, and the sales pitch for his charter chain was that he had a unique take on “visioning.”
Ingersoll is in jail, but the charter for one of his schools was renewed earlier this year, and the charter is paying rent to Ingersoll while he is in prison.
“Bay City Academy had its charter renewed for the next three years, allowing the school to graduate its first class in 2020.
“Lake Superior State University renewed the charter this week. It included an option to renew for an additional two years, which would make it valid until 2023. Officials said the renewal is a result of the school’s recent uptick in enrollment and improved test scores.
“We have made huge growth in our academic achievement this year and continue to focus on school culture and success beyond the traditional classroom setting,” Principal Darci Long said in a statement.
“Brian Lynch, founder of Mitten Management, the charter school’s management company, said the renewal is validation that the school is moving in the right direction.
“It has had a rocky past. In March 2015, its founder, Steven J. Ingersoll, was convicted of tax fraud and later sentenced to 41 months in prison. Federal prosecutors said Ingersoll, who founded and managed Bay City Academy, ran a shell game and moved significant sums of money between business and personal bank accounts in an effort to hide the money for tax purposes…
“In November 2016, the school closed its Madison Arts Campus at 400 N. Madison Ave., after Chemical Bank foreclosed on it. Ingersoll owned the building at the time.
“Since February, the school has operated out of its Farragut Campus building, 301 N. Farragut St., which Ingersoll continues to own. Lynch said the school has an agreement with Wildfire Credit Union to continue making rent payments on the building.”
Diane Ravitch's blog 
The saddest part of that story is that the charges were federal- it was tax fraud and that he defrauded a bank. Michigan just let him steal 2 million dollars. They never pursued the charge that he robbed Michigan school children and taxpayers. That’s how captured they are.
He can defraud the people of Michigan with absolute impunity and the one and only reason he’s not still robbing them is he defrauded a bank and the IRS.
We once had a superintendent here who took a laptop home and the superintendent’s daughter used it. It was unauthorized use- the daughter was clearly using the machine. They had a full-bore investigation by the county prosecutor and the county auditor. This guy walked away with 2 million dollars and Michigan said “okay”
They simply don’t enforce ordinary laws and regulations when it comes to charters.
the key word here being “they” — there is little interest in oversight from those who have swallowed the koolaid
Chiara is spot-on–those of us following this story were frustrated at every turn, and actually disappointed that they got him on tax evasion rather than charter fraud (which encompasses completely abusing pretty much all of what few charter regulations exist in Michigan–everything from Board-packing to lying to parents to offering a phony ‘curriculum’ to gross financial malfeasance). In addition, his school has destabilized the local public school system in multiple ways.
Thanks for mentioning Lake Superior State, as well, complicit in so many charter abuses. When the law provides payoff for almost no work to colleges and universities for ‘authorizing’ a charter, I guess it’s no surprise that they see this as an easy revenue stream.
” When the law provides payoff for almost no work to colleges and universities for ‘authorizing’ a charter, I guess it’s no surprise that they see this as an easy revenue stream.”
The authorizer piece doesn’t get enough attention, in my opinion.
I think it goes deeper than just payoffs to public colleges and universities- I think it influences how Michigan colleges and universities push and promote charters to policymakers. They have a conflict. They’re directly benefitting from additional charters. They’re taking a cut of K-12 funding, which has never happened before.
I was really struck by how little real analysis there is coming from Michigan colleges and universities when they inform the legislature- it’s Gary Miron at Western Michigan and that is ALL there is on the “dissent” side. One school? One professor? Everyone else is charter cheerleading?
That’s remarkable. It’s downright odd. It looks like capture to me.
There is also Mitchell Robinson at Michigan State, whose posts are often reposted here.
I am sure there are others, please remind me if you think of their names.
The founder of the Pennsylvania Cyber Charter School, Nick Trombetta, was sentenced to prison for tax evasion, having admitted that he stole $8 million and didn’t report it. He was not convicted (and apparently not charged) with theft or embezzlement. I don’t understand why. He goes away for a couple of years, the school is still making money, and he comes out a very rich man.
Hi Diane
This comment is unrelated to this post. I couldn’t figure out how to get it to you without going through another post.
Joel Schwartz
http://jacobinmag.com/2018/09/ford-foundation-ocean-hill-brownsville-philanthropy
Thanks for the article. This brought back many memories.
I wonder if Steven Ingersoll is in one of those white collar crime prisons that have no fences or barbed wire and come with tennis courts. I’ve read that in place of fences and barbed wire, they have a painted line the inmates are told not to cross and if they behave they might get rewarded with weekends off.
Yes, Lloyd, you’re correct: https://www.mlive.com/news/bay-city/index.ssf/2017/02/charter_school_founder_steven.html
Kind of like what happened to Martha Stewart.
https://www.businessinsider.com/martha-stewart-daily-mail-2016-6
“The website http://www.arrestrecords.com has listed the facility as number 43 on its list of ‘The 50 Most Comfortable Prisons in the World.'”
I wonder where the #1 most comfortable prison is located – near Washington DC or Wall Street – maybe?
These must be the prisons built for the top 1-percent in the off chance that they will actual get caught, convicted, and sentenced.
Someone living in poverty or in the middle class will end up in a much worse prison, the kind of prison where they learn how to become a hardened criminal so the next time they do something wrong, they will end up with a longer sentence for a worse crime, for a few ounces of marijuana but a rich guy from the top 1-percent steals millions of dollars and ends up in one of the most comfortable prisons in the world and they sometimes don’t have to pay back all of the money they stole.
Possession of marijuana is punishable by up to one year in jail and a minimum fine of $1,000 for a first conviction. For a second conviction, the penalties increase to a 15-day mandatory minimum sentence with a maximum of two years in prison and a fine of up to $2,500.
Try this one (the link, I mean!): https://www.businessinsider.com/take-a-tour-of-americas-cushiest-prison-2013-6
After reading that, I think the ruling elite have created a double standard in this country. Country club prisons for them and nightmare prisons for the rest of us.
Underfunded public schools for us and perfect, elite private schools for their children.
We are supposed to make sure our children are perfect and always behave that way and never get in trouble, while their children are allowed to do whatever they want even underage drinking and raping our children and getting away with it.
Yes, Lloyd. You got it right again. There ARE truly federal prisons for the elite. Of course they are privately owned. In the United States, it really IS all about money, isn’t it? I mean, we are a capitalistic nation; the most powerful in the world. A democratic-republic as you say. And you were one of many who fought for this wonderful freedom we have, and survived to tell the stories. And I guess we have to keep paying those taxes to keep the wars going And you’re a teacher, an author, a writer of good worth, a step-father (of a nearly perfect daughter), a man of integrity, a GOOD man! WTF is happening, right before our very eyes so rapidly??? Is the only answer to VOTE? In a possibly “rigged” system? The only thing I know, is that I don’t know. And that is what you teach. You teach us to learn. I’m glad you are here on this wonderful site of Diane’s. I always listen to you. I believe you have valuable insight in many matters. Much gratitude.
Thank you. The darkness is always lurking waiting to get in and cause havoc. It isn’t easy to keep the darkness out. The darkness is as persistent as Charles Koch and ALEC.
It’s a full time job that Donald Trump doesn’t care about. Trump never had a real full time job anyway, even as president he doesn’t know what it means to work, really work.
I think Donald Trump is all darkness and so is the most recent nominee for the US Supreme Court.
It’s true that the Bay City Academy’s sole Bay City building, known as the Farragut Schoolhouse, is legally owned by a Steven Ingersoll-related LLC.
However, Ingersoll defaulted on its $700,000+ mortgage in June 2016.
Wildfire Credit Union, the lender, made a deal with Brian Lynch’s Mitten Educational Management to pay $8,000 a month to occupy the building.
But here’s something else: the Bay City Academy is under the supervision of the Michigan Treasury with an “enhanced deficit elimination” plan.
Based on $3,015,076 FYE June 30, 2017 revenue (the most recently available), the Bay City Academy’s -$1,366,699 deficit represents 45.33% of its revenue.
According to the Bay City Academy’s 2014/2015 financial report, the charter school incurred a significant operating deficit in 2015, resulting in a cash flow shortage.
As of June 30, 2015, the Academy’s current liabilities exceeded its current assets by $1,374,477, pretty steep for an operation with $3,980,670 in total revenues.
An audit of that year attributed the deficit to Steven Ingersoll, and his reliance on the Bay City Academy as his personal piggybank:
“SSM transferred the entire annual management fee and a significant portion of the annual lease payment in July 2014, the first month of the fiscal year. These transfers were made prior to SSM earning the right to these payments. In addition, the contract with SSM did not include an objective measure to calculate the annual management fee.”
And, finally, on December 9, 2015, Ingersoll acknowledged under oath during his federal sentencing hearing the fraudulent conversion of nearly $5.0 million from the Grand Traverse Academy.
Ingersoll admitted that he fabricated an accounts receivable scheme as financial cover for his diversion of funds from the Traverse City charter school.