Part 1 of an exclusive three-part series, “How Do You Steal $5.5 Million Dollars And Not Get Charged With A Crime?”.
No unalloyed ass-kissing, just the facts!
GRAND TRAVERSE ACADEMY $1.6 MILLION DOLLAR RESTITUTION, OR THE “UNREBATED” REBATE
I'm beginning this series with final disputed sentencing issue U. S. District Judge Thomas L. Ludington considered in his September 22, 2016 opinion, the Grand Traverse Academy’s request for restitution.
The Traverse City charter school was seeking the return of a $1,626,020 “shortfall” from Steven Ingersoll, a request denied by Judge Ludington.
In his opinion, Ludington noted that the Sixth Circuit (United States Court of Appeals) has stated that neither the Victim and Witness Protection Act (“VWPA”) nor the Mandatory Victim Restitution Act (“MVRA”), authorize restitution for tax crimes in violations of 26 U.S.C. § 7201 (U. S. tax code “attempt to evade or defeat tax”).
Under the MVRA, a defendant convicted of a qualifying crime can be ordered to make restitution to the victim of the offense.
However, restitution “is intended to compensate victims only for losses caused by the conduct underlying the offense of conviction.”
Having determined that the MVRA was applicable, Ludington then considered whether the Grand Traverse Academy even qualified as a “victim” under that act.
As discussed above, the IRS, not the Grand Traverse Academy, was the entity directly harmed as the result of the offenses for which Ingersoll was convicted, and therefore is the proper victim.
Because the Grand Traverse Academy was not directly harmed by Ingersoll’s tax evasion, the Traverse City charter school was not a victim such that restitution should be awarded.
Moreover, the Grand Traverse Academy never sought civil recourse for the alleged conversion, and evidence presented during the sentencing hearing suggested that the board explored pursuing such a cause of action with counsel — but ultimately rejected it.
Ludington stated that evidence presented during the sentencing hearing suggested that the Grand Traverse Academy continued to renew its management agreements with Ingersoll’s Smart Schools Management on unamended terms– for the full 12 percent of gross revenue not to exceed $2,000,000, and that the rebate agreements (including the unrebated “rebate” carried as an account receivable) were intended to satisfy the Michigan Department of Education and that the multi-million dollar account receivable would be excused as soon as the Grand Traverse Academy was financially healthy.
That's not completely true. Although early management contracts between Steven Ingersoll's Smart Schools Management and the Grand Traverse Academy allowed Ingersoll's Smart Schools to receive 12% of the Academy's gross revenues, that practice was suspended with a new management contract beginning July 1, 2009.
The Grand Traverse Academy’s 2007 bond issue actually required the school to balance its books, and Ingersoll's management agreement was modified to curtail the amount of money he was draining from the Traverse City charter school.
But it didn’t stop Ingersoll from draining the money — just the way he reported school’s worsening financial condition.
Ludington stated the unamended management agreement suggests that the board considered the possibility that the Grand Traverse Academy was obligated to excuse the Smart Schools Management receivable prospectively to the extent that it could, despite the board’s allegations in its restitution request that Ingersoll's Smart Schools continued to owe the Grand Traverse Academy repayment of the receivable.
For these reasons, Ludington stated, even if the Grand Traverse Academy was a proper victim, restitution is not mandatory in a case such as this where “determining complex issues of fact related to the cause or amount of the victim’s losses would complicate or prolong the sentencing process to a degree that the need to provide restitution to any victim is outweighed by the burden on the sentencing process.”
In my opinion, the Grand Traverse Academy's request was a ploy, protective cover that allowed the school's board to make it appear it was making an effort to recover money from Steven Ingersoll.
I mean, couldn't the Academy's own attorney have researched the statutes before submitting this doomed-to-fail request?
Or maybe he did...