A jury in Michigan has found charter school founder Steven J. Ingersoll guilty on three counts of federal tax fraud. Ingersoll was accused of diverting $704,000 of a $1.8 million bank loan intended for school construction to his personal bank account and failing to pay taxes on it. Ingersoll’s wife and brother were also charged in the case but were acquitted.
The jury also found contractor Roy C. Bradley Sr. guilty on one count of conspiracy to defraud the United States. In December, Bradley Sr. was found guilty of four felony counts after it was discovered that he had failed to properly remove and dispose of asbestos at the construction site
Ingersoll founded both the Traverse City Academy and Bay City Academy with charters granted by Lake Superior State University. The lawsuit accused him of mishandling funds from both schools. Cole Waterman of MLive covered the case and provides background:
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.
Defense attorneys argued no crime had been committed at all and that the moving around of cash was a result of the parties not being the savviest of individuals.
In March of 2014, Ingersoll was removed from his position as president of educational services by the Bay City Academy Board of Education. The school cited low academic performance. In addition to the affected campus, Bay City Academy operates three other locations.
Nick Oshelski, who runs the charter schools office at Lake Superior State University, said his group would meet with the university’s lawyers to discuss “options with regard to Bay City Academy still retaining the services of Smart Schools.” He added, “We’ll look at our options, we’ll present them to the board of Bay City Academy and we’ll have to see what they decide to do.”
Union members celebrated the victory as it was Laborers International Union of America (LiUNA) Local 1098 that originally blew the whistle on Ingersoll’s unscrupulous contracting. The illegal non-removal of asbestos was what alarmed them. Brent Pilarski, Business Manager of Laborers Local 1098, told MLive:
“Justice has been served with the conviction of Mr. Ingersoll. Stories like this prove that prevailing wage laws are needed in Michigan to ensure that construction projects are done in a manner that protects taxpayer dollars. This conviction should serve as a wakeup call for contractors that attempt to cut corners and put the safety of Michigan’s school children at risk.”
Ingersoll’s three counts of federal tax fraud carry possible sentences of five years each. He is scheduled to be sentenced on June 16th, 2015.