Scott Westerhuis Double-Dipped Managing GEAR UP Funds

Mid-Central Educational Cooperative business manager Scott Westerhuis incorporated two non-profits to handle the federal GEAR UP grant the Department of Education contracted down to MCEC, allowing him to keep his hands on that money at multiple points.

According to Angela Kennecke, it appears that found another way to write himself an additional paycheck out of money intended to help Indian kids get to college:

We discovered shortly after the murders and suicide in Platte, Scott Westerhuis and his wife, Nicole, were also managing funds for the American Institute for Indian Innovation, the foundation that got GEAR UP money to run the programs.

That’s at the same time Scott Westerhuis was also business manager for Mid Central.

We got the initial federal grant application from the state, which showed that the state knew about this conflict of interest because Scott Westerhuis signed the documents for AIII in the application.

We’ve confirmed that Scott Westerhuis was also the Budget Specialist for the GEAR UP grant itself, a paid position under the grant [Angela Kennecke, “Paperwork Reveals GEAR UP Grant Conflict of Interest,” KELO-TV, 2015.11.09].

Westerhuis used his position at MCEC to collect checks in direct violation, Kennecke notes, of MCEC’s own conflict-of-interest policy:

Employees of the Board will not engage in nor have a financial interest, directly or indirectly, in any activity that conflicts (or raises a reasonable question of conflict) with their duties and responsibilities in the Mid-Central Educational Cooperative system [Mid-Central Educational Cooperative, Board Policy Book, File GBCA, adopted 2006.10.12].

Speculation over the gruesome shooting deaths and fire on the Westerhuis property on September 17 has hinted that Scott wouldn’t have done such a thing, that mysterious third parties must have come to rub out Scott and his family and destroy the evidence of their malfeasance. However, the evidence available so far indicates that Scott Westerhuis had plenty to hide and plenty to despair over the state’s cutting off the gravy train he’d devised for himself.

33 Responses to Scott Westerhuis Double-Dipped Managing GEAR UP Funds

  1. Yup, the dead guy did it. I wonder who his supervisor was and why something like that was not caught in one those rare audits you should do. The whole bunch had to be in on the scheme to make it work.

  2. larry kurtz

    If Secretary Schopp knew this was happening how could Denny Daugaard and his legal team not known?

  3. I wanted to say that I’m surprised at how often we find cases of people double-dipping or starting their own companies to sub-contract out work that should be done by previously existing government agencies and/or companies… but then I realized I’m not surprised. These companies appear to exist for no other purpose other than to enrich a select few while bilking taxpayers out of money, and although the people running them might call themselves entrepreneurs, visionaries, or consultants all I see is dishonest crook, misleading crook, and greedy crook.

    What I am surprised about is that we don’t seem to have any type of consistent mechanism in place to identify these cases of abuse and address them before people have collected hundreds of thousands if not millions of taxpayer dollars.

    The wolf isn’t even watching the hen house anymore. Instead, the wolf sub-contracted the job out to a company he created a few weeks ago and then pays himself a salary to ensure he continues to watch it. The whole thing stinks.

  4. Indeed Craig, the most excellent blog Northern Valley Beacon has an in depth report on exactly that.

  5. And again the question: where was Dan Guericke when all this was going on?

  6. owen reitzel

    Maybe I’m a conspiracy theorist but if KELO found about this so easily why didn’t the state know?
    This seems to be too neat.
    Am I crazy?

  7. craig, you are surprised and yet say its not a republican deal. none of us here are surprised after what we have been drug through. where do yah wanna start. EB5 is a convenient place but many here can take you waaaay back.

  8. Straight outta ridge

    This thing failed at so many levels! First at the MCEC where its board has years of experience in leadership and governance. Makes me wonder about the organizations that were represented on the MCEC board of directors? Secondly at the state level thru 2 administrations and multiple key personnel changes?

  9. Questions need to be asked of MCE Board members. From where I come from part of being on a Board is fiduciary responsibility.

  10. Leslie I didn’t use the term republican anywhere in my comment, but now that you mention it I have no idea what the party registration of Westerhuis was nor do I feel it matters. In my experience, greed isn’t limited to one political philosophy but is instead more closely aligned with those who obtain some level of power and control. It may just so happen we see more corruption and abuses by Republicans in SD because there are a lot more Republicans in SD. The point is, I don’t see this as a single party issue and we should call out fraud and abuse regardless of where it originates and regardless of who may be involved.

  11. Eve Fisher

    Well, it will be highly interesting to see what happens to all the TIGER money the DOT is giving to South Dakota for railroads, etc…

  12. Incredible corruption at the highest and lowest levels of government in this state!

    Is there no one watching the chickenhouse? Not even a semi-smart dog?

  13. David Newquist

    The most damning sentence in Kennecke’s report is, “The South Dakota Department of Education says it contracted the hiring of the budget specialist out to Mid Central and wouldn’t even give us the name of the budget specialist,” which turned out to be Westerhuis. The entire state bureaucracy is fertile ground for larcenous seeds.

  14. Westerhuis’ co-owner in AIII and Gear Up partner, Stacy Phelps, sat on the State Board of Education until just last month. Guericke and Schopp cannot claim ignorance.

    What Lance Russell said.

  15. Roger Cornelius

    Apparently the legislative minority leader commented about the GEAR UP scandal and Powers at the Dump Site and his usual one-sided views posts only the Attorney General’s response.

    Jackley responds with his usual blather about a fair investigation, etc. I think he uses the same press release from previous scandals, changes a few words and hopes for the best.

  16. It is true, Jackley now has a broilerplate response, all typed up so all that is needed is a date change. When your as busy as he is covering up the crap that is being spread, you just don’t have the time for details.

  17. Loved that big f on Kelo that was given to our state,Transparency in Govt,

  18. Maybe this Westerhuis Dutch guy trained under that Bollen Dutch guy. Remember when Bollen wrote up a contract and signed it both on behalf of the state and SDRC, Inc. his private company. It turns out Bollen didn’t have any authority to contract on behalf of the state but nobody did anything about it, and the state just let the contract go on.

    If Westerhuis hadn’t killed himself and his family, nobody would ever have known anything about this scandal. The GOP machine in Pierre would have bottled it up.

  19. That press release by Jackley has got to be the most shameful thing I have seen come out of his office – Blaming part-time (Democratic) legislators who voted for GearUp funding while making no mention of the negligent full-time well-paid Governor-appointed administrators at the State Department of Education who allowed massive fraud, abuse, and conflicts of interest to exist right under their noses in this multimillion dollar program that the executive branch of government managed.

    Jackley needs to quit covering for political hacks whose arses have grown roots in government chairs and start acting like a real prosecutor who goes where the facts lead him. Governor Daugaard needs to fire people who failed in their duty to oversee and ensure the integrity of this program.

  20. its not my day. Rors, i missed jackley blaming dems.

    craig, i know it wasn’t your post in this thread, i thought there was another, wondering why repubs were blamed, but i can’t find it now.

    and bill d., i’m not quibbling about kids trying pot, sex, it is the way it happens, at least in families i know. stats were just to correct my generic 10%. i don’t disagree with you. was rather enjoying porter step in it over and over today over on the Flandreau thread. he went after me the other day for saying Indian country.

  21. So how did the dems know where this money was to go Jackley you can do better,

  22. Will the secretary of education for the state get called in on this.

  23. What Lance Russell said. Even a broke clock can be right . . . .

    it’s too bad we don’t have a sub-.500 football team here to begin a 48-hour boycott for Schopp’s resignation and accountable government . . . .

  24. This story is exactly the story that came out after Richard Benda’s death. Just the names are changed. The person who knows everything and may have peripherally profited from the scheme decides to commit suicide and then it comes out that they were the only bad apple in the basket. What should be examined is who were the behind the scenes people who helped set up these vehicles for diversion. Are any of these the same behind the scenes folks who were in the background of the EB-5 money laundering enterprise?

  25. mike from iowa

    John,no offense,but Missouri’s problems run deeper than a sub-500 football season or some missing money.

  26. Bill Dithmer

    Leslie, I was having a little to much fun yesterday. Sometimes I do push a little hard.

    The Blindman

  27. Bill Dithmer

    Missouri still has a football program? I heard they were having trouble finding people small enough to practice against to run plays all the way through.

    The Blindman

  28. The Sec. of education says she worked three years to help Mid Central. It seems that Angela Kenecke needed only about three days! Covering up crime takes longer than exposing it! Just another case of missing $millions.

  29. bearcreekbat

    And now this RC Journal front page news today: “South Dakota gets ‘F’ grade in integrity.” What next?

  30. Francis Schaffer

    The state of South Dakota only received an F because that is the lowest grade given.

  31. According to the Argus:

    Since fiscal year 2008 the cooperative received $11.1 million in direct federal funding and $19.1 million in other awards, according to federal spending data. The group also had several other contracts with the state Department of Education separate from the Gear Up grant.

    I didn’t realize there was that much money at play. Since 2008, 30.2 million plus state DOE contracts. And Schopp (does not rhyme with Joop) knew of accounting “problems” going back three years?

    How much of that pie, including seconds, got gnoshed on by Scott and the Mrs., Melmer and Graves? Maybe the audit will answer some questions. I think we get a B- in audits simply because we have to do so many of them when the GOP tips over its cookie jar.

  32. Schopp hires full time employee to over see Gear Up program for Board of Regents. …

    Color me impressed.

    American Institute for Indian Innovation. ..Platte, SD ?? Yea right.

    I refuse to waste my time looking at all the Mud Central info out there. I think Cory said it right…12 or 13 school superintendents engaged in this bulls–t should be sent to guantanamo bay for waterboarding.(my add libbying on the last part Cory)
    Moore is nothing but a crook with a bible trying to milk and abuse his Indian heritage for all its worth. N Melmer can go to hell for defending Watertowns insulting homecoming ritual then robbing native kids.

    I can’t make jokes because of the terrible loss of life in this.

    Maybe some Keystone pipeline protesters I know should head back to Pierre over this thievery. Give Jackley n Daugaard an excuse to billy club some natives over this. After all this is all our fault.

    I am impressed with some of the reporting. Thanks Cory, Bob et al.

    N the researchers that blog here are amazing.

    I’m not happy that apparently Jackley finds no wrongdoing with all the checks issued to the leeches many of whom could care less about natives. SF Argus Leader says 19 mill + 11 mill and several other programs. I’d bet money these people were equal opportunity crooks that got checks from other prograns.

    I like your first comment Craig, n the second one is right, greed is greed.

    In the end audit this audit that…but the check book tells all. We will never see it.

  33. craig, a crony is a republican that got a job unqualified for, because of who he/she plays the game with. as in “good job brownie”-gwb

    spike, who is this person schoop hired to cover MCEC’s obligation to Gearup for Regents? surprise me that he/she is not a republican or spouse/relative/friend of a prominant republican.