You know that big map of the GEAR UP/Mid-Central scandal that Marshall Damgaard’s political science students put together in spring 2016? It appears that anyone who’s willing to crowd into the Dakota Hall second floor conference room Monday morning can get a guided look at all those pins and strings.
The Legislature’s interim committee on state and tribal relations meets Monday, October 23, in Vermillion, and they will start their meeting with an 8 a.m. briefing from Damgaard himself on the GEAR UP map. The agenda notes that “the location for the briefing has limited space and is not handicap accessible,” but since it is a meeting of a Legislative committee, the briefing should be open to the public. Committee chairman Senator Troy Heinert (D-26/Mission) should be willing to accommodate as many interested viewers as the room will fit and leave the door (and windows?) for those who’d like to listen from outside.
And if we can’t all fit, then, committee, members, serve your constituents and tweet lots of pictures.
But hey, after thirty years of seeing South Dakota at the rock-bottom of the national rankings for teacher pay, she did help lobby for a sales tax increase that may have boosted our teacher pay from 51st in the nation to 50th. Well done.
One of the few things we learned from the Government Operations and Audit Committee’s mostly toothless hearing on the GEAR UP/Mid-Central scandal was that Scott and Nicole Westerhuis apparently effectively hid and destroyed all records of the first six years of their operation of federal GEAR UP money for the Department of Education.
After skipping most of Thursday’s GOAC session in Sioux Falls to watch her boys’ cross-country meet, GOAC chair Senator Deb Peters asserted at Friday’s meeting that no money was missing from the first GEAR UP grant. But as persistent corruption bulldog and complete thorn in Peters’s side Senator Stace Nelson noted, how do we know no money is missing when DLA didn’t check and when the records apparently all went up in flames in the Westerhuis fire (or to an undisclosed location in that missing safe)?
Remember, Office of Indian Education director LuAnn Werdel said she had concerns about corruption in GEAR UP back at the beginning of 2011. Those concerns had to have arisen during the first GEAR UP grant that the Westerhuises were managing through OSEC. But we can’t check those concerns, because somehow, the state Department of Education allowed financial records for a federal government education grant to be held entirely by private contractors who appear to have destroyed the evidence.
South Dakota lawmakers looking into how more than $1 million went missing from a Platte educational cooperative’s bank account decided Friday they should seek ideas from the public for possible new laws.
The Government Operations and Audit Committee listed five potential measures on the agenda Friday at http://bit.ly/2yLGLjC. Staff for the Legislative Research Council and the Department of Legislative Audit could add more in the coming weeks.
Seek ideas from the public—that’s rich! The public gave the Legislature a complete Anti-Corruption Act, Initiated Measure 22, last year in the general election, passed by a majority of South Dakota voters, and two weeks later, Senator Peters and 25 of her Legislative colleagues sued to block that law. And while in GOAC Senator Peters uses ongoing litigation as an excuse for GOAC not to press for answers or action, she and her Republican friends didn’t wait for the courts to settle their lawsuit: they plowed ahead when the 2017 Session started and voted to repeal IM 22. And now with the public trying to put a new version of the Anti-Corruption Act on the ballot in 2018, South Dakota Republicans are trying to sow distrust of initiatives and portraying the public’s efforts to put laws to a vote as dangerous “mad scientist” ideas.
The public has been offering ideas to fight corruption all along. The Republican leadership on GOAC and in the Legislature just doesn’t want to listen or act on the real corruption they have facilitated during forty years of one-party rule.
Once the Government Operations and Audit Committee gets done grilling anyone from Tri-Valley who dares show up to talk about its possibly illegal laptops-for-enrollment scheme, the committee will turn to its most heavily documented and thus far most time-consuming topic, the GEAR UP/Mid-Central scandal. The newest document posted to the GOAC webpage for today’s meeting is this big PDF labeled gently, “Follow-up Information from DLA.” This document, submitted by state government audit manager Tim Flannery from the Department of Legislative Audit, responds to questions offered by GOAC at its August 29 on four topics. In its GEAR UP responses, the Department of Legislative Audit finds Secretary of Education Melody Schopp and her attorney Paul Bachand got a couple points wrong in their summer statements to GOAC.
DLA observes that, contrary to Schopp/Bachand’s statements, the validity of the use of Microsoft software to fulfill the matching requirements for the GEAR UP grant remains in doubt:
DLA noted no records of use for this software in an audit finding in both SFY14 and SFY15, with report dates of 2/25/15 and 3/21/16, respectively. In Paul Bachand’s response to GOAC dated 8/22/17 he indicates that records for use of this software were destroyed in the fire. Since DOE still had no records on file at the time of the fire (9/16/15), it is apparent DOE did not increase monitoring activities in this area after it was noted in DLA’s 2/25/15 report.
In Paul Bachand’s response to GOAC dated 8/22/17 he indicates DOE provided 2015 summer honors program syllabus to USDOE as evidence that the Microsoft software was used. DLA’s special review dated 5/19/17 indicates that, although Microsoft Programming was a part of the summer program, DLA could not verify that this software was used in the program [Paul Flannery, DLA to GOAC, 2017.10.03].
In August, Secretary Schopp told GOAC she did not become aware of the suspicious dual position of Nicole Westerhuis in the GEAR UP management web until she reviewed DLA’s special Report and Audit of Mid-Central in May 2017. DLA says Schopp must not be checking her e-mail:
This was noted in our audit finding 2015-003 of DLA’s FY2015 Statewide Single Audit which was provided to DOE for their response which was received back on 2/8/16 via email with CC to Dr. Schopp, and finally the finding and response was included in the FY2015 Statewide Single Audit with a report date of 3/21/16 [Flannery/DLA to GOAC, 2017.10.03].
To Schopp’s credit, DLA notes that Schopp’s diagram of monitoring procedures imposed on Mid-Central back in 2012 appear to have no inconsistencies with GEAR UP project director Roger Campbell’s April and August 2012 e-mails on the subject.
DLA also appears to suggest Schopp/Bachand may be underplaying the amount DOE and Mid-Central paid Keith Moore for his consulting on federal grants. Bachand’s September response to a question about Mid-Central’s GEAR UP “advisory board” says Moore was paid $36,000 from August 2012 to May 2013. DLA confirms those numbers but provides a fuller list of $68,000 in GEAR UP stipends and $3,881.11 in travel and “laptop presenter stipends” for GEAR UP and College Access grants from 2008 through September 2015, when the whole Mid-Central scheme collapsed.
In his 322-page document submitted September 28, attorney Paul Bachand does get around to responding to the thirteen questions the Government Operations and Audit Committee sent to his client, Education Secretary Melody Schopp, to follow up on her previous testimony on the GEAR UP scandal.
The document dump includes seven contracts issued by the Department of Education to consultant Brinda Kuhn. The contracts span 2008 through 2011:
January 1—December 31, 2008: $65,000, to evaluate GEAR UP.
September 1, 2008–August 31, 2009: $25,000 for salary, $5,000 for travel, plus $25,000 in matching funds, to “provide a formative and summative evaluation.”
January 1–December 31, 2009: $54,000 for salaries, $11,000 for travel, plus $54,000 in matching funds, to evaluate GEAR UP.
February 1, 2009–September 30, 2010: $6,500 plus $1,500 for expenses, to write an application for the Indian Land Tenure Grant.
September 1, 2009–August 31, 2010: $25,000 for salary, $5,000 for travel, plus $25,000 in matching funds, to provide formative and summative evaluation for the College Access Challenge grant.
January 1–December 31, 2010, with option for two 12-month renewals: $65,000 to evaluate GEAR UP.
January 1–September 30, 2011: $65,000 to evaluate GEAR UP. In administrative inertia, the contract signed by Kuhn on January 14, 2011, and by DOE on January 23, 2011, still listed LuAnn Werdel as the state’s contact person for the contract, even thought then-new Education Secretary Schopp had canned Werdel on January 10, 2011.
Kuhn probably didn’t pocket all of that listed $374,500 in salaries and matching dollars over those three years. In her October 16, 2009, proposal to secure the GEAR UP evaluation gig again, Kuhn listed three staff members—Angela Sam, Christopher Peters, and Melita York. But Kuhn’s consulting office enjoyed multiple revenue streams during that period, including evaluation gigs for Oglala Lakota College and Fairmont State University.
Bachand’s response gives a few other GEAR UP dollar figures. Noting information already published in the Mid-Central Educational Cooperative financial reports and Eide Bailly’s Forensic Accounting Report, Bachand says three men—former GEAR UP project director Keith Moore, former Education Secretary Rick Melmer, and (former Rosebud Tribal Chairman?) Rodney Bordeaux—collected a total of $79,000 for serving on the “GEAR UP Advisory Board,” which, according to Keith Moore, served to help Mid-Central manage GEAR UP and use political connections to boost grant activities.
Bachand dodges two GOAC questions that seek more information about who might have known what when in the GEAR UP scandal. Asked to say who besides Office of Indian Education directors LuAnn Werdel and Roger Campbell may have “expressed concerns of improprieties or wrong doings of the grants handled by Mid Central or any other related organizations,” Bachand vaguely refers to “staff” questioning payment requests, then says, “Nothing further will be added to the answer previously given.”
Asked again for “memos and emails” documenting “conflicts of interest and related parties” that supported DOE’s decision to cancel Mid-Central’s GEAR UP contract in September 2015, Bachand shuts the door:
Communications with the Governor or his staff are privileged. Emails and memos are privileged. Documents prepared in anticipation of litigation or in response to litigation are privileged. Communications with legal counsel are privileged [Bachand to GOAC, 2017.09.28, p. 3].
Communications with the Governor? Should we consider it significant that the Governor’s office was in the loop on the rather long decision-making process that led to cancelling Mid-Central’s contract? Did Secretary Schopp really need higher executive approval or guidance to cancel a contract that she had known for more than three years was being mismanaged?
The Government Operations and Audit Committee will meet Thursday and possibly Friday in Sioux Falls at Carnegie Town Hall to discuss these answers and more about the GEAR UP/Mid-Central Scandal. With no requested witnesses agreeing to come testify in person, committee members will mostly talk amongst themselves about how satisfactory they find these written answers.
On September 12, the Government Operations and Audit Committee asked Education Secretary Melody Schopp to attend its October 5–6 meeting and answer thirteen queries following up on her prior responses to GOAC’s investigation of the GEAR UP/Mid-Central scandal:
Please explain the process used to apply for both the first and second GEAR UP grants.
How were these grants built into the State budget process?
The South Dakota Department of Education (SDDOE) made payments to BC Kuhn from July 2008 to September 2011. What were these payments to BC Kuhn for? If these payments were for contractual services please provide copies of the related contracts.
Please provide the names of your supervisors from the first day of your employment with the SDDOE until the date of your appointment as Secretary in January 2011.
Prior to being appointed as Secretary, you indicated your involvement with the GEAR UP program was minimal. Please explain what that means.
In the Committee’s letter to you, dated August 4, 2017, we asked for memos and emails in support of your decision to terminate the subaward agreement with Mid Central. We are interested in the documentation as it relates to conflicts of interest and related parties. Did you report your concerns about conflicts of interest and related parties to the Governor or the Governor’s Chief of Staff?
In April 2012 you received an email from Roger Campbell of his concerns about the GEAR UP program. In your testimony to the Committee you indicated that in April 2012 the SDDOE implemented an online system for submitting GEAR UP documentation and that invoices began to be reviewed on a random sampling basis. Was this done in response to Mr. Campbell’s concerns?
Who appointed the GEAR UP Advisory Board for the second GEAR UP grant?
Please provide a list of those individuals serving on the GEAR UP Advisory Board for the second GEAR UP grant and how much each member was paid.
In your testimony to the Committee on July 24, 2017 you indicated LuAnn Werdel was released from employment because of a change in administration. In your written response to Committee questions, dated August 22, 2017, you indicated you asked Ms. Werdel to resign for personnel issues. Please clarify the reason for Mr. Werdel’s resignation and provide any documentation relating to her resignation.
In the Committee’s letter to you, dated August 4, 2017, we asked for persons other than LuAnn Werdel and Roger Campbell that expressed concerns of improprieties or wrong doings of grants handled by Mid Central or any other related organizations. You did not answer this question in your response dated August 22, 2017. Please provide this information.
When asked how many Native American students went to college during the last 12 years of the program, you could only tell lawmakers that number was 285 for the most recent school year. How many of those 285 students went on to college specifically and primarily because of the GEAR UP program?
Please provide the annual GEAR UP evaluation reports prepared by other parties over time [GOAC to Secretary Schopp, 2017.09.12].
I appreciate that these are good faith efforts to clarify earlier answers. It is my hope that these facts will help certain committee members who have been repeating untrue claims or conspiracy theories relating to this matter.
No GEAR UP money was embezzled.
There is not $62 million that is missing or was misspent.
The U.S. Department of Education has been kept fully informed about this matter, including receiving copies of audits and reports.
And, most egregiously, there is no evidence to support the offensive conspiracy theory that the deaths of the Westerhuis family were anything other than a murder-suicide, as professional criminal investigators have found.
Based upon my advice, no SD DOE staff will appear at the October GOAC hearing with regard to this matter. Furthermore, because of the pending civil litigation and upcoming criminal trials, I have advised SD DOE against answering any further questions at this time. I believe the committee has what it needs at this time to consider proposals for legislation relating to this matter, and I need to protect the state’s interests in the civil proceedings [Attorney Paul Bachand for Secretary Melody Schopp to GOAC, 2017.09.28].
Wow, the nerve!
I indulge Bachand and DOE in their arrogant distraction by leading with Bachand’s lead. But it is worth looking at GOAC’s latest round of questions and Bachand’s opening response to them to see how hard the Department of Education is working to keep the Legislature or the press from focusing on the corruption that South Dakota state government let happen. Consider:
GOAC’s 13 questions don’t inquire about embezzlement specifically; in fact, they go far beyond that specific crime.
Bachand is now taking the position that a Governor’s political appointee and the employees of her state agency can refuse to provide information to a legislative committee.
And just to ice the cake, Bachand, an attorney for the executive branch, is presuming to tell the legislative branch what and how much information they need to legislate.
If I were a legislator interested in checks and balances, I’d be mad. If I were a committee chair listening to a witness open with the above statement, I’d gavel him silent at sentence #3 for not responding to the specific questions asked. If the witness persisted with his assertion of executive authority over legislative jurisdiction, I’d gavel him down again: “The Legislature will decide what information it needs to legislate, and you will provide the information we decide we need. Now, to Question #1….”
But that’s why Bachand is telling Schopp and other DOE staff not to appear in person before GOAC, because in person, legislators would not tolerate such arrogant disregard for legislative authority.
Of course, that assumes that we have any legislators willing to fully assert their authority and independence from an executive branch that seems to have pretty effectively set the Legislature’s agenda for years.
Coming up next: I’ll get past Bachand’s bluster and see what new information we get from the responses and documents he sent to GOAC last Thursday.
The Government Operations and Audit Committee has asked numerous principals in the GEAR UP scandal to come answer questions at its October 5–6 meeting. A few are providing written answers, but those responses indicate none will show their faces before the committee Thursday or Friday in Sioux Falls.
GOAC asked former Mid-Central Educational Cooperative chairs Pam Haukaas and Lloyd Persson to come explain their board’s oversight of the GEAR UP grants, including answering simple questions like, “Who appointed the GEAR UP Advisory Board?” and whether Mid-Central’s director, business manager, or auditor ever presented annual audit reports to the board. On September 22, Sioux City attorney Ryland Deinert replied for Persson and Haukaas and said that, due to pending litigation, no one from Mid-Central’s board will answer any GOAC questions, in writing or in person.
GOAC asked Rick Melmer, the former Education Secretary who steered GEAR UP to his hometown coop and made good money consulting for Mid-Central, to come explain his role in the GEAR UP grants and provide a timeline of his work for Mid-Central. Melmer wrote back on September 24 that he won’t visit GOAC in person, but he did provide written answers. Melmer said the state applied for the first GEAR UP grant in 2005 to bolster the summer honors program at School of Mines for American Indian high school students. Melmer says he was not involved in applying for second GEAR UP grant in 2011, but Mid-Central director Dan Guericke brought him aboard in 2012. Melmer details the contract work that I reported back in 2015:
Dan Guericke, director of Mid-Central Educational Cooperative (MCEC), asked me to be involved during the 2012–13 year to provide technical assistance on issues related to GEAR UP and the other programs (i.e. College Access Challenge Grant) that focused on the academic needs of Native American students. This assistance included regular correspondence with the director on questions or issues that may arise related to the grant and the discussion and formation of an Advisory Board that would assist in the coordination of programs designed to improve educational opportunities for Native students. In 2013–14 I began a two-year employment with MCEC and worked on three contracts. The largest contract was with the Council of Chief State School Officers (CCSSO) which involved work on the Cross-State Learning Collaborative Project. A second contract was with the Board of Regents in South Dakota (SDBOR). That contract involved working with the statewide teacher residency program and a leadership development program designed for K-12 building principals. The third contract was with GEAR UP where I chaired an Advisory Board that met monthly. The primary objective of the Board was to coordinate programs that were designed to assist Native American Students. The programs included the College Access Challenge Grant, Jump Start, TRIO and the Bridge programs. I coordinated the planning, materials and presenters for each meeting and communicated with the Task Force members about agenda items. The GEAR UP contract generated less than 15% of my total income with MCEC [Rick Melmer to GOAC, 2017.09.24].
GOAC sent similar questions to Roger Campbell, who succeeded Werdel at the Department of Education and who made headlines with his own batch of 2012 e-mails released by the DOE for GOAC’s August hearing. If Campbell has replied, GOAC hasn’t posted that document yet.
GOAC also asked Education Secretary Melody Schopp to appear again. On September 28, her attorney, Paul Bachand, wrote that Secretary Schopp and the Department of Education are done appearing before GOAC on this matter… but he provides one more document dump that warrants attention in a separate post.
So in seven requests for testimony, GOAC so far has published six refusals to testify in person, four written responses, and two refusals to provide any information. That response rate calls into question the authority our Legislature has to get the information it wants and needs about corruption in state government.
It is expected of auditors to ask questions of employees of the organization they are auditing. In addition, we frequently carry this procedure one step further. As a typical procedure, we routinely drive by the key financial person’s residence or farm in most of our audits. We asked about the gym and other improvements on his acreage. He indicated that [his] mother was helping him financially. According to the Charles Mix County directory substantiated in our audit file, his mother owned 760 acres of farmland. This would certainly indicate financial means for contributing to the improvements on his acreage. As indicated in our original response, the gym was never acknowledged to be an asset of Gear-Up or Mid Central Educational Cooperative by any individual, management or in any representations provided to us by management [Schoenfish & Co., unsigned letter to Department of Legislative Audit and Government Operations and Audit Committee, 2017.09.22].
The average cash rental rate for farmland in Charles Mix and Douglas counties topped out at $157.90 in 2014. That’s $120,000 in rent Ma Westerhuis might have made. She’d have paid some property tax and federal income tax and maybe had five figures left to help her son pay the mortgage on his big, big property.
In his summary of the follow-up documents Education Secretary Melody Schopp provided to the Government Operations and Audit Committee this week pertaining to the GEAR UP/Mid-Central scandal, attorney Paul Bachand makes a strong effort to portray former Indian Education director and attempted GEAR UP whistleblower LuAnn Werdel as unreliable, her successor Roger Campbell as responsible, and Secretary Schopp as a sterling defender of truth:
The email exchanges provided with this correspondence support the prior submission and statements by Dr. Schopp related to the increased oversight of GEAR UP and Mid Central. These emails must be understood in their context. That is why the emails from LuAnn Werdel were provided. Ms. Werdel’s lashing out can only be understood in the context of her contemporaneous apologies and assertions regarding Dan Guericke and Stacy Phelps. To be blunt, the personnel issues surrounding Ms. Werdel had considerable impact on her credibility.
In contrast, Mr. Campbell was considered a credible source, and as I believe you will see through the attached documentation, had the support of the Department in attempting to ensure that the 2011 GEAR UP grant got off the ground on the right foot.
…Finally, if you go back and review Dr. Schopp’s July 24 GOAC presentation, you will see that the timelines for increased monitoring and oversight line up with the concerns raised by Mr. Campbell. Fortunately for Dr. Schopp, it is easy to keep your story straight when you are telling the truth [Paul Bachand on behalf of Melody Schopp, letter to GOAC, 2017.08.28].
I have my own issues with the usability of Werdel’s documented January 10, 2011, warning about corruption in GEAR UP, given her January 11, 2011, e-mail apologies for those statements. We can debate the extent to which her immediate backing off from her January 2011 whistleblowing may be understood in the context of her fear of further retaliation from a well-connected Education Secretary who had already demanded her resignation.
However, it is… problematic to say that, as we try to evaluate the credibility of the Department of Education’s claims about GEAR UP, we must accept as a standard for the credibility of all witnesses the Department of Education’s opinion of those witnesses’ credibility.
Senator Neal Tapio seems unswayed by the Department of Education’s effort to paint LuAnn Werdel as unreliable. He sends out an e-mail to state officials and the press urging us all to listen to the recordings of Werdel’s July 25 and July 26 phone calls with Senator Stace Nelson. I reported on the content of those calls Wednesday. If you like, take Senator Tapio’s advice and listen to the calls yourself:
July 25, 2017:
July 26, 2017:
As we hear in the second call, Senator Nelson took Werdel’s story and her concerns about retaliation seriously enough that he e-mailed the Attorney General the night of the first call to say he was concerned about her safety.
Senator Tapio has listened to those recordings along with all the other information presented to him and other members of GOAC. He now asks GOAC to “suspend any contact with Ms. Werdel until a later time” and offers this positive assessment of her reliability as a whistleblower and witness:
While Ms. Werdel’s initial criticism of the GearUP program was considered less credible by State employees and by the Legislative Audit staff, I consider her brave attempts to expose the corruption of the GearUP program to be commendable and worthy of the greatest respect. It was her willingness to sound the alarm, and hers alone, that accurately predicted future events.
I’ve never met Ms. Werdel, but I know her type. People willing to stand up for what they believe, and fight for it, is who we need in government. I consider her to be a whistleblower and we should take precautions to protect her reputation, respect her privacy and consider concerns for her safety. Additionally, I believe there are federal whistleblower protections that we must legally respect.
The people surrounding the creation, implementation, execution and oversight of this grant should be the focus of our attention [Sen. Neal Tapio, e-mail received by Dakota Free Press, 2017.08.31].
Context is important for understanding the emails from Roger Campbell to Secretary Schopp in 2012. Context is also important in understanding Werdel’s e-mails in 2011. Both Senator Tapio and Senator Nelson have decided to view Werdel’s January 11 “apologies” in the context of what Werdel learned, did, and said about GEAR UP, Secretary Schopp’s January 10 request for Werdel’s resignation, and Werdel’s fears of further career-related retribution. You may add to your context by listening to Werdel yourself and making up your own mind.