Guericke’s defense attorney, Mike Butler, says his client’s only crime was trusting Scott Westerhuis.
“My client is guilty of trusting Scott and Nicole. He worked there for 16 years; I think everybody trusted him. And he exploited it and when he felt he was going to be exposed, he did the ultimate horrible act. The act of a coward. He killed everybody and then he leaves these people standing in the wake and the Attorney General comes in and says, ‘I need a few more people to pay.’ I think it’s just horrible what’s going on,” Butler said [Angela Kennecke, “Defense in GEAR UP Case Claim They Did What Westerhuis Told Them; ‘Everybody Trusted Scott’,” KELO-TV, 2017.03.16].
Attorney General and gubernatorial candidate Marty Jackley argues that GEAR UP can’t fall on one guy:
“It would not have been possible for Scott Westerhuis acting alone to accomplish all that was discussed over the last two days. It took somebody addressing payroll. It took somebody making invoices, it took somebody finding matching grants; it took somebody testifying in front of the South Dakota legislature. There were a lot of things happening beyond just Scott Westerhuis,” Attorney General Marty Jackley said [Kennecke, 2017.03.16].
The defense is arguing that A.G. Jackley is reaching too far in punishing anyone beyond those already dead for the gross abuse of GEAR UP funds. Some of us will argue that as long as Jackley looks no further than Platte, as long as Melody Schopp remains Secretary of Education in Pierre, A.G. Jackley isn’t reaching far enough.
Mid Central says if it is found to be at fault, its fault is “slight in comparison to the fault of Schoenfish & Company.” Mid Central says the accounting firm should have caught any missing money [Angela Kennecke, “SD Legislator’s Accounting Firm Named in GEAR UP Lawsuit,” KELO-TV, 2017.02.28].
Dragging the accountants into the lawsuit matters in part because one of those accountants is Republican Representative Kyle Schoenfish of District 19.
KELOLAND News tried to reach Kyle Schoenfish Tuesday for comment. We’ll let you know when we hear back from him.
This isn’t the first time the accounting firm of Schoenfish & Company has been under scrutiny over not catching the misuse of GEAR UP funds.
An independent group of citizens has prepared a list of ten questions it would like lawmaker Kyle Schoenfish to answer and has submitted them to the South Dakota Auditor General.
They specifically ask about discrepancies in Mid Central’s balances and if Schoenfish ever reported them to anyone outside of Mid Central. We’ve posted those ten questions online on this story if you’d like to read them.
KELOLAND News spoke with Randy Schoenfish, Kyle’s father who told me he cannot answer those questions due to client confidentiality [Kennecke, 2017.02.28].
Hey: when your client sells you out and tries to make you foot the bill for a lawsuit, are you still bound by client confidentiality?
In trivia from yesterday’s Aberdeen crackerbarrel…
Senator Brock Greenfield (R-2/Clark) compared his anti-refugee bill to his mom’s anti-nuclear waste bill, saying both are simply measures to expand the Legislature’s oversight. It’s funny that Republicans are working hard to expand government power. It’s not funny that Senator Greenfield views refugees the same way he views nuclear waste.
Best friends against the Muslim ban in West Palm Beach.
Senator Greenfield boasted that legislators don’t attack each other, then noted wryly that a couple of his Republican colleagues may try to prove him wrong. Brock didn’t say names, but we know who he meant, don’t we, Stace and Lance?
Addressing a questioner’s concern with transparency, accountability, and Joop Bollen’s big smile, rookie Representative Drew Dennert (R-3/Aberdeen) said the root of the corruption problem with EB-5 and GEAR UP was federal money. Hmmm… that’s like saying the root of South Dakota’s meth problem is acetone manufacturers.
Since Republicans struggle with simile and subtlety, let’s just say it: No, Drew, the root of EB-5 and GEAR UP corruption was corrupt friends of friends who thought they could take money from the till because nobody in Pierre was watching.
And in participation awards:
Representative Burt Tulson drove 120 miles to get 85 characters, including spaces.
Hmmm… 75 characters, 10 empty spaces… that’s darn near a description of the Republican caucus in Pierre.
But are employee theft and corruption mutually exclusive terms? I search “corruption” in South Dakota Codified Law and find two references (SDCL 3-17-6 and 9-13-30) in which corruption and theft are listed side by side and separately, as if they are distinct actions requiring distinct reference.
Yet it seems reasonable to treat corruption as a larger term that can encompass theft along with other bad behavior, or perhaps the disease of which theft is one symptom. Black’s Law Dictionary (at least the free online version; I’ll defer to Judge Rusch’s copy on his desk, if he cares to offer a counter-definition) offers a definition that fits that hierarchy:
Illegality; a vicious and fraudulent intention to evade the prohibitions of the law. The act of an official or fiduciary person who unlawfully and wrongfully uses his station or character to procure some benefit for himself or for another person, contrary to duty and the rights of others [The Law DictionaryFeaturing Black’s Law Dictionary Free Online Legal Dictionary 2nd Ed., retrieved 2016.11.07].
Reaching into the till over and over again for years is illegality. Westerhuis (and, says A.G. Jackley, his numerous co-conspirators) worked hard to evade the prohibitions of the law against theft. Team Westerhuis wrongfully used their stations to procure benefits for themselves, contrary to the duty entrusted to them by the state and federal governments. And, perhaps most importantly to candidate Winegar’s point, officials in state government appear to have remained silent about warnings of this financial misconduct for six years, which, as I wrote in March, represents pervasive corruption preventing people of good conscience from speaking up to protect the rights of Indian students and taxpayers.
I wouldn’t want to be the sitting state legislator running semantic interference for the crimes of Scott Westerhuis. The GEAR UP scandal was employee theft. It also competes with EB-5 for designation as Exhibit #1 in Winegar’s and the people’s case against corruption in Pierre.
Candidate Graeff is also reminding us that we still haven’t held anyone in Pierre accountable for the deadly GEAR UP scandal. He calls for Secretary of Education Melody Schopp to resign immediately:
Little has happened to hold accountable those individuals tasked with oversight of the Gear Up program. Obviously the South Dakota Department of Education needs new leadership. We also need to recover those missing/misappropriated federal funds. Sad to say those lives lost won’t be able to be recovered.
…Schopp dropped the ball on the whole Gear Up program. Her lack of oversight, accountability, and responsibility has left another black mark on South Dakota.
…The lack of oversight, including the accounting firm who did the annual Mid Central Education Cooperative audits, should be thoroughly investigated as well [Russell Graeff, campaign press release, 2016.11.02].
Graeff evidently understands that ballot measures and corruption are key Democratic issues. We’ll see how well those issues stack up against Stace Nelson’s name recognition and noisy conservatism on Tuesday.
Update 2016.11.04 08:15 CDT: Democratic District 19 House candidate Melissa Mentele informs me that, after a family-related absence from the campaign trail, she’s jumping back on the horse and coming to today’s ballot question fora as well!
Angela Kennecke checks the court documents and find the state has submitted evidence against Dan Guericke, accused co-conspirator in the GEAR UP/Mid-Central scandal. The red-letter finding: 17 contracts worth $3.8 million signed in secret by Guericke, without approval by his Mid-Central Educational Cooperative board. Who got that illegal gravy?
PAST Foundation, three contracts, June 2012–September 2015, $1,576,962.
Brinda Kuhn, GEAR UP evaluator, four contracts, October 2009–September 2010, October 2012–September 2014, $308,365.
Rural Learning Center, one contract, October 2009–September 2010, $160,011.
University of South Dakota, three contracts, October 2011–September 2014, nearly $1 million.
American Indian Institute for Innovation, six contracts, October 2009–September 2010, October 2012–September 2015, three with no amounts specified, one for $266,172, two annual contracts giving co-indictee Stacy Phelps $130K for 270 days of work and Jay Roman $160K for 400 days of work.
Attorney General Marty Jackley presents these secret contracts to “show the jury the manner in which Defendant was running MCEC”—i.e., to show that Guericke was hiding his handouts from the board that was supposed to approve and supervise any use of those public dollars.
Not discussed in A.G. Jackley’s brief is the question of whether Mid-Central—or the South Dakota Department of Education, which directed to Mid-Central the GEAR UP funds disbursed in these seventeen contracts, or the federal Department of Education, which issued these public grants in the first place—can claw back these illegally disbursed funds from Kuhn, Phelps, Roman, PAST, and USD.
p.s.: Included in A.G. Jackley’s evidence packet is an e-mail thread involving Guericke, Phelps, Education Secretary Melody Schopp, and DOE director of finance Tami Darnall concerning graduation and college entrance rates for GEAR UP participants. The thread includes Darnall’s e-mail signature quote:
“She was unstoppable, not because she did not have failures or doubts, but because she continued on despite them.” So wrote Beau Taplin, a self-publishing Australian author with no idea who runs South Dakota’s Department of Education.
All bids are online and start closing on Monday, September 12 at 10 a.m. However, Wieman is opening the Westerhuis property south of Platte for inspection of the auction items this week on Wednesday, Thursday, and Friday from 1 p.m. to 5 p.m. You can check out all the items, like this hydrotherapy bed (bid at this writing: $110):
Making us pay for these items feels a bit like the Sioux Nation’s having to buy back Pe’ Sla. But lawyers and contractors need to be paid. So swing through Platte, check out the scene of the crime, and see if you can bear to buy any of the remains of the GEAR UP scandal.
According to state prosecutors, GEAR UP/Mid-Central corruption scandal defendant Stacy Phelps and his attorney Dana Hanna are sitting on evidence that could help establish the state’s case that Phelps conspired with deceased Mid-Central business manager Scott Westerhuis to embezzle millions of dollars from the GEAR UP education grant.
The state says that a Mid-Central employee* gave Phelps a box of receipts from AIII for charges for which Phelps was seeking reimbursement from Mid-Central. Phelps gave the box to his lawyer, who has balked at the state’s request to hand over the evidence, demanding in a June 29 e-mail that the Attorney General put in writing “any legal basis for why the Attorney General believes these documents contain evidence of crime or why the State would ahve the lawful authority to demand production of my client’s records.” The state they aren’t Hanna’s client’s records: Phelps is no longer CEO of AIII, the organization in whose names the charges on the receipts were allegedly incurred, and thus has no claim to those AIII receipts.
In a Monday afternoon e-mail to the prosecution and the defense, Judge Bruce Anderson says the state “makes some very important points in paragraph 9 of their response” to Mr. Hanna’s motion to seal the receipts and review them in camera. Paragraph 9 reads thus:
Defense counsel’s requested relief is highly inappropriate because it places the court in the middle of an ongoing investigation. It is akin to a defendant depositing a gun with the court and asking the court to determine if it is the murder weapon before it is turned over to law enforcement. This is not the court’s function. The court does not know, nor should it at this juncture, the potential charges being investigated and, therefore cannot evaluate the relevance of the evidence to the investigation. The court does not have other evidence in the possession of investigative authorities, nor should it at this juncture, to know what pieces of the puzzle are filled in by the evidence in question. The court is not in a position to judge the porbative value of the evidence, and it is highly inappropriate for defense counsel to put the court in the position of an investigator in a case now before it. Per Rule 3.4, it is enough that the receipts are “potential” evidence and, as such, defense counsel was obligated to turn them over to investigative authorities, not the court [State’s Response to Motion to Seal and In Camera Inspection, State v. Phelps, Case #11CRI16-000102, 2016.07.11, p. 4].
Judge Anderson expected Hanna’s response by yesterday afternoon; he may decide the seal/in camera motion today.
*Correction 11:27 CDT: I incorrectly attributed to former MCEC exec Dan Guericke the delivery of the box of receipts to Phelps. The court documents do not name who handed that evidence to the defendant rather than to investigators.
Last week KELO again created more click-bait for their Facebook page when they produced a headline that read “State: Phelps Spent More Than $200k in Gear Up Grant Money On Meals, Personal Items.” Now the headline reads exactly the way the State wanted it too. It makes it seem like Phelps had simply went on a spending spree where he was living lavishly by shopping at Sam’s Club and scamming the tax-payer out of tens of thousands with meals at the “swanky” Olive Garden. It makes me wonder if KELO had ever taken the time prior to all this to visit a Gear Up summer program prior to this? Did they know that many of the kids who attended this program would come with little more than the clothes on their backs and that the program would supply these kids with what they needed? KELO must be aware that many Lakota students come from homes that are so poverty ridden that school supplies would never be a priority in a family’s budget. Then again maybe they are as out of touch with our people as it seems [Brandon Ecoffey, “Has the AG’s Office Ever Backed Native Issues?” Lakota Country Times, 2016.06.30].
I worked for an Indian organization one summer. One of the things I noticed was that when board members or others working with us came to Rapid City, the organization would take people out for lunch or dinner to conduct business. I thought it was excessive. In my white way of thinking you could just do business in the office and have people go their merry way. I came to realize that feeding folks was part of the cultural norm among Native Americans [Donald Pay, comment, Dakota Free Press, 2016.07.03].
I’m not sure potlatch philanthropy and multiculturalism qualify dinner at Seattle’s Space Needle as an acceptable use of federal education grant money. One gains status from giving one’s own resources, not grants from Uncle Sam.
But we can certainly understanding Ecoffey’s concern about cultural bias from a Native-detached media that could be sitting up and barking for a Native-hostile Attorney General:
Those of us out here on the western side of South Dakota have learned to take a wait and see approach to any case filed against a Native person by the office of Marty Jackley. Each time there is an issue involving Native interests his office has conveniently taken the side most detrimental to us. Just look at the stances the state has taken against the Indian Child Welfare Act and in favor of the Keystone pipeline. Are there any issues that the AG’s office has decided to back Native people on? [Ecoffey, 2016.06.30]
Stacy Phelps ate out a lot on GEAR UP’s dime. So suggest the exhibits attached to Attorney General Marty Jackley’s notice filed this week in State v. Phelps, one of three felony cases he’s prosecuting in the Mid-Central/GEAR UP scandal.
Consider Exhibit 2, which shows aggregate totals spent at dozens of restaurants and stores by Phelps using money from his American Indian Institute for Innovation, the corporate entity Phelps and Mid-Central business manager Scott Westerhuis appear to have set up to conceal their use of public dollars for personal use. Here’s that exhibit in edited one-page form:
Squint at the maddeningly fine print showing just the restaurant expenses (left column, plus lighter pasted block at bottom right), and you’ll see $87,647.15 in dining expenses accumulated in 812 visits over four years (October 2011 through September 2015). Phelps spent $108 every other day taking people out to eat or ordering take-out for staff and GEAR UP students.
Even if we strike the four largest line-item expenses for what appear to be food for students at the GEAR UP summer program (Dave and Busters, Golden Corral, Little Caesar’s, and Subway), we are still have over $45,500 spent on 712 dinings out. That’s an average of $64 dollars spent on 49% of the days in the period covered by the listed expenses.
The expense summaries submitted to the court by A.G. Jackley do not indicate how many of those dining out on AIII/GEAR UP dollars were current or former state officials.