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.
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!
Interestingly, it’s not Pat Powers but Scott Ehrisman who suggests that Scott Heidepriem’s representation of the American Indian students suing Mid-Central Educational Cooperative over the GEAR UP scandal could be a political move:
So a Republican friend calls me last night and asked if I saw Scott onStormland TV. Then they speculated that he may be running for governor again since he is involved with this Gear UP lawsuit. I guess I would not go that far, but if Huether is running on the Democratic ticket, I would like to see a primary challenge from someone, even if it is two closet Republicans [Scott Ehrisman, “Get out the Man Purse. Is Heidi-Scott Back?” South Dacola, 2016.06.01].
Heidepriem is one of five lawyers listed on the complaint filed by Alyssa Black Bear last month. John Hinrichs, Kasey Olivier, Ashley Miles, Steven Emery… I suppose any one of them could be running for governor, too… or they and Heidepriem might just be doing their job as lawyers and helping victims of South Dakota’s corruption fight back.
The Department of Education and Melody Schopp are mentioned in the Black Bear complaint but not named as defendants (yet?). Secretary Schopp is distracting herself and the electorate by playing Republican and saying the new federal education laws are too darn complicated:
“My first blush on (ESSA) is that it’s very complicated,” Schopp said. “It’s not like any of us love No Child Left Behind, but it was easy to explain.”
The guidelines add another 200 pages to the existing 1,000-page ESSA law, and Schopp worries that the complexity will inhibit stakeholders from understanding future changes to the state’s education system.
“It should be very explicitly clear, not for the education geeks, (but) for every parent and public taxpayer about what our system is going to look like,” Schopp said Friday [Megan Raposa, “Schopp Concerned About Proposed Education Law Regulations,” that Sioux Falls paper, 2016.05.29].
Remember: our courts wouldn’t be clogged with all this litigation if former Education Secretary Rick Melmer hadn’t farmed GEAR UP out to his friends back home in Charles Mix County over a decade ago. And none of these lawsuits would be happening if current Education Secretary Melody Schopp had acted on the warnings it had of financial misconduct at Mid-Central when she came into office six years ago.
In his Platte press conference yesterday, Attorney General Marty Jackley said the charges he was bringing against Dan Guericke, Stacy Phelps, and Stephanie Hubers (Guericke and Phelps: conspiracy and falsification of evidence; Hubers, grand theft) were “initial” charges. The conspiracy charges refer to Guericke, Phelps, the deceased and accused embezzlers Scott and Nicole Westerhuis, and “other unknown co-conspirators.” In her February 16 interview with DCI agents, Hubers, who took illegal payments from Scott Westerhuis from 2009 through 2014 totaling $55,339.49, alleges that two assistants received similar illegal payments. According to Hubers, one assistant asked for more money, and Scott Westerhuis acquiesced to keep that assistant from squealing to Guericke.
Attorney General Jackley has more leads to follow and more shoes to drop. On whom migh those next shoes fall?
Other Mid-Central staff? The top three business personnel in the Platte office have been implicated in theft of hundreds of thousands, perhaps a million dollars. If the Westerhuises weren’t dead, they could both have face charges of aggravated grand theft, the highest classification of theft, a Class 2 felony worth up to 25 years in the pen. Hubers says Scott Westerhuis gave her stolen money laundered through his GEAR UP-managing corporation AIII because he felt “she was worth more than what MCEC was paying her” (DCI Special Agent Brett Spencer’s words, Probable Cause Affidavit, State v. Hubers, paragraph 44). Hubers’s statement implicates two other Mid-Central staffers; might the Westerhuises have sprinkled more of their sizable ill-gotten gains to other Mid-Central staff to win goodwill and tamp down questions?
Other AIII staff? Unless Stacy Phelps was handling all the books for the American Indian Institute for Innovation himself, someone else had to be processing the illegal transfers from Mid-Central. Scott Westerhuis acted as chief financial officer for AIII, but their 2013 Form 990 lists the following board members and employees:
One would imagine that if DCI hasn’t already included the above AIII players in its 65 witness interviews, those folks will be hearing knocks on their doors shortly.
Rick Melmer? Rick Melmer drew big dollars from Mid-Central for still unspecified work on GEAR UP and when pressed gave shaky answers about those payments. Guericke’s charges include falsifying Mid-Central’s contract with Melmer just two days before the state canceled Mid-Central’s GEAR UP contract and just three days before Scott Westerhuis allegedly torched his embezzlement-funded house and killed his family and himself. In the somewhat Swiss-cheesy narrative of his probable cause affidavit on Guericke, Special Agent John Barnes does not nail down Melmer’s involvement in backdating his contract. The charges say that Scott Westerhuis sent an e-mail to Melmer on September 14, 2015, at 3:37 a.m. (Westerhuis apparently wasn’t getting much sleep that week) saying, “Hi, Rick, this is what the original one would have looked like.” Melmer replied at breakfast:
That e-mail seems to walk Melmer to the edge of awareness of, if not participation in, the conspiracy. He didn’t like what he was hearing from Westerhuis, but the text only indicates that he was concerned that Mid-Central couldn’t find the original contracts, not that he felt he was being asked to help create a bogus, backdated contract. Special Agent Barnes does not say Melmer signed anything on September 14. Even if he did, he might not face charges: former Mid-Central board chairman Lloyd Persson signed the bogus contracts a few hours after the Westerhuis-Melmer exchange, and Jackley indicated at yesterday’s presser that Persson won’t face charges.
But recall the bigger picture. Melmer rolled the first marble into the whole GEAR UP/Mid-Central/AIII Mousetrap when, as Mike Rounds’s Secretary of Education, he steered GEAR UP responsibilities back to his home folks in Platte. Instead of keeping a big important federal grant under close supervision in Pierre, Secretary Melmer thought it would be a good idea to move supervision of those millions of dollars 135 miles away from the capital, to a co-op designed to provide special education services to small neighboring school districts which now would coordinate a statewide outreach program for Native American students. Farming GEAR UP out to Mid-Central wasn’t criminal, but it allowed Scott Westerhuis to hatch a criminal enterprise in which a number of people, possibly including Melmer himself, got tax dollars that they didn’t earn.
Keith Moore? Mike Rounds’s past director of Indian education and the current head of the South Dakota Fellowship of Christian Athletes figures in the Guericke charges just like Melmer: Guericke allegedly conspired to backdate Moore’s contract with Mid-Central just like Melmer’s to comply with the state audit in September 2015. The charges and affidavit provide no e-mails or other details from Moore. But like Melmer, Moore cashed in on Mid-Central contracts and gave vague answers about the work he did. Like Melmer, Moore failed to submit some work logs (an alarming fact that Bob Mercer reported way back in May 2015, before any of the rest of us were paying attention). Melmer and Moore said they were never asked to fill out work logs, which sounds exactly like what Stephanie Hubers says in paragraph 56 of Special Agent Brett Spencer’s affidavit: “Your affiant asked if Hubers had to fill out effort logs and she said that she did not. Hubers says she was never asked to fill out effort logs.”
Melody Schopp? Our current Secretary of Education has said she saw “incompetence” in Mid-Central’s bookkeeping in 2012. She responded with “technical support.”
The GEAR UP/Mid-Central/AIII criminal enterprise went on for at least ten years. Secretary Melmer and Secretary Tom Oster apparently noticed nothing. Secretary Schopp didn’t notice anything fishy until her second year in office. She didn’t cut Mid-Central off until three years later.
Rep. Lance Russell called on Secretary Schopp to resign back in November over her lack of oversight. We now have the Attorney General confirming that that lack of oversight cost the taxpayers as much as seven figures. Whatever further questions the Attorney General may have for Secretary Schopp and her staff, the primary question taxpayers and the Governor should have for Secretary Schopp is, “Why are you still drawing a state paycheck?”
The PAST Foundation? This Ohio-based organization is among the numerous players in AIII’s long-standing scheme to build an American Indian boarding school focused on STEM education. The PAST Foundation received the third-largest chunk of GEAR UP funds from Mid-Central during the last two years of the scam. The PAST Foundation, headed by USD grad Annalies Corbin, has also worked on Mid-Central’s Teacher Quality grant program and the South Dakota Innovation Lab. The PAST Foundation, like every other big-money Mid-Central partner, should now face serious scrutiny as the Attorney General tries to nail down where every dollar that passed through the Mid-Central office went, how many of those dollars went for legitimate expenses, and how many of those dollars went to friends of Scott for no good purpose.
I’m sure you readers can identify numerous other GEAR UP/Mid-Central players who may figure in the big picture of the vast Westerhuis scheme. Let us hope Attorney General Jackley continues to talk to those players and assemble the complete narrative of what went wrong in Platte and in Pierre.
Mid-Central is setting standards for South Dakota—perhaps we can use that sentence as a writing prompt for students learning about irony (see ELA Standard 11-12.RL.6: Analyze a case in which grasping point of view requires distinguishing what is directly stated in a text from what is really meant (e.g., satire, sarcasm, irony, or understatement).
Rewriting these curriculum standards (wait—we need new standards again? we adopted our current Common Core standards just six years ago!) is only a $4,200 contract, but with several South Dakota educational cooperatives who are not under investigation for corruption available to do the work, are taxpayers really ready to hand even that meager sum to MCEC exec Dan Guericke and interim business manager Stephanie Huber again?
Maybe Secretary Schopp is handing Mid-Central this small contract as training wheels. Maybe she is reassured that the fiscal incompetence is over; after all, right after the Mid-Central board approved the standards contract, it reaffirmed a memorandum of understanding with Wagner-based accounting firm Bechen and Company for fiscal services through June 30 for $800 a day plus travel. Amanda Bechen has been at each monthly Mid-Central meeting since October; over the last three months, Mid-Central has paid Bechen $14,157.50.
If they keep that up, Mid-Central’s going to need to rewrite a lot more standards.
Education Secretary Melody Schopp rejects Rep. Lance Russell’s call for her to resign over the Mid-Central/GEAR UP scandal. She tells Dana Ferguson that good leaders don’t “back away from problems” but step up and “see them through.”
Evidently Secretary Schopp’s “leadership” also means letting incompetent accountants waste multi-million-dollar federal grants for three years:
The Department of Education began tracking what she described as “incompetence” with the group’s financial record-keeping in early 2012. The department offered technical support to Mid-Central managers to help bring its accounting up to standards but became frustrated with the lack of improvement, Schopp said.
…After about three years of working with Mid-Central staff on the problems, Schopp said her employees didn’t see improvement in its work. A 2014 state legislative audit revealed ongoing problems, she said. Mid-Central employees weren’t properly documenting work they’d done and the group continued to expense “unallowable’ purchases.
If I hire a contractor to paint my house and his crew starts tearing off my siding with the power washer, I won’t just sit there continuing to have frustrations. I won’t spend three days offering them technical support. I’ll say, “Do the job I hired you to do or get off my property!” One more mistake, and they’re done, and I get out my own ladder.
Why didn’t Schopp show that kind of leadership?
“I didn’t think there was anything criminal,” South Dakota Education Secretary Melody Schopp said in an interview [Ferguson, 2015.11.10].
You don’t have to be a criminal to be a cock-up. But it took to feds to get Dear Leader Schopp to Mid-Central out of our misery:
Schopp said she contacted U.S. Department of Education officials in early September and was told the state could terminate its Gear Up contract with Mid-Central if they acted before Sept. 25. Federal officials recommended she find another group to administer the federal funds [Ferguson, 2015.11.10].
Holy cow. Leadership is letting millions of dollars flow to incompetent and apparently incorrigible contractors for three years, asking the feds what to do?
Dang. Maybe Rep. Russell should ask the feds what we should do with our Secretary of Education.
Related Reading: Libertarian blogger Ken Santema looks at Rep. Russell’s call for Schopp to resign and wonders if “it is time the heads of other state agencies are asked to do the same” for the sake of good stewardship of our tax dollars. Santema also worries (?) that conservative leaders could use the lack of confidence in the Department of Education as justification to torpedo any proposals from the Blue Ribbon K-12 panel.
Rep. Lance Russell (R-30/Hot Springs) takes a look at the Mid-Central/GEAR UP scandal and comes to an obvious conclusion: Melody Schopp should resign as Secretary of Education:
Republican State Representative Lance Russell of Hot Springs recently sent a letter to South Dakota Secretary of Education Melody Schopp, saying that the management of the GEAR UP grants concern him greatly.
…Russell adds that the utter lack of oversight of millions of dollars that were flowing through the Department with almost no accountability for a number of years is unacceptable.
Even the Democratic leadership in its response to Attorney General Marty Jackley’s failed attempt at press-conference closure Tuesday didn’t go as far as Rep. Russell. Minority Leaders Senator Billie Sutton (D-21/Burke) and Rep. Spence Hawley (D-7/Brookings) didn’t mention Secretary Schopp specifically; they stuck with general statements about the corruption that inevitably blooms under one-party rule.
The Department of Education rebuts Rep. Russell’s claim that they have exercised no oversight:
Secretary Schopp exercised oversight when she canceled the GEAR UP management contract because of her concerns with its administration. She is staying on the job and will continue to oversee this program. She is looking forward to the new partnership with the Board of Regents [Mary Stadick Smith, Department of Education spokesperson, e-mail to KCCR Radio, in Larsen, 2015.11.05].
That’s kind of like if Bill Clinton had said, I’ve stopped having sexual relations with that woman in the Oval Office, so you have no reason to say I’m not fit for the job. Rep. Russell cites a lack of oversight that went on for years and enriched GOP cronies. Secretary Schopp didn’t notice or didn’t want to notice anything was wrong until the Department of Legislative Audit dropped so much evidence in her lap that she had to act.
[Grant expert Michael] Wyland also points out that the state’s objectives for the program are vague and hard to measure. And we discovered in the application that South Dakota applied for a waiver from having to use any of the money for college scholarships for Native American students.
“50 to 75 percent of GEAR UP funds are designed to be spent on scholarships. South Dakota requested a waiver to spend no money on scholarships, but rather to spend 100 percent of the grant on college preparedness and college readiness. And so that was a major departure from the original intent of the federal law,” Wyland said [Angela Kennecke, “SD GEAR UP Grant Application,” KELO-TV, 2015.11].
There’s a lot less money to disappear into “overhead” and “consulting” and big dang houses with two security systems if we’re writing checks directly to Indian kids or the colleges they choose to attend.
Rep. Russell is an occasional thorn in the side of the Republican establishment, so expect the GOP spin blog to accuse Rep. Russell along with Senator Sutton and Rep. Hawley of dancing on children’s graves. But Rep. Russell is calling for one of the basic actions of a true leader: to take responsibility for mistakes and, when those mistakes are sufficiently grave, to step down and let new leadership set things right.
Bob Mercer clarifies that both KOTA and Venhuizen were mostly right:
The KOTA TV story was substantially correct but erred on Schopp’s role. A letter from Schopp about halting the GEAR UP grant to Mid Central was read by GEAR UP director Stacy Phelps to GEAR UP employees on Tuesday. Phelps reportedly told them they were terminated. As for Venhuizen’s statement about Schopp, he was technically correct. GEAR UP now will flow the state Board of Regents in the future [Bob Mercer, “Venhuizen: Schopp Didn’t Fire SD GEAR UP Staff (w/update),” Pure Pierre Politics, 2015.09.25].
Venhuizen says the state wants GEAR UP to continue, but is moving a college prep program for middle schoolers and high schoolers to the Board of Regents’ dossier the best policy option? The Regents did conduct a fascinating and useful study in 2013, “Like Two Different Worlds,” that explored the difficulties American Indian students face in preparing for and succeeding at university. However, when the Regents asked the Legislature for funding for one measly Indian outreach coordinator, Republicans said no. The Regents have an interest in helping American Indians make it to and through university, but are the Regents best equipped to manage a program involving direct instruction for pre-university kids?
Maybe the DoE could more logically partner with the tribal colleges to run GEAR UP. Or maybe there’s a combination of expertise to be had: split the GEAR UP dollars between the tribal colleges and teachers from Teach for America. The tribal colleges asked for a mere $700K in state support this year to support their mission, but the Legislature refused. Teach for America is still doing good work for South Dakota’s Indian students, even though the Legislature defunded TfA in 2014 and refused their request for $500K this year. Four million-plus in GEAR UP dollars could go a long way toward helping both entities accomplish their missions: the tribal colleges could apply their experience with American Indian matriculators to develop plans which Teach for America instructors could execute face-to-face in their classrooms and communities.
Whether we put the Regents, the tribal colleges, Teach for America, or some combo of the three (hint!) in charge of GEAR UP, it would appear that the state, by effectively firing the current staff picked by the Mid-Central Educational Cooperative, has determined that the previous staff wasn’t getting results and someone else needs to oversee those big federal dollars to help our Lakota, Nakota, and Dakota students.
The state is moving quickly to shut down the gravy train that Mid-Central Educational Cooperative appears to have created with its contract to run the GEAR UP program. KOTA reports that Education Secretary Melody Schopp yesterday fired everyone working for the program:
On Tuesday Secretary of Education Melody Schopp by email terminated all 6 to 10 GEAR UP employees, including state board of education member Stacy Phelps of Rapid City.
The only thing more remarkable about a Secretary of Education firing someone she works with on the state Board of Education is that she would have allowed someone she works with on the state Board of Education to profit from a state education contract in the first place.
If Dr. Schopp chopped all GEAR UP staff, that should include consultant Brinda Kuhn, GEAR UP evaluator, whose BC Kuhn Evaluation, LLC, has received $5,625 per month from MCEC for GEAR UP salaries alone for the last two years, in addition to thousands of dollars more each month for work on the College Access and Teacher Quality programs.
Why Schopp didn’t take this action and cancel MCEC’s $4.3-million contract to run the federally funded college prep program for economically disadvantaged youth back in May, when a state audit found material weaknesses in MCEC’s financial oversight, is an open question.