• Tag Archives PAST Foundation
  • Jackley: Guericke Issued 17 Illegal Contracts to PAST Foundation, USD, Others

    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:

    Tami Darnall, e-mail to Dan Guericke, 2015.08.30.
    Tami Darnall, e-mail to Dan Guericke, 2015.08.30.

    “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.



  • GEAR UP/Mid-Central: What Shoes Drop Next?

    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 AffidavitState 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:

    AIII 2013 Form 990, board and top-paid staff
    AIII 2013 Form 990, board and top-paid staff

    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:

    excerpt, Special Agent John Barnes, Probable Cause Affidavit, State V. Guericke, 2016.03.10.
    excerpt, Special Agent John Barnes, Probable Cause Affidavit, State v. Guericke, 2016.03.10.

    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.

    Auditors? Eide Bailly took a very narrow look at Mid-Central’s GEAR UP ledger last fall and found nothing wrong. Schoenfish and Company of Parkston (where Rep. Kyle Schoenfish works) audited Mid-Central’s books for at least eight years. Neither organization blew any whistles about the blatantly obvious misalignment of monthly ending and beginning balances that went on for at least nine years and that appear to be the central evidence of the Westerhuises’ embezzlement.

    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.