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.
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.
The grimmest sale of the year will take place right around the first anniversary of the grimmest murder in South Dakota. Yesterday Judge Bruce Anderson approved an auction of the loot Scott Westerhuis didn’t set on fire before killing his wife, kids, and himself to escape prosecution for embezzling over a million dollars in taxpayer education dollars. Scott Westerhuis took his family’s lives in the middle of the night September 17, 2015; the estate auction will take place the week of September 12.
As tends to happen in such ugly cases, the people cleaning up the mess are getting compensated before the people who got screwed:
Anderson also approved an initial list of creditors set to be paid back first upon the completion of the auction. He said the couple’s funeral expenses along with compensation for estate representatives and attorneys would be repaid first. Then about a dozen other credit card companies, banks and workers would be repaid. Morgan said she wasn’t sure the funds won at auction would cover all the requests.
“I don’t know if there’s enough to go around here to make everybody completely whole,” Morgan said.
Jim Brenner, an electrician from Armour, sat in the courtroom Thursday afternoon waiting to hear whether he would be repaid for extensive work he did on the Westerhuis’s home in Platte.
When Scott Westerhuis’s murder/arson/suicide launched the Mid-Central/GEAR UP scandal to the front pages, I immediately noticed the suspect business manager’s small web of corporate entities. The thinnest strand of that web appeared to be the Chita Corporation, about which I wrote on September 22, 2015, this simple sentence: “Westerhuis formed Chita Corporation in 2012, named himself and his wife Nicole as officers, and filed one annual report, his 2013 report in October 2014.”
Chita Corporation did not pop up in any of other Mid-Central or GEAR UP documents.
But now I’ve found one document—just one, that clarifies two things about Chita Corporation.
First, the spelling is actually ChiTA.
Second, Westerhuis formed this corporation to build man camps in the Bakken oil fields of North Dakota. ChiTA proposed building a 100-unit camp in Watford City, ND, and a 250-unit camp outside of Minot, SD. ChiTA proposed to differentiate itself in a marketplace marked by barracks-style lodging with stick-built modular homes featuring private living quarters and, at the Minot facility, a two-unit automatic truck wash.
To make these two camps happen, ChiTA just needed $18 million.
My humble Googling finds no information indicating that ChiTA Corporation ever obtained funding for or built its man camps. The ChiTA document trail, consisting of no more than the 2013 annual report filed in 2014 with the South Dakota Secretary of State and no business records for ChiTA in North Dakota’s registry, suggest that ChiTA never got into the oil field housing business. If that’s the case, Westerhuis may have spared himself another financial debacle: by September 2015, the crash in oil prices had turned the Bakken man camps to ghost towns.
Jean Koehler, vice-president of First Dakota National Bank in Mitchell, would like to hold an auction. She needs Judge Bruce Anderson’s permission to do so; he may give that permission at a hearing on August 18 in Lake Andes. If Judge Anderson says okey-dokey, the public will get a crack at bidding on what’s left of Scott and Nicole Westerhuis’s criminal fiefdom.
According to the preliminary inventory Koehler submitted to the court, the Westerhuises left some pretty nice loot:
Remember: Scott Westerhuis burned his entire gigantic house down, but his estate still has four big flat-screen TVs—48-inch, 55, 55, and 72—to sell.
The estate auction also include lots of other electronics, lots of tools and gym equipment, 45 desks, 18 box springs and 15 mattresses, 330 life vests*, and a hot tub. The auction would not include the vehicles, which are being sold by an agent. Among the vehicles: three dump trucks and a 2008 Ford Super Duty 450 pickup—white. (Coincidence, of course.)
Among the over $60K in cash and investments left, the two biggest ticket items are $28K in College Access 529 plans for the Westerhuises’ murdered children and $10K in Scott’s life insurance policy with Unum Life.
Koehler says in her June 6 court filing in probate case #11PRO15-000020 that the Westerhuis estate is insolvent. Koehler says she has sent out Notices of Disallowance of Claims to creditors seeking their fair share from debts Scott Westerhuis left unpaid, but she asks the judge to approve partial payment on three priority claims: the $3,748.79 bill to Mount Funeral Home in Platte for Scott’s final disposition, attorney fees, and her own fees as personal representative of the estate.
Update 2016.06.30 06:53 CDT: I noticed the 25 orange life vests but missed the 297 yellow life vests and 8 Stearns life jackets in my first scan of the inventory.
Exhibit 5 from Attorney General Marty Jackley’s new filing in the state’s case against GEAR UP player Stacy Phelps shows that Rick Melmer, the Education Secretary turned consultant who made six figures off GEAR UP contracts after steering the federal grant to his home folks back in Platte, may have some more questions to answer.
KSOO’s Beth Warden posts the document, which shows three text conversations (the participants are cited by e-mail address, but the messages read more like phone texts or Facebook messages) between Phelps and Mid-Central Educational Cooperative business manager Scott Westerhuis. One of those text conversations took place on February 28, 2014. Exhibit 5 lists these lines in reverse chronological order; I have cut and repasted them in chronological order and spaced them to mark changes in speaker:
This text is filled with these things, this, and it, pronouns without antecedents. Scott Westerhuis is dead, so the state will have to provide more bracketing text or call Stacy Phelps to the stand to tell us what exactly he and Westerhuis were talking about that night over that nearly three-hour span. But we can fill in some names:
I’ll need to spend some time trying to place “walt”, “jodi”, and “sams”.
But on February 28, 2014, it appears Keith Moore was “asking way to[o] many questions” and making a decision to give someone a contract that didn’t please Phelps and Westerhuis, while Rick Melmer was “soft selling” something and “trying to defer the conversation.” Whether Phelps is being sarcastic in saying he likes Melmer’s soft selling is not clear from the text. Phelps anticipates TIE fighting back, and Westerhuis anticipates “a lot less money coming in.” (Note that Westerhuis expresses this financial concern two months before a long stretch of big-dollar discrepancies in MCEC’s financial reports suddenly ceased.) And Phelps expresses concern that AIII, the non-profit American Indian Institute for Innovation that he and Westerhuis were allegedly using to pilfer GEAR UP grant money, will be “kicked out.”
Keep those e-mails coming, A.G. Jackley. It appears there are more shoes to drop, or at least players to testify to explain just what the heck was going on between Phelps and Westerhuis in the GEAR UP scandal.
Bob Mercer shares with us the new court documents in the state’s prosecution of GEAR UP player Stacy Phelps, who stands accused of falsification of evidence related to his misuse of federal grant funds intended to help American Indian students but funneled through his non-profit American Indian Institute for Innovation to buy lots of goodies for himself and friends.
Yesterday Attorney General Marty Jackley filed his “Notice of Intent to Introduce 404(b) and Res Gestae Evidence.” Per state law, prosecutors must give notice that they intend to submit evidence “proving motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident.” In this case, the evidence Jackley lists aims to show that Phelps had reason to falsify evidence and conspire with Scott Westerhuis to falsify that evidence, because he was using GEAR UP money to buy lots of steak dinners and other treats.
One of those steak dinners took place on November 4, 2011, when Phelps rang up $163 at Seattle’s El Gaucho restaurant. The Attorney General’s entry on that expense highlights the word “swanky.” If he’s taking that from El Gaucho’s own marketing lines, I’d recommend he add “ritualistic“—that would really set the jury on edge.
The single largest dining expense is a July 13, 2015, outing to Famous Dave’s which cost $645.13.
Attorney General Jackley itemizes $9,251.74 for 45 restaurant visits from October 25, 2011, to July 20, 2015. That’s an average tab of $205.59. A.G. Jackley lists eight visits to Minerva’s between November 2011 and July 2015 totaling $1,873.57, but the 404(b) notice includes another line saying that from October 2011 to September 2014, Phelps spent $7,643 of AIII money at Minerva’s.
A.G. Jackley makes a similarly muddled list under expenses at Best Buy. His filing itemizes eight expenditures at Best Buy from June 2012 to December 2014 totaling $11,430.70, then adds a total from February 29, 2012, to September 14, 2015 (three days before his alleged partner in GEAR UP crime Scott Westerhuis killed his family and himself after receiving word that the state was taking GEAR UP out of their hands) of $20,729.74.
A.G. Jackley notes $44,913.49 spent on fuel at Loaf & Jug between October 25, 2011, and December 29, 2014. He notes another $3,914.71 spent on fuel at Pilot and $1,786.56 at Shell during that period. Add that up, take a wild guess (based on my own car records) that the average gasoline price during that period was $3.60 and that the average fuel efficiency of Phelps’s vehicle was 20 miles per gallon, and that fuel corresponds to over 281,000 miles of driving over a bit more than three years, or 242 miles per day. Of course, if that money was spent on a small fleet of AIII vehicles, that mileage could be perfectly reasonable business expenses.
Therein lies the caution with which we must read A.G. Jackley’s evidence. The big ticket items—$50K for fuel, $50K+ at computer stores, $58K at Walmart, $61K at Sam’s Club—could have been normal expenses involved in running the non-profit and supplying the summer GEAR UP camp at the School of Mines for hundreds of American Indian kids. A $240 dinner at the Space Needle and $1,200 in gear at the Victorinox store in Minneapolis, probably not, but on the other items, the judge and jury will need to hear A.G. Jackley’s evidence that the listed expenses were not normal operating costs.
A.G. Jackley appears prepared to do that. He includes an e-mail exchange between Phelps and Westerhuis on February 12, 2015, that suggests intent to keep secrets from the AIII board, although the snippet provided does not discuss actual expenses. A.G. Jackley concludes his filing with this statement, saying that Phelps wasn’t as big a crook as Westerhuis, but he was a crook:
The scope of that debt should motivate us all to drop the “apparently”.
[Electrician Jim] Brenner said the bills have started piling up and he’s struggling to pay them without the $45,908.03 Westerhuis owed him for remodels of the family’s gymnasium and storage shed. Brenner said he trusted Westerhuis to pay him back once he completed work on the projects.
…Scott Westerhuis also had debts on his American Express card and Paypal account to the tune of $15,648.56 and $4,477.25 respectively, claims against his estate show.
…Westerhuis had just less than $120,000 in unpaid loans for the family’s four vehicles, two four-wheelers and a boat. The Ft. Randall Federal Credit Union brought a claim against his estate for $120,569.94 for the outstanding loans on the vehicles, an $1,830.15 personal loan, a credit card balance of $35.38 and additional late fees [Dana Ferguson, “After Platte Murder-Suicide, Debts Yet to Be Repaid,” that Sioux Falls paper, 2016.05.24].
Scott and Nicole Westerhuis were maintaining a $1.3-million home and $900,000 gymnasium on combined annual honest salaries at Mid-Central Educational Cooperative of $131,000. Those salaries would likely have gone poof, right along with Scott and Nicole’s ability to find other gainful employment, once the state canceled MCEC’s GEAR UP contract and their scandalous behavior hit the press and the Attorney General’s desk. The money they stole from Indian kids to pay for their own privileged white kids’ education would be clawed back by creditors and the state. Scott Westerhuis, a good respected Christian man around Platte, would see his reputation, his little empire, and his future destroyed.
Scott Westerhuis quite literally faced the loss of everything. A man in that desperate situation could easily kill himself. A man who had beaten others by robbing them for his pleasure could rationalize, as his final pleasure, beating them by burning down an ill-gotten home that he could not keep so no one else could have it.
And a man who could take those steps, a man with no future, and man seeing no way left to provide his wife and children with a future, could kill his wife and children so no one else could have them.
Such evil happens. It happened in Platte last September. Scott Westerhuis built his world on lies and theft. He got so deep in sin and selfishness that he could not see a path to repentance and responsibility. Scott Westerhuis thus killed his wife, his four children, and himself.
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.
As a Senate candidate, I’m telling my District 3 neighbors that I will fight corruption by being a watchdog, just as I do here on the blog, asking questions, finding and reporting real data, and speaking truth to power.
Potential Senate candidate Lora Hubbel (she’s not on the official list yet, but she swears on Facebook that she sent her District 9 petition in yesterday) says she’ll fight corruption right now by hiring Magnum PI to get to “the real story” behind the deaths of GEAR UP scandal king- and queen-pins Scott and Nicole Westerhuis and their children last September in Platte:
It’s a free country, and in South Dakota, we candidates are freer than most to spend our campaign contributions however we see fit. But I think I’ll spend my $15,000 to $20,000 on print ads and parade shirts before I hire a detective to try to prove that Attorney General Marty Jackley is lying to us.
But Lora, if your P.I. finds anything, let us know. If you make it to the Senate with me, I’ll be glad to have your help rooting out corruption.