Bob Mercer reports that Scott Westerhuis and his family died last Thursday morning just hours after the state Department of Education had told Westerhuis’s employer, Mid-Central Educational Cooperative, that it would not renew a $4.3-million contract to run the GEAR UP American Indian education program.
Mercer reports a number of questionable financial activities by Mid-Central:
The state audit found that former state Education Secretary Rick Melmer and former state Indian education director Keith Moore received payments from the state department, but initially hadn’t filed work reports, to serve on a panel to oversee Mid Central’s conduct of American Indian education programs. Their responsibilities included GEAR UP.
Mid Central’s board of directors accepted Melmer’s resignation at the board’s July meeting.
State Board of Education member Stacy Phelps of Rapid City operated a business that received a large piece of the GEAR UP funding to host an annual summer event at South Dakota School of Mines and Technology.
The audit noted a number of discrepancies and weak financial controls over the federal money by the state department and Mid Central [Bob Mercer, “Platte Deaths Came After Big Contract Wasn’t Renewed,” Pure Pierre Politics, 2015.09.22].
Mercer notes that Westerhuis had set up a number of corporations seemingly related to Indian education. The seven corporate entities that pop up in the Secretary of State’s corporate database with Westerhuis as agent are shown below:
Four of those entities—one LLC and three non-profits—were up-to-date in filings as of last week. Rock Ranch Consulting, which has no easily identifiable online presence, may refer to the Westerhuises’ rock-decorated rural home, which went up in flames last week. Here’s the aerial view from Google Maps:
Rock Ranch Consulting wrote the check to incorporate Westerhuis’s most recent corporate creation, the “American Indian Institute For Innovation and Excellance,” misspelled exactly like that on the articles of incorporation, on May 4, 2015. The bylaws of that new nonprofit dictate that, on dissolution, any assets should be converted to an endowment for scholarships for Indian students:
The AIIIE articles name Westerhuis, his wife Nicole, and Stacy Phelps of Rapid City as incorporators and Phelps; the same trio are listed as the last officers of the inactive Blackrock Consulting, Inc. The AIIIE articles name Phelps; Choctaw astronaut John B. Harrington of Lewiston, Idaho; and Carlos Rodriguez of Washington, D.C., as directors.
Herrington and Rodriguez are also listed on this state filing as officials with Westerhuis’s American Indian Institute for Innovation (no “Excellance”), which Westerhuis formed in 2008 and for which he filed an annual report on May 22, 2015, after forming the AIIIE. AIII is focused on STEM education for American Indian students. AIII’s 2014 Form 990 says Phelps and Westerhuis are CEOs of the organization alongside chairman Herrington and and secretary/treasurer Rodriguez. The 2014 Form 990 shows $2.7 million in revenue and $3.0 million in expenses, including $1.58 million in salaries and wages, $311K in pension and benefits, and $270K in travel, conferences, and meetings.
AIII’s income came primarily from the following sources:
Note the $779K that came from government contracts, including $612K from the GEAR UP program.
AIII paid ten employees more than $50K in 2014:
Westerhuis incorporated the Oceti Sakowin Distance Education Consortium Incorporated in 2003. It dissolved in 2012, apparently succeeded by the Oceti Sakowin Education Consortium (OSEC), formed in 2011 and still in good standing.
OSEC’s 2013 Form 990, completed by Nicole Westerhuis on November 6, 2014, shows $965K in revenue and $935K in expenses. It paid executive director Chris Bordeaux $64K (plus another $10K in other compensation) and business manager Nicole Westerhuis $39K. OSEC spent over $510K on educational services for Indian schools.
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.
Scott Westerhuis handled a number of corporate entities that handled a lot of money directed toward Indian education. GEAR UP money was part of that cash flow. Would learning that the state had cut off one source of funding for various Indian education projects have prompted the action that the preliminary autopsy finding suggest Scott Westerhuis took? Or do we have some more documents to go find?