So that’s why Dan and Stephanie never answered my question.
Back in October, I noticed that the monthly balances on the Mid-Central Educational Cooperative financial reports from June 2011 to March 2014 didn’t match up:
In every available financial report from June 2011 to March 2014, the beginning balance does not match the ending balance reported in the previous month’s financial report. For example, MCEC reported an ending balance in January 2012 of $2,396,755.32. MCEC then reported a beginning balance in February 2012 of $2,297,428.29. Apparently, from January 31 to February 1, $99,327.03… moved. Looking at other financial information on the documents available, I can’t tell where.
The beginning balance increases from the immediately preceding ending balance in just one report, June 2012, a gain of $192,442.56. Every other report from June 2011 to March 2014 shows the beginning balance decreasing from the immediately preceding ending balance. The average decrease is $110,807.75. Two discrepancies exceed $400K, in April 2012 and August 2013. The smallest discrepancy is the last, $300, in March 2014, after which these report-to-report discrepancies disappear.
The 32 discrepancies add up to $3,324,232.50 [CA Heidelberger, “MCEC Financials: Monthly Balances Don’t Line Up; Lots of Revenue Labeled ‘Misc‘,” Dakota Free Press, 2015.10.12].
My initial calculation omitted two monthly financial reports that weren’t posted online with the Mid-Central minutes. A month later, when Mid-Central attorney Scott Swier finally responded to my open records request by providing those two missing documents, I found the total balance discrepancies added up to $3,442,649.45.
I sent e-mails to Mid-Central on October 12, October 21, November 13, and November 24, 2015, asking executive director Dan Guericke, interim business manager Stephanie Hubers, and/or counsel Swier for explanations of those balance discrepancies. I received no reply to those inquiries. No one could provide me with any logical explanation for $3.44 million in balance discrepancies other than my conclusion that money went someplace it shouldn’t have.
On February 16, 2016, a month after her resignation from Mid-Central, in an interview with Special Agents John Barnes and Brett Spencer of the Division of Criminal Investigation, Stephanie Hubers confirmed my conclusion. She told Agents Barnes and Spencer that she had overseen unauthorized transfers of Mid-Central funds to cover payroll at the American Indian Institute for Innovation:
Recall that AIII was one of the corporations that Scott Westerhuis created in what looked from the start like a scheme to conceal financial misconduct in an impenetrable web of organizations not subject to direct state supervision. Mid-Central contracted with AIII to manage the multi-million-dollar federal GEAR UP program for Native American education. The principals of AIII were Scott and Nicole Westerhuis from the Mid-Central business office and Stacy Phelps, who stands charged alongside Hubers and Guericke of multiple felonies in connection with the Mid-Central/GEAR UP scandal.
Hubers told Agents Barnes and Spencer that she had seen these unauthorized transfers ever since she had begun working for Mid-Central on September 30, 2005. Hubers suspected and Agent Spencer alleges that Scott Westerhuis and his wife and fellow Mid-Central employee Nicole were “skimming off of the funds AIII was taking in to satisfy their own personal needs” (Spencer affidavit, paragraph 69).
Since 2005, the evidence of financial wrongdoing at Mid-Central was right in front of us. It was staring Dan Guericke and board members and Melody Schopp in the face, just waiting for any of them to say, “No, really, Scott, how does this happen every month? Voided checks and journal entries my foot—show us where our money is, now.”
The discrepancies in the Mid-Central financials that I read seemed so big, so blatant, that even I hesitated to post about them when I first noticed them. I thought, “Come on, there must be some simple bookkeeping explanation. Crooks wouldn’t leave evidence this obvious of their crookery.”
I was mistaken. The crooks and their crookery were that obvious. The apparent head crooks are dead and beyond the law, but their assistant Stephanie Hubers now gets a date with the judge.
Related: The AIII website, theaiii.com, is now suspended.