Bob Mercer notices that LRC is posting documents for the Government Operations and Audit Committee’s meeting next week in Sioux Falls. Among the items jumping onto GOAC’s Thursday, October 5 (and Friday, October 6, if discussion runs long) agenda is a brief letter from accountants Schoenfish & Co., Inc., relaying how GEAR UP scamster Scott Westerhuis said he financed the $900,000 gym on his property:
It is expected of auditors to ask questions of employees of the organization they are auditing. In addition, we frequently carry this procedure one step further. As a typical procedure, we routinely drive by the key financial person’s residence or farm in most of our audits. We asked about the gym and other improvements on his acreage. He indicated that [his] mother was helping him financially. According to the Charles Mix County directory substantiated in our audit file, his mother owned 760 acres of farmland. This would certainly indicate financial means for contributing to the improvements on his acreage. As indicated in our original response, the gym was never acknowledged to be an asset of Gear-Up or Mid Central Educational Cooperative by any individual, management or in any representations provided to us by management [Schoenfish & Co., unsigned letter to Department of Legislative Audit and Government Operations and Audit Committee, 2017.09.22].
The average cash rental rate for farmland in Charles Mix and Douglas counties topped out at $157.90 in 2014. That’s $120,000 in rent Ma Westerhuis might have made. She’d have paid some property tax and federal income tax and maybe had five figures left to help her son pay the mortgage on his big, big property.
However, sources around Platte have told me that Westerhuis told them he was able to afford the gym thanks to some lucky investments. Apparently he had a different story for the auditors, who were curious enough to drive by the Westerhuis estate and scope out his lavish construction but not curious enough to notice or raise alarms about the accumulated discrepancies in Mid-Central’s monthly financial reports of over $3.4 million.
Related: The Platte Ministerial Association has acquired and reopened Westerhuis’s property as the New Hope Christian Camp and Retreat Center. They are hosting a women’s sewing and crafting retreat this weekend.
Well I guess that puts Schoenfish & Co. in the clear.
Westerhuis’ mom could have gone public with that info about paying for the gym. It is also possible the gym was financed with skimmed federal grant monies. Either way, the state of South Dakota needs to step up supervision and oversight of all grants and programs. Toomany bodies passing the buck around. What a state mess with one party rule.
Having been a family farmer most of my life, I can affirm that net worth does not readily equate to liquidity or cash flow. Nevertheless, Westerhuis had a different story for everyone, and sadly, for his family, every one of them was a lie. Agree with “too many bodies passing the buck around” and time for two party (at least) rule. The overwhelming Republican rule is counterproductive to “fiscal responsibility”, clearly.
Robin, if you’re inclined, I’d like to hear more of your financial perspective. Given 760 acres, either renting it out or farming it yourself, how much money do you think you could make, and how much would you have to put toward building a big gym?
Are any of those gear-up teaching fellow’s names on the membership list of this gym? Did Mr. Phelps attend the gym to work out? That would seem to be a sure tie and they must have cameras there that the police looked at the pictures from.
Just on a minor note-it would be nice if the date or even the year that this conversation took place was provided?
Very good point, Mr. Sol! Forward that to GOAC (specifically, to Senator Nelson, Senator Tapio, or Senator Sutton, the only guys who’ve shown interest in probing beyond the party line)!
If someone owns 700+ acres outright (no outstanding debt), its not what cash flow they could get off of it, its what they could be worth.
If the auditor(s) asked the question, and he said his mom, they looked it up and she had some assets it would be a plausible explanation.
And if you aren’t a carpenter would you know how much it actually was costing?
News reports have placed the value of the gym at $900K.
What they could be worth—does that mean that, for Mom to help, she’d either have to sell the land or borrow against it?
Westerhuis disappeared a whole flock of grant money. I think the story about his Mom is a subterfuge to cover up for stolen funds.
If she did own 700 acres of land outright, a pretty penny could be borrowed against the value of that land. Westerhuis hisownself, apparently only had 40 acres.