COMETH THE “CLAWBACK”: Independent Bank Seeks $332,541.94 “Default Judgment” Against Steven Ingersoll’s “Smart Schools” Entities

MARK NOSS/FULL SPECTRUM MANAGEMENT BANKRUPTCY “ADVERSARY ACTION” UPDATE

“It is undisputed that the Ingersoll/Smart School Entity Transfers were paid to the various Smart Schools Entities in complete disregard of whether the recipient-entity was entitled to the payment and in complete disregard for the corporate forms of those entities. Mr. Ingersoll readily admitted that the Technical License Agreement was between Debtor FSM and SS, Inc., but the payments issued by FSM were paid to SSM, Inc. and SSMBC, Inc., at different times depending on when the payment was issued.”

“Here, damages are easily measured since the damages recoverable against the Smart Schools Entities equal the total sum of the Ingersoll/Smart School Entity Transfers. The amount of those improper transfers is established by the well-pleaded factual allegations in the Complaint, and by the sworn testimony and related admissions provided by the Defendants themselves.”

March 21, 2023; PLAINTIFF’S BRIEF IN SUPPORT OF MOTION FOR ENTRY OF DEFAULT JUDGMENT AGAINST THE SMART SCHOOLS ENTITIES

You can run…but you can’t hide.

Right after he assumed control of the Grand Traverse Academy, Mark Noss began making covert $12,500 monthly payments to Steven Ingersoll.

Finally forced in March 2016 by a whistleblower’s disclosure to acknowledge the payments, Noss explained that he had continued to speak with Ingersoll “for guidance with respect to regulation, compliance, and reporting, as well as the requirements of the State of MI, LSSU, and our bond issue” even though he was barred by a federal restraining order from contacting Ingersoll during the early months of 2015.

Well, that’s some bullshit.

In a brief submitted yesterday in Full Spectrum Management’s bankruptcy adversary case, Independent Bank’s attorney Sandra Hamilton petitioned the court to grant a $332,541.94, “default judgment” against Steven Ingersoll’s Smart Schools Management, Inc., Smart Schools Management of Bay City, LLC, and Smart Schools, Inc.

And while local Traverse City media never mentioned the financial fallout raining down on Mark Noss after the Grand Traverse Academy kicked him to the curb in June 2017, I’ve reported extensively on his departure, including Full Spectrum Management’s February 19, 2019 bankruptcy petition.

On April 30, 2020, an adversary complaint was filed in federal bankruptcy court by Kelly M. Hagan, the Chapter 7 Bankruptcy Trustee for the estate of Full Spectrum Management, LLC.

Later, creditor Independent Bank blocked Noss’s effort to discharge $766,925 owed by his Full Spectrum Management, LLC to the bank — striking an agreement with Full Spectrum’s bankruptcy trustee to pursue collection of the amount from Noss, Noss-related entities and the Grand Traverse Academy, while simultaneously conducting an investigation to seeking discover whether payments made by Mark Noss to Steven Ingersoll were done with intent to hinder, delay, or defraud Full Spectrum’s creditors

Here are a few highlights —

“It is undisputed that the Ingersoll/Smart School Entity Transfers were paid to the various Smart Schools Entities in complete disregard of whether the recipient-entity was entitled to the payment and in complete disregard for the corporate forms of those entities.”

“Mr. Ingersoll readily admitted that the Technical License Agreement was between Debtor FSM and SS, Inc., but the payments issued by FSM were paid to SSM, Inc. and SSMBC, Inc., at different times depending on when the payment was issued.”

“When Ingersoll was indicted, his bank accounts were allegedly shut down by either the banks or federal authorities, so Ingersoll directed Noss, as the Manager of FSM, to redirect payments to his various Smart Schools Entities.”

“Dr. Noss’ deposition testimony is absolutely consistent with Ingersoll’s unapologetic admissions on these points. As admitted by Noss, the License Fees paid by FSM at the direction of Noss to SSM, Inc. and SSMBC, LLC were, in part, to compensate Ingersoll for his alleged undisclosed, continuing role in serving as a consultant to Noss in connection with managing GTA.”

“Ingersoll also confirmed during his sworn deposition testimony that “consulting fees” allegedly earned by his daughter, Gretchen Ingersoll, were paid to Smart Schools Management of Bay City, Inc. instead, despite the complete absence of any governing contract.”

“Gretchen Ingersoll did not provide consulting work, but merely handled the bookkeeping for GTA and FSM for a limited period after Noss took over managing GTA.”

“The amount of the Ingersoll/Smart Schools Entity Transfers is also undisputed. Both Ingersoll and Dr. Noss have confirmed that the payments set forth on Exhibits 5 and/or 6 to their depositions, which is a Quickbooks printout generated from Debtor FSM’s accounting system, accurately lists each of the payments made by FSM to Ingersoll, Ingersoll’s daughter, and/or to the Smart Schools Entities.”

“Plaintiff’s expert witness, Heather Gardner of DWH, LLC, who has reviewed and extensively analyzed the FSM financial statements, accounting records, tax returns, and bank statements, has
confirmed the exact amount of the transfers. The “Declaration of Heather Gardner”, which is established that, according to a forensic examination and review of the Debtor’s own financial, accounting, tax, and banking records, the Ingersoll/Smart Schools Entity Transfers totaled $332,541.94.”

And some background-

IN MARCH 2014, STEVEN INGERSOLL ASKED MARK NOSS FOR A $925,000 FAVOR…AND NOSS SAID YES.

On April 28, 2014, Mark Noss issued a “broadcast email” (shown below) to the entire Grand Traverse Academy school community touting “financial and management experience that I have gained over 30 years” and “15 years volunteering on the board” — surely not someone who would need to secretly pay Steven Ingersoll $12,500 a month, right?

Wrong!

Noss did pay Ingersoll nearly $400,000, (ostensibly for those services) between April 8, 2014 and March 1, 2016.

In early March 2014, Steven Ingersoll set into motion a plan that, if it had succeeded, would have allowed him to maintain control of the Grand Traverse Academy, build a long-desired expansion at the school and pay off the massive business debt he owed Traverse City State Bank (TCSB).

Having renegotiated the repayment terms of his $989,825 line of credit debt with Daniel J. Stahl, TCSB’s Senior Vice President of Commercial Lending, in late February 2012, Ingersoll engineered the remarkably swift off-loading of that obligation from his Smart Schools Management, Inc. to Mark Noss, then president of the Grand Traverse Academy’s board of directors.

A contemporaneous string of emails from early March 2014 between Steven Ingersoll, Mark Noss and Dan Stahl reveals a deal was struck on March 16, 2014 for Noss to assume the obligation to repay Ingersoll’s outstanding debt, days before the GTA board voted to sever ties with Ingersoll. Noss wasn’t formally awarded a management contract until March 19, 2014.

More on this — and these guys — a bit later.