I will admit, it was refreshing to read this humorous article about South Dakota Trusts. It all starts with some digs on Noem, EB-5, Gear-Up, etc.;

Corey Lewandowski. Read it all here: (The BulwarkThe Daily Beast) BTW, Ian Fury, Noem’s official spokesperson, said “Corey was always a volunteer, never paid a dime (campaign or official).” To which I instantly responded, “So, you are saying that he did it for love.”

Is that what Repugs call love? Unfortunately, YES!

Now I am proud to say that in one way, I actually broke this story, on SleuthSayers, back on June 20, 2012. It’s just that no one listened. As the once and (probably) future AG Marty Jackley once told me, “Call me when there’s a crime.”

I think Jackboots had that line disconnected after Dep SOS Pitty Pat and SOS Jason Gunt left office.

Unless you live under a rock or are dumber than* our governor (or related to her) you know that the Trusts don’t benefit average South Dakotans one iota, it doesn’t even benefit main street or the government coffers in Pierre. There is a select group of banksters, bondsters and all around scammers making money from this and the cavemen and Betty Rubbles running our state house don’t have a clue about the laws they are passing.

I can feel all that liberty and freedom making me dumber by the minute.

In the wake of the GEAR UP tragedy, no one has ever come forward with an honest, accurate number of deserving Native American kids who actually went to college. This is despite our state government blowing through about $60 million of our state and federal tax dollars. High-placed bureaucrats claimed preposterous conflicts of interest were “business as usual.” Auditors failed their professional and ethical obligations. Politicians suddenly came down with amnesia. Consultants laughed all the way to the bank with their ill-gotten millions. While thousands of our young people got cheated out of a chance for a better future, no one ever spent a single night in jail. It was convenient to blame it all on the dead guy and move on. Will our state’s Native American children and our taxpayers suffer again from such scandals? Yes they will, unless we find ways to prevent such abuses of public trust from happening again. If you have suggestions for meaningful changes—in rules, laws, or oversight procedures—please consider sharing them with us before November 10. If you wish, we will keep your identity confidential. We will not attribute your comments to you in any way. We will present our findings and proposals to legislators and other public officials for their review and action in the 2020 legislative session.

Frank Kloucek

Email: fkloucek@hotmail.com • 29966 423rd Avenue • Scotland, SD 57059 • 605-660-0254

Jack Billion

Email: jackbillion@sio.midco.net • 400 E. 21st Street • Sioux Falls, SD 57105 • 605-212-2084

So two of the accused were acquitted and one of them got a heck of a plea deal. The problem though with these trials were they only focused on the individuals who worked for the organizations and NOT the consultants. It also swirled around a very small amount of money in the bigger scheme of things. (The trials focused on around $1 million when in essence around $60 million is missing).

Like EB-5, it seems the ‘dead guy’ was blamed. But unlike EB-5, dozens of consultants walked away with millions and little to show for the work they did.

As a team of USD Political Science students showed on the big board of yarn, there were many players in the Gear-Up scandal. Why weren’t they dragged into a courtroom? Were these 3 mini cases simply a deflection of the bigger scammers? And by the State (AG Jackley) losing these cases a way of putting this all to bed?

I just find it a little odd that the small players (and dead guy) were put on trial yet NONE of the consultants who took millions in Federal Grant money had to appear in a court room.

The Gear-Up scandal stinks to high heaven and it is a distinct possibility the real crooks in this matter got away.

Click to enlarge

This thesis just recently got published and is available at USD in hard copy. I have a PDF of the document here (DOC: GEAR-UP-THESIS)

Here are some highlights of the Thesis;

The Misspent Youth of South Dakota Native American Students:

An Analysis of the Gear Up Grant Program in South Dakota

While Native Americans constitute about 9.00% of the total population of South Dakota, they represent only 3.16% of the student population in Board of Regents (BoR) institutions.1

GEAR UP (Gaining Early Awareness and Readiness for Undergraduate Programs) is a federally funded grant program the U.S. Department of Education established in 1998.

In the original grant application, a conflicting budgetary concern is clear. On page e3, the federal funds amount requested for “Consultants & Contracts” is $959,188 per year, totaling $5,755,128 or 83.12% of the total amount requested.11 The “Scholarships/Tuition Assistance” category requested $50,000 per year, totaling $300,000 or 4.3% of the total amount requested.12 In the following budget for matching funds to be provided by non-federal sources, the pattern is similar. Consultants and contracts amount to $180,000, whereas scholarships and tuition assistance account for $90,000 (the total matching funds are $723,000).13 As noted previously, of the awarded grant money, at least 50% was required to be used for scholarships, unless a waiver were requested. South Dakota’s 2005 application did not request a waiver for the scholarship requirement.14

Following the arrival of the first GEAR UP grant in South Dakota, many colorful personalities soon populated the GEAR UP world. The personal and professional relationships between and among these people rapidly grew into a tight web. Some observers see these relationships as entirely professional and beneficial – especially in a lightly populated state where educational experts may be difficult to find. Others see them as blatant conflicts of interest and reject the argument that South Dakota has to tolerate close relationships due to sparse population and a lack of professionals in technical education areas.

Additionally, the 2011 report showed the GEAR UP program lacked in special education services. According to Michael Wyland of Nonprofit Quarterly,

“Disturbingly, while the GEAR UP program reported serving several thousand low-income, predominantly Native American students prepare for success in postsecondary education, not a single student receiving special education services was served during the 2005-2011 period. We now know the original grant application stressed equitable participation in program services and even documented the percentage of special education students in each of the two dozen schools to be served.”58

Also in the letter to GOAC, Rick Melmer stated that he began his two-year employment with MCEC in 2013 (after he left USD) where he worked on three contracts with CCSSO, the SDBoR, and the GEAR UP program respectively. In June 2013, the MCEC board approved a one-year contract for $185,000 with Melmer to serve as a senior advisor, and approved a similar contract the following year for $233,000.69 Between 2012 and the termination of MCEC in June 2017, MCEC paid Melmer at least $350,000 through contracts directly among MCEC, CCSSO, and the SDBoR that were not included in Melmer’s two employee contracts for 2013-2014 and 2014-2015.70

LuAnn Werdel, the director for the SDDOE Office of Indian Education at the time, sent Schopp an email on January 10, 2011, regarding Schopp’s decision to end Werdel’s employment with the SDDOE Office of Indian Education. In the email, Werdel references several issues with the management of the GEAR UP and College Access grants by MCEC. In her email, she states:

“By ending my appointment as an exempt employee of the Department of Education you have effectively sided with people who have no integrity or morals when it comes to managing grants and federal funds. I have told you over and over what Stacy Phelps and Mid Central is doing with the GEAR UP grant and College Access grant…To conclude, you know only too well that I have been

frustrated with the daily operations of the SD GEAR UP Grant and the SD College Access Grant. In front of everyone last Friday at the last College Access meeting, Stacy Phelps directed all College Access staff to send College Access data to his GEAR UP data lady, Misty Mousseau. This co-mingling of data is illegal. Stacy Phelps remains Project Coordinator in charge of daily operations. This arrangement did not work previously and I’m not sure why we would expect a different result. He is also designated 100% GEAR UP and once I showed you and Mr. Oster the budgets a couple of months ago you were appalled. What has changed? …You told me last week not to worry so much about the grants and to focus on large policy issues-how can one focus on other issues when the foundation of the Office of Indian Education is based on unethical foundations.”111

At about 6:00 p.m. that day, Schopp and Guericke connected over a phone call, in which Secretary Schopp informed Guericke that she was terminating the SDDOE’s management partnership contract with MCEC for the GEAR UP program.127 That same night, just hours after the phone call between Secretary Schopp and Guericke, local Platte residents reported a fire at the property of Scott and Nicole Westerhuis. Scott and Nicole Westerhuis and their four young children perished. Based upon Division of Criminal Investigation (DCI) findings, South Dakota Attorney General Marty Jackley revealed that Scott Westerhuis murdered his wife and their four children with a shotgun before setting the house on fire and shooting himself.128 The news of the murder-suicide shocked the community of Platte and the entire state of South Dakota.

The continuation of these problems prompted Secretary Schopp’s cancellation of the grant contract with MCEC. A few days later, on September 21, 2015, Secretary Schopp sent a formal letter to Dan Guericke outlining the eight specific reasons for termination. They are as follows:

“(1) Lack of supporting documentation and improper documentation for match, resulting in a significant shortfall in match;

(2) Lack of fiscal capacity including lack of fiscal control and improper governmental accounting procedures;

(3) Lack of knowledge of Generally Accepted Accounting Principles (GAAP) or

failure to implement GAAP procedures;

(4) Lack of internal controls

(5) Conflict of interest and failure to disclose related parties;

(6) Lack of project oversight;

(7) Lack of oversight on school subgrants; and

(8) Lack of documentation for grant activities under OMB A-87.”131

At the AG’s press conference, questions arose about a missing safe that witnesses claim should have been in the Westerhuis’s house. The safe may hold important financial documents regarding MCEC, other organizations, and people involved with GEAR UP. According to a KELOLAND News report in November 2015, “Jackley believes it was most likely destroyed in the fire, but could have been stolen or moved somewhere else by Scott Westerhuis.”

Ten years after its inception in 2005, the GEAR UP grant did not have an effective system of collecting data or consistently tracking performance metrics. South Dakota simply does not know, through explicit data, whether the millions of dollars of grant funds helped Native American students prepare for or succeed in college.

The South Dakota GEAR UP mission statement is to “increase the number of low-income Native American students that are prepared to graduate from higher education.”164 For both GEAR UP grants, South Dakota received federal and statematched dollars totaling over tens of millions of dollars from 2005 through 2017. While the intrinsic benefits of the GEAR UP program for some students may exist, the hardline statistics of Native American students in Board of Regents universities barely fluctuated. The achievement gap between Native and non-Native students in South Dakota is very real. The GEAR UP grant program is a clear example of how “throwing money” at a problem without adequate oversight and checks and balances fails to accomplish its noble goal. In the end, good intent was lost between the dollar signs.

Are grant programs like GEAR UP, College Access, and Wakan Gli effective? Does South Dakota need to approach the achievement gap in a fundamentally different way? While many factors are at play, the above statistics suggest that the achievement gap is not closing. The state of South Dakota needs to reflect deeply on how it serves this at-risk and long neglected segment of the population.