08 June 2017

Of Safes and Smoke

by Eve Fisher

Do you remember the South Dakota GEAR UP! scandal?  The one that got started when, early in the morning of September 17, 2015, a fire destroyed the home of Scott and Nicole Westerhuis and their four children in Platte, South Dakota?  And they were all later found to be shot to death?
Quick Note:  (GEAR UP! is a federal grant program to get financial assistance to low-income students; here in SD it's primary aim was supposed to be helping Native American students.)  
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SD AG Marty Jackley
Now, my regular readers may remember that South Dakota Attorney General Marty Jackley determined that Scott Westerhuis shot his wife and children, torched the house, and then shot himself, all because he was about to be caught for embezzling enough funds to build a $1.3 million rural home, a $900,000 gym complete with basketball court, etc., etc., etc., on an official combined salary (his and his wife's) from Mid Central Educational Co-Op of $130,000.  Later, it turned out that the Westerhuises had set up a number of shell organizations, and given themselves hefty salaries from them all.

Well, I'm happy to announce that the General Audit of Mid Central and GEAR UP! has finally been released and it shows:

(1) Scott and Nicole Westerhuis took nearly $8 million out of Mid Central's bank account without authorization to cover the salaries of their non-profit organizations. Supposedly most of that money was returned to Mid Central (how, when, where?), but $1.4 million was still missing at the time of the Westerhuis family's deaths.

(2) The Mid Central Board and its director, Dan Guericke, didn't have enough oversight and never addressed the risks created by Scott and Nicole Westerhuis having roles in the non-profits they set up to take the GEAR UP! grant money.

(3) Guericke didn't get approval by the board for 17 contracts and a number of payments made without contracts with the Westerhuises.

Naturally, the blame game has begun:
  • Mid Central's board is blaming the South Dakota Department of Education ("lead partner" in the GEAR UP! grant and responsible for ensuring the project was carried out in accordance to federal rules and regulations).  
  • The SD DOE says it did its job of conducting reviews of grant expenses and tightened up its controls when it began noticing issues in 2014, which is why it cancelled its contract with Mid Central right before the Westerhuis tragedy.  
  • The Mid Central board's responded that, "no amount of reasonable oversight would have detected the complex scheme of fraudulent and illegal activities conducted by Scott and Nicole Westerhuis."  (Angela Kennecke, KELO TV)  
  • NOTE:  I once put together five years of an organization's accounts from a checking account register.  You can figure out a lot if you just follow the money...
  • Also, Cory's blog Dakota Free Press has all the facts and figures that we have so far, and all the excuses piled up so far.
So, June 30, 2017, Mid Central will shut down. 12 of its 13 members have formed Core Educational Cooperative.  The same staff of Mid Central (those who are not going to trial) are now going to work for Core (at least half of them had to have conflict-of-interest waivers to work for Mid Central, and will now have to have conflict-of-interest waivers to be able to work for Core); the Mid Central Board is liquidating their assets (even though $1.4 million in tax-payer money is still owed to our long-suffering public).  Please see Cory Heidelberger's article at Dakota Free Press for a fuller experience of how deep it's getting piled.  Again...

Meanwhile, no one's come forward yet to untangle the following mysteries:
(1) Who called Nicole's cell phone in the middle of the night, right before the fire?
(2) Why did Mid Central Educational Co-op, which owned the Westerhuis cell phones, cancel them and wipe the records the next morning, before the ashes from the arson had even cooled?
(3) What did Mid Central Educational Co-op Director Dan Guericke talk about with Scott Westerhuis for an hour on the evening before the tragedy?  (Guericke told the board the two really didn't talk about much at all.)
(4) What happened to the Westerhuis safe, which trotted out of the house like a trained pig right before the house was torched?

Yes, there's going to be a trial of 3 Mid Central employees, including Director Guericke.  Maybe the questions will be answered then...  But I'm not holding my breath.  Will keep you posted.

Cannabis Plant.jpgThe other big news of the week hearkens back to last year, when the Flandreau Santee Sioux Tribe reversed course on opening America's first Tribal Marijuana Coffee Shop, and burned the whole crop in November.  (They had been warned that they were going to be raided by federal officials.)  AG Jackley was suspicious that they hadn't burned it all, and talked about charges.  And he did.  He charged Colorado marijuana industry consultants Eric Hagen and Jonathan Hunt for helping the tribe set up their grow room, etc.  (BTW, State AGs can’t prosecute non-Indians for crimes on reservations, but Jackley argued that his office had jurisdiction to prosecute victimless crimes committed by non-Indians.) Hunt rolled over and pled guilty but Hagen went to trial: and was acquitted by a jury. (Hagen testified that he was simply a consultant with experience in the industry who had been hired by the tribe, and apparently the jury agreed with him.) Marty Jackley was restrained, saying that he respected the jury's verdict.  (See the Argus Leader article for more details.)

Many people believe that the reason Jackley pursued this lawsuit was because he and current SD Rep. Kristi Noem (R) are going to duke it out for the South Dakota Governor's Office next year, and he's trying to get out front on the law & order issue. (Most of us think taxes and health care would be more salient...) But, as we move into yet another election year, the questions pile up:
Will GEAR UP! come up?
Will crop insurance?
Will marijuana?
Will riding horses?
Will let you know.

Meanwhile, a friend just told me that a forrmer public works director (no names were named) said that South Dakota doesn't really need federal money for infrastructure, because driving on bumpy roads isn't all that much of an inconvenience. My friend pointed out that tourists might disagree & he said tourism doesn't impact the state economy that much...

Crazy Horse Memorial - Photo by TBennert on Wikipedia
Mount Rushmore
Mount Rushmore - Wikipedia
Badlands National Park - Wikipedia
Black Hills -Needles-31.jpg
The Needles - photo courtesy of
Doug Knuth - https://www.flickr.com/photos/dknuth/7677770944/
Wikipedia

Bear Butte - photo courtesy of
Jsoo1, as English Wikipedia image: en:Image:Bearbutte4.jpg

Main Street Sturgis South Dakota Bike Week.jpg
Sturgis motorcycle rally - Photo courtesy of
Cumulus Clouds, Wikipedia
Are our public officials TRYING to run our economy into the ground, or are they just stupid?

More later, from South Dakota, where we talk like Mayberry, act like Goodfellas, and the crazy just keeps on coming.

 Goodfellas.jpg


6 comments:

janice law said...

Remind us what GearUp was supposed to accomplish- the case is getting so baroque I have forgotten! Do keep us posted.

Eve Fisher said...

I updated it Janice - (GEAR UP! is a federal grant program to get financial assistance to low-income students; here in SD it's primary aim was supposed to be helping Native American students.) It is baroque. I'm still shaking my head over a board saying, "well, how were we supposed to know they were doing so much illegal stuff?" Try reading the financial statements? Sigh...

B.K. Stevens said...

Fascinating information, Eve--and I love your Mayberry/Goodfellas juxtaposition. By the way, you should include the waterfall in your new city in your list of tourist attractions. It's not Niagara, true--I grew up in Buffalo, so I'm in a good position to compare the two--but it draws some tourists, too.

Eve Fisher said...

Yes, B.K., I should have put up Sioux Falls itself. And you're right, it does get tourists. We get a LOT of tourists in South Dakota! Now if we can just convince our public officials of that...

Leigh Lundin said...

Eve, I find your exposé articles interesting! I'd never know otherwise.

Barb Goffman said...

You're spot on, Eve, about figuring things out by analyzing an entity's expenditures. As one of my journalism professors once said, follow the money.