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August 30, 2017 06:05 PM

Lawmaker Says State Withholding Info From Feds Is Fraud


Does Governor Dennis Daugaard need to step up and admit to the federal government that South Dakota took taxpayer dollars fraudulently and needs to pay it back?

That's what one state senator says needs to happen in the GEAR UP case.

Here's what you need to know:  DreamSpark is a Microsoft program that gives students the tools to build a game, design an app or launch a project. Licenses to use it were donated to GEAR UP.   Scott Westerhuis claimed they were worth $2 million. But a legislative audit found they were only worth $250,000 a year. 

Department of Education Finance and Management Director Tamara Darnall testified before the Government Operations and Audit committee in 2015 that state auditors got it wrong and at the time Dan Guericke told the committee that the schools used the software, but they didn't record who got it. 

In the end the U.S. Department of Education accepted the inflated valuation and allowed the match, which meant South Dakota got to keep $4 million in federal funds.
But the latest special state audit on Mid Central found no records that the software was never used in the GEAR UP program. Now the feds could ask for their money back. 
However, one state senator says it's time for the governor to step up and admit South Dakota was wrong. 

“They need to be able to say, 'We did something wrong. We have to take responsibility for it; and if it costs the state some money--so be it," Tapio said.

Senator Neal Tapio of Watertown is on the GOAC Committee.  He says he was troubled by Secretary of Education Melody Schopp's testimony in July about the state getting away with an inflated valuation for a software program never used in GEAR UP. 

“The U.S. Department of Education thought that series of emails back and forth has accepted and resolved that finding in both the 2014 and 2015 audit for the valuation of the software," Sec. Schopp said on July 24, 2017 before GOAC.

In that series of emails, DOE finance director Tamara Darnall told Mid Central Director Dan Guericke to "take a quick minute to do a happy dance."  Tapio is now asking Governor Daugaard to admit to the feds the Microsoft software is no match. 

“This rises to the level, the governor needs to have involvement in this issue. There was fraud; there was a cover-up and I believe somebody should be dismissed because they placed; they signed their name to something that wasn't accurate," Tapio said.

It's Darnall's name on those emails. 

“Way too many state employees knew what was going on; in my opinion and they looked the other way and they hid and they tried to pass it off. Secretary Schopp passed it off saying the Department of Education accepted this valuation; when we knew there was no way to document that valuation,” Tapio said.

The state says it was up to Mid Central to provide that documentation and Mid Central claimed that it was destroyed in the fire at the Westerhuis property.  The state has filed a lawsuit against Mid Central and the school districts that belonged to it, in case the feds ask for their money back.  KELOLAND News asked Governor Daugaard’s office about Tapio's request and his Chief of Staff Tony Venhuizen responded in an email that: “The U.S. Department of Education already knows what is going on with this situation.  There is no reason to tell them what they already know.”

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