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May 30, 2017 05:00 PM

Prosecutors Submit Special Audit as Evidence In GEAR UP Trial

Lake Andes, SD

In March, KELOLAND News investigates reported that Microsoft Software called DreamSpark could be central to the state's case against Dan Guericke. 

The software was supposedly donated by Microsoft and valued at $4 million over a two-year period. That amount was then used as the state's match to get the federal money.
  
During the hearing over which evidence would be allowed in the case, Guericke's attorney Mike Butler told the judge that he didn't think a jury needed to hear about the software issue, calling it implication and innuendo. 

"The Microsoft issue has nothing whatsoever to do with if my client knew what Mr. Westerhuis was up to. It's the proverbial red herring. They said today, 'We're still looking for students that are using it.'  It's right under their nose. All the evidence appears to be hiding in plain sight," Guericke Defense Attorney Mike Butler said on March 16.  

Yet the South Dakota Auditor General's report found that the Microsoft DreamSpark program was not used in the GEAR UP summer program at the School of Mines, nor was it used in at least half of the GEAR UP schools. 

In 2015, then-Mid Central Director Dan Guericke was asked by members of the Government Operations and Audit Committee which students actually used the expensive software:

"What we didn't, as I'm understanding the finding, we did not record as to which student, which software went to, because it varied somewhat as to what schools they were in.  All the schools had access to all of it. But we did not record which piece of software went to which student," Guericke testified to GOAC on August 25, 2015.

The Department of Legislative Audit found no evidence that the software was used in the program at all and that means the $4-million match was unsupported.

The State contends that the lack of record keeping provides motive for Guericke to backdate contracts to avoid future audits of the GEAR UP program. 

Meanwhile, Mid Central's response to the special review is being submitted in support of evidence from the State against former assistant business manager, Stephanie Hubers. 

Hubers' defense asserted that Mid Central management and its board of directors knew about the Westerhuises diverting money from Mid Central to bankroll the American Indian Institute for Innovation, as well as more than $50,000 in payments to Hubers. 

Only Mid Central contends it didn't know about the arrangements, or the so-called "hush money" paid to Hubers to keep quiet about the Westerhuis' scheme. 

The auditor's report says the unapproved entries were buried in audit books and budget reports and were not "necessarily" easy to see.

For eight years, Mid Central Auditor Randy Schoenfish found so-called "red flags" in his reports.  He met with Guericke, the Westerhuises and Hubers over the issues, but not with members of the board.  

Now another big question goes back to the MIcrosoft software and whether or not the State will have to pay back the $4 million it received in grant, because it didn't have the proper match.  The South Dakota Department of Education tells KELOLAND News that the Microsoft match issue has been resolved with the U.S. Department of Education.           
Still, that doesn't mean that at the end of the grant period, which is up in 2018, the feds won't require the State to pay some, if not all of the GEAR UP money back. 

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