Evidence Of Alleged Embezzlement Reviewed In GEAR UP Hearing

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A family murdered, the parents were accused of embezzling up to $2 million in grant money. Now, three people who were closely connected to the Scott and Nicole Westerhuis, the Mid Central Educational Cooperative and GEAR UP grant are all charged in the case.
 
Those involved in the case met in a Charles Mix County courtroom in a hearing to determine what evidence and testimony will be allowed when the three defendants go on trial in a few months. We learned Wednesday about what was going on at Mid Central Educational Cooperative while Scott Westerhuis was business manager. 

Timeline: Follow The KELOLAND News GEAR UP Investigation From The Beginning

Katie Deneui worked at Mid Central from 2010 to 2014.  She was ready to take a new job and got emotional when she talked about telling Scott Westerhuis that she was going to quit. 

“He said he was extremely disappointed; he was trying to build a team and he made me feel like I betrayed him,” Deneui said on the stand.

Deneui told Westerhuis more money would help, so he began paying her an extra $1,200 a month for a total of $48,000 before payments stopped in 2014. He had also been paying Administrative Assistant Catrina Brown an extra $500 a month from the American Indian Institute for Innovation.

Both women say they didn’t have any extra duties to do for AIII. When Westerhuis stopped the payments, he said it was because AIII got a new board of directors and he didn’t want to explain the payments to them. 

The defense for former Mid Central Assistant Business Manager Stephanie Hubers says that shows others were paid by AIII like she was and that she didn’t do anything illegal. Prosecutors say Hubers’ case is different. 

“You heard me ask the question, so that’s why you haven’t been charged and the witness said that’s correct. And so at this point we view those type of witnesses differently,” Attorney General Marty Jackley said.

Deneui testified that she thought it was wrong how there would be unbelievable charges for a company car and that 300 inner tubes were purchased by Westerhuis for GEAR UP.  She quit shortly after the payments stopped.

When long-time auditor Randy Schoenfish took the stand, he said he questioned Mid Central bankrolling of AIII and another Westerhuis organization, the Oceti Sakowin Education Consortium. The educational cooperative was owed between $300,000 and $400,000 a year. He brought those red flags to former Mid Central Director Dan Guericke, Hubers and Scott Westerhuis, but says he doesn’t know what they did with that information.  

Also introduced into evidence was a spreadsheet created by Hubers that showed AIII owed Mid Central $726,000. Prosecutors called it a secret journal, but Hubers’ defense argued that it was listed in the educational cooperative’s minutes and audits that AIII owed Mid Central money. 

Jackley also brought up overvalued software that mentioned in the legislative audit that first found the problems with GEAR UP. In a document reportedly from Microsoft but signed by Westerhuis, the value was listed at $2 million dollars. However, the retail price was listed at $500 online.  

There was testimony today by witnesses that the U.S. Department of Education could potentially take issue with relating to the $4 million and that could affect the South Dakota Department of Education. According to Jackley, they could ask for that money back.

An auditor also testified about 17 contracts that went through Mid Central but were not approved by the board. That would be illegal. They were, however signed by Guericke. 

The testimony will continue in Charles Mix County on Thursday, beginning with Astronaut John Harrington, who will be testifying via phone. A previous KELOLAND News investigation looked into the role Harrington played as a board member of AIII.

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