GEAR UP Money Spent On Waterparks, Starbucks, Casinos And More

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Our KELOLAND News investigation has been following the GEAR UP money for nine months.  Now, new evidence being introduced in the case against former GEAR UP leader Stacy Phelps gives us more specifics on exactly where the grant money – your tax dollars – went.

KELOLAND’s Angela Kennecke has been investigating the program since Scott Westerhuis killed his entire family before turning the gun on himself last September.  She has new details from court documents about how your money was being spent by the American Indian Institute for Innovation.

You’ll remember that last May, we spoke with a former GEAR UP worker who told us about federal grant money being spent on fancy meals and big shopping sprees at places like Sam’s Club.  

The new evidence of American Indian Institute for Innovation receipts, being introduced by the attorney general’s office outlines some $240,000 in what prosecutors say was personal spending by Stacy Phelps of GEAR UP money.

Notice of Intent Introduce Phelps

It includes tens of thousands of dollars in charges to steakhouses and big box stores. Transactions by AIII from October of 2011 through September of 2015 add up to $88,000 in restaurant charges, and $258,000 in other charges for a total of $346,000 in spending by the organization. 

While prosecutors are not saying all the spending was personal, much of it appears to be very questionable at the least.

We dug through the 2,000 transactions and found out where else GEAR UP money was going.

Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5

Prosecutors highlighted meals, consumer goods, electronics, gas, and personal vehicle maintenance in the evidence of personal spending by Stacy Phelps.

There was a lot of GEAR UP money going to places that wouldn’t necessarily help prepare Native American students for college – l
ike the Golden Buffalo Casino in Lower Brule. AIII had 45 receipts that it classified as “Travel and Meetings,” totaling $3,264.  

AIII made 6 charges at the Mystic Lake Casino near the Twin Cities for a total of $434. At just one trip to the Rosebud Casino, AIII charged $136.  

All casino trips were listed as “Travel and Meetings.” 

All that travel added up to $14,500 in hotel rooms over the four year period. There were 3 charges to Starbucks for $153 dollars, which AIII said was for “supplies.” 

It appears thousands of dollars were spent on field trips for Native American students, for as far away as Denver. AIII spent $2,000 of GEAR UP money in 2013 at a Colorado I-Max Theatre. There were two transactions to Water World in 2013 in Denver for $4,912. In 2012, nearly $2,000 was spent at the Denver Zoo and the Denver Museum of Natural History. All of these transactions were listed as “supplies.”

There was also money spent on attractions closer to home.  AIII spent $1,000 on “supplies” at Bear Country in 2012; and $645 at Reptile Gardens that same year.

Email transactions between Phelps and Westerhuis may shed some light on how the two conspired to keep the spending hidden from others. You may remember former Director of Indian Education Keith Moore and former Secretary of Education Rick Melmer were highly paid consultants for GEAR UP. 

In an email exchange in February of 2014, Phelps tells Westerhuis that “Keith is asking way to (sic) many questions,” and says, “These guys are going to go back and be scared of these things.” 

Westerhuis replies, “Ya don’t give out our plan!”

Phelps also says “Rick is soft selling” something and “trying to defer the conversation.” But there is no way to determine what that means.

Westerhuis and Phelps also emailed each other about how TIE is going to fight back even more now.  Technology and Innovation in Education is headed by former Board of Education member Julie Mathiesen, who just resigned her position due to the new conflict of interest law in the state.  What TIE was going to fight isn’t specified. 

Phelps is facing felony charges of falsifying evidence.  The Attorney General’s office says the misappropriation of funds and unchecked spending would have been stopped by a legislative audit and avoiding that audit was the motive for Phelps to change and backdate a contract for AIII. 

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