First Drafts Of State GEAR UP Reports Completed

SIOUX FALLS, S.D. - We have an update tonight on a financial report that we've been waiting for on the GEAR UP grant funds for nearly a year.

South Dakota Auditor General Marty Guindon tells KELOLAND News that the field work for the Department of Legislative Audit Special Review, which followed the millions in grant money through Mid Central into nonprofit organizations, is now complete. He added that the 2015 single audit of Mid Central Educational Cooperative is also done. 

Guindon said the first drafts of the reports are done, but the fact checking by his department is still ongoing. Guindon doesn't have a time frame for when those reports will be released, but plans to release them both at the same time. 

Ten months ago, the South Dakota Department of Legislative Audit issued a searing report within its single audit of the state for 2015 regarding the Department of Education and Mid Central Educational Cooperative in Platte.

That report found that DOE exposed itself to increased fraud, waste and abuse of GEAR UP and other federal grant funds by not having the proper controls in place to make sure that grant rules were being followed.

The American Indian Institute for Innovation took $1 million in GEAR UP grant money and the Department of Legislative Audit says according to federal law, AIII should have been audited every year since 2012, but it was not. 

Stacy Phelps, former head of AIII and Dan Guericke, former director of Mid Central are both facing felony charges, accused of altering contracts to avoid such an audit.

Former Mid Central Assistant Business Manager Stephanie Hubers is accused of helping Scott and Nicole Westerhuis steal more than $1 million in grant money and taking hush money to keep quiet. All three are awaiting trial in March. 

Mid Central Business Manager Scott Westerhuis killed his family before turning the gun on himself in September 2015 after learning the state was pulling its contract with Mid Central after an audit turned up misuse of grant funds. 

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