GEAR UP Trial Latest: Phelps Found Not Guilty On All Accounts


The last defendant in the GEAR UP case has been found not guilty on all four accounts.

A Minnehaha County jury returned that verdict against Stacy Phelps at around 10:30.

Phelps had been accused of backdating contracts to stop a state audit into the American Indian Institute for Innovation, which he led. 


Jurors in the latest GEAR UP trial have reached a verdict.

The group from Minnehaha County has listened to testimony in Stacy Phelps' case for several days.  After hearing closing arguments Thursday morning, the jury began deliberations around 1:30 p.m.

Court is scheduled to reconvene at around 10:25 for the verdict to be read.  Phelps is facing two counts of falsification of evidence and two counts of conspiracy to offer forged or fraudulent evidence. 

KELOLAND's Angela Kennecke will be in the courtroom; look for updates on this story once court resumes. 

UPDATED: 2:32 p.m. 


The fate of Stacy Phelps and the GEAR UP trial is now in the hands of the jury.

In its closing arguments Thursday, the State said while Dan Guericke was duped, Scott Westerhuis and Phelps we're both "in on it."

Phelps allegedly changed his story several times while being interviewed by investigators on why contracts were changed.

Prosecutors said the evidence shows Westerhuis and Phelps conspired to deceive their own AIII board members. Prosecutors say they don't believe Phelps knew about Westerhuis' theft -- but he had secret income from secret contracts that the board didn't know about and that was his reason to forge a contract. 

The jury was instructed that backdating is not always a crime if it is a complete and accurate representation of the original description of the document. During the trial, Phelps admitted that terms of the contracts were changed from the originals.

Phelps is accused of conspiring with Westerhuis to backdate contracts to stop a state audit into American Indian Institute for Innovation's finances.  Phelps is the former head of AIII, which received GEAR UP grant money to run the programs in schools across the state.

During this trial, Phelps' lawyer portrayed Westerhuis as the mastermind of the scheme. In closing arguments, Dana Hanna told the jury, "This case is about trust and betrayal of that trust." Hanna said that Phelps trusted Scott Westerhuis, the business manager of Mid Central Educational Cooperative and chief financial officer of AIII. Hanna told jurors,"Stacy Phelps trusted Scott Westerhuis just like everybody else who kew him, until he blew himself and his family away with a shot gun."

Westerhuis killed his family and himself in Platte in September of 2015, after the South Dakota Department of Education decided to end its contract for the GEAR UP grant with Mid Central after an audit turned up problems. 

Hanna said prosecutors failed to prove that Phelps intended to help Westerhuis offer fake evidence in a state audit. Hanna said Phelps was a great leader when it came to helping advance the education of Native American students, but a poor leader when it came to financial management because he knew nothing about financial matters."Stacy Phelps had a secret enemy: Scott Westerhuis attacked his weak spot and destroyed AIII and Phelps' lifelong dream," Hanna said. . 

Hanna also said in closing arguments that if not paying attention was crime, former Secretary of Education of Melody Schopp and the Department of Legislative audit should be on trial. 

Attorney General Marty Jackley told jurors in final arguments that the altered contracts that Phelps' admitted to backdating are direct evidence in the case. "Stacy Phelps knowingly and intentionally engaged in a cover up with Dan Guericke and Scott Westerhuis and got caught," Jackley said. 

Last month former Mid Central Director Dan Guericke plead guilty to one count of falsifying evidence and testified for the state in Phelps' case. 

KELOLAND's Angela Kennecke is monitoring developments at the Minnehaha County Courthouse; we'll update this story as new information is reported.


10:32 a.m. 

A Minnehaha County Jury hears closing arguments in the latest GEAR UP trial on Thursday morning.

Defendant Stacy Phelps is the former head of the American Indian Institute for Innovation, which received GEAR UP grant money to run the programs in schools across the state.

Phelps is accused of conspiring with Scott Westerhuis to backdate contracts to stop a state audit into AIII's finances. 

KELOLAND'S Angela Kennecke has been in the courtroom throughout the trial.  Look for updates here as the jury deliberates. 

You can view a timeline of the GEAR Up Scandal here

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