PIERRE, S.D. - Evidence of the misuse of GEAR UP grant funds is mounting against former Mid Central Educational Co-op Director Dan Guericke. Prosecutors say that evidence shows Guericke’s motive for backdating contracts to avoid a government audit.
The State says Guericke's own testimony before lawmakers, as well as in an email exchange between Guericke, Phelps and the State Department of Education, are part of the evidence against him.
We're also learning about secret contracts that appear to be illegal.
Attorney General Marty Jackley has now introduced into evidence Guericke's testimony in the summer of 2015 before a legislative committee.
That testimony followed an audit which found a number of accounting problems with the GEAR UP grant. In the testimony, Department of Education staffer Tamara Darnall told the legislative committee that for the most part, the issue had all been resolved.
KELOLAND News asked South Dakota Secretary of Education Melody Schopp about that last November.
AK: Your Director of Finance, Tamara Darnall, testified to the South Dakota Government Operations and Audit committee on August 25th and I want to quote this---"That for the most part all findings had been resolved." She was referring to the audit of Mid Central and the GEAR UP program in 2014. Less than three weeks later you pulled the plug on that contract with Mid Central. What happened during those three weeks, from the time everything has been resolved to you pulling the plug?
"We had a second round of preliminary audit findings we were reviewing and even though we had resolved many of those issues in the first audit, we continued to see some of the same issues arise in the second audit," Secretary of Education Melody Schopp said in a November 2015 Interview with KELOLAND News.
Now we have evidence of what some of those issues were. Dan Guericke told that same committee that of the students in the GEAR UP summer program, 98 percent graduate from high school and 95 percent go on to post-secondary education. But when Pierre reporter Bob Mercer asked for that data, Guericke didn't have it and emailed Stacy Phelps and Brinda Kuhn asking for the statistics.
Stacy Phelps replied the number is more like 80 percent and Guericke forwarded Phelps' email to Tamara Darnall in the Department of Education.
Darnall then asked for the actual numbers and continues to press Guericke for them, saying "the longer we wait to respond to Bob, the more it looks like the numbers are being made up.
She also asked Guericke where he got the number he quoted before the committee and Guericke tells her from presentations made by Phelps.
Stacy then promises Guericke the data spreadsheets and Guericke asks Stacy if he was quote, “very far off in what I said at the committee?
Our KELOLAND News investigation showed that annual GEAR UP reports to the Department of Ed didn't back up that number and there was little data kept to show how many GEAR UP students were going to college.
The State also alleges that over a six year period, Guericke signed 17 contracts on behalf of Mid Central worth $3.8 million, without getting approval from Mid Central's board as required by law.
As KELOLAND News reported back in February, the PAST Foundation out of Ohio was the third biggest recipient for getting GEAR UP money from Mid Central over a two year period; with a half million dollars going to the organization. It turns out the organization got a lot more than that. Three secret contracts to PAST, that never went before the board, total $1.6 million dollars.
Three of those secret contracts also went to GEAR UP evaluator Brinda Kuhn, who hung up on us the last time we tracked her down at her Rapid City consignment shop called Booty & Loot. Those contracts to Kuhn were worth another $262,365 dollars. KELOLAND News previously reported from the contracts we knew about, that Kuhn got more than $1 million in Mid Central Money.
There was also a secret contract with the Rural Learning Center for $160,000 in 2009. The Rural Learning Center in Howard is out of business. There were also several secret contracts to Phelps' American Indian Institute for Innovation, including two to Stacy Phelps and AIII employee Jay Roman. In those, Phelps got $65,000 for working 130 days and Roman got $80,000 for working 200 days, for a total of $290,000.
Finally, there were three contracts awarded to the University of South Dakota for nearly $1 million dollars that didn't go through Mid Central's board for approval.
Jackley also says Guericke was unable to tell the legislative committee how many students used a Microsoft software program that was a match to the grant and the lack of documentation could mean that South Dakota may have to pay the feds back $4 million.
Prosecutors say the evidence shows Guericke's intent and motive to falsify evidence and forge documents.
The State says Guericke backdated contracts to cover up his own and Mid Central's handling of public funds.
GEAR UP was on the legislative committee’s next agenda, but then the Westerhuis murders occurred.
Guericke spent more than an hour on the phone with Scott Westerhuis the evening before the tragedy and when the board questioned him about what was said, sources tell me that Guericke told them the two really didn't talk about much at all.