Two college students representing nearly 7,000 Native American students want someone to be held accountable in the GEAR UP Scandal.

Our KELOLAND News investigation found that despite tens of millions of dollars spent on the college readiness program, no data was kept to show it resulted in a single student going to college.

Alyssa Black Bear was a student at Todd County High School where GEAR Up was supposed to be administered.

Kelsey Walking Eagle-Espinosa attended the summer GEAR UP program when it was held at the School of Mines.

Both young women actually did end up in college, but say it was not due to GEAR UP.

Walking Eagle Espinosa’s mother told KELOLAND Investigates in 2015:

“All the Native American children that didn’t benefit anything from it. And we’re not thinking just hundreds of dollars–we’re thinking millions of dollars that probably could have put a lot of our Native American children into colleges across the state,” Starr Walking Eagle said.

The young women’s lawsuit went after the now-defunct Mid Central Educational Cooperative, its leaders and board. The American Indian Institute for Innovation, formerly led by Stacy Phelps and the estates of Scott and Nicole Westerhuis are also listed in the lawsuit.

However, Circuit Court Judge Bruce Anderson ruled federal law doesn’t allow students to sue for breach of contract or malfeasance because the GEAR UP grant fell under the Higher Education Act.

“We are not claiming that the students claims arise under the higher education act,” students’ attorney John Hinrichs said.

Chief Justice Gilbertson: I guess theoretically you could have the federal government seeking their money back. The state might be on the hook and seek their money back; now your clients.  You could potentially have three different parties seeking the dollars.

Hinrichs: That’s correct.

Mid Central Attorney Ryland Deinert pointed to an audit commissioned by the educational cooperative following the scandal.

“From 2013 to 2015 with their audit, Eide Bailly found that no GEAR UP funds were missing,” Deinert said.

But as KELOLAND Investigates first reported, that audit did not show how the money was spent.

Justice Patricia DeVaney: Wasn’t the response to that though, it didn’t take into account how the flow of dollars actually went? That there were certain amounts advanced each month?

Deinert: There was. $50,000 was the automatic fund advanced each month.

“We have an effort by Mr. Westerhuis and Mr. Phelps to shield AIII from an audit, from both the state and federal government so that whatever is occurring at that level cannot be investigated or detected,” Hinrichs said.

“There are wild allegations there were hotels and things like that. But the South Dakota Department of Education and the U.S. Department of Education allowed that. There’s no finding of that at all. We have innuendo of this inappropriate spending,” Deinert said.

In 2016, KELOLAND Investigates reported the State Division of Criminal investigation had evidence Phelps spent some $240,000 in federal grant money living the high life and that he and Scott Westerhuis worked together to hide that spending from authorities.

“The people who were responsible for reporting those expenditures and documenting those expenditures up the chain to the South Dakota Department of Education are the very people who are implicated in the wrong doing,” Hinrichs said.

“To this day, we have seen no evidence that any GEAR UP funds were actually improperly utilized or stolen, or used. Admittedly, according to Auditor General Guindon, $1.3 million was stolen from Mid Central. But that was their own funds. It wasn’t GEAR UP funds,” Deinert said.

In the criminal cases, juries acquitted both Stacy Phelps of AIII and Stephanie Hubers of Mid Central. 

Former Mid Central Director Dan Guericke pled guilty to backdating contracts.

The South Dakota Supreme Court will make the decision on whether the students’ civil lawsuit can proceed in state court at a later date.