Day two of the GEAR UP hearings are underway at the Charles Mix County Courthouse in Lake Andes. On Thursday, the state is calling witnesses in the cases of former Mid Central Director Dan Guericke and American Indian Institute for Innovation leader Stacy Phelps. Both are accused of altering contracts to avoid audits of grant money that went to the American Indian Institute for Innovation.

Two South Dakota Department of Criminal Investigation agents testified in court today. They testified about email exchanges over the contracts the two are accused of backdating and their interviews with Guericke and Phelps. The emails were sent from Scott Westerhuis to Phelps to sign and date the documents after the date that was on the contracts. Phelps told investigators Scott Westerhuis told him to sign and backdate the contracts and he didn’t know it could prevent AIII from being audited.

Timeline: Follow The KELOLAND News GEAR UP Investigation From The Beginning

Phelps asked DCI agents if he could get in trouble for backdating contracts towards the end of his interview with them. Guericke also told DCI agents he backdated contracts because Westerhuis told him to because state auditors were asking for them. Guericke asked the DCI agents if it was wrong.

Phelps’ spending on personal vehicles using AIII money also came up in agent testimony, including one for two $800 iPhones bought from Best Buy.  An agent testified that Phelps spent nearly $5,000 in AIII money on tires and repairs to several personal vehicles. Phelps told agents, while he had a company car, he also used his personal vehicle for AIII business.  

Agents testified there was a lot of money spent at Loaf ‘N Jug to fill up AIII staff vehicles.  Phelps also told agents if the GEAR UP grant wouldn’t cover meal expense for himself and AIII staff, AIII money would be used to pay it. Phelps told agents there wasn’t much oversight at AIII and it was “pretty loose.” But Phelps also said to agents that he didn’t use his AIII credit or debit cards for personal expenses, but later said if he did it was by mistake. 

Astronaut John Harrington, who is an AIII board member, will testify this afternoon over the phone from Idaho.

Angela Kennecke is in the courtroom following the testimony. Follow along with the case with Angela on Twitter and Facebook.