Murder-Suicide Tragedy May Have Roots in Nonprofit Conflicts and Embezzlement

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October 2, 2015; Argus Leader (Sioux Falls, SD)

Platte, South Dakota, is a town of 1,250 residents that suffered a tragedy in September when Scott Westerhuis came home from work, killed his wife and four children, set the house on fire, and then committed suicide. Everyone in town knew the family and were shocked at the loss of six popular and well-respected residents. It’s only natural to ask why such a thing could have happened. The answer may involve many people, federal grant money, and a tangled web of personal and professional relationships.

Westerhuis was the business manager for the Mid Central Educational Cooperative (MCEC), a public nonprofit formed by rural school districts in the region to pool resources for special education services and other school district programs. As both a 501(c)(3) and a state-recognized local education agency (like a school district), MCEC was selected to administer the state’s federal grant award under the “Gear Up” program. Gear Up programs are designed to assist Native American youth to prepare for success in college or other postsecondary education, and may include income-based scholarship support.

The day before Scott Westerhuis killed his family and himself, the state’s education department informed MCEC that it would not receive over $4 million in Gear Up funds for the coming year due to accounting concerns about Gear Up funds already spent by MCEC. Westerhuis’s boss was quoted as saying the potential grant problems would not have placed his job in jeopardy.

However, subsequent reports indicate that there may be a lot more to the story. South Dakota’s attorney general and governor have both indicated there will be an investigation of MCEC’s finances. MCEC itself has ordered a forensic audit.

Westerhuis and his wife both worked for MCEC. Westerhuis also founded two nonprofit organizations that received Gear Up funds from MCEC. Westerhuis’s wife was the business manager for one of the two nonprofits. Federal grant funds were apparently used to build a $900,000 gymnasium/dormitory/meeting hall adjacent to Westerhuis’s home on land owned by Westerhuis in rural Platte. The executive director of one of the two nonprofits founded by Westerhuis was, until he resigned last week, a member of the state’s board of education and also a former partner of Westerhuis in a consulting practice. One of the key contractors paid by MCEC using Gear Up funds is a former SD Secretary of Education who currently runs a consulting practice in the state. In addition, a consultant hired by the state to evaluate Gear Up in 2009 was also an MCEC contractor “making hundreds of thousands of dollars over several years.”

Nonprofit conflicts of interest are sometimes difficult to manage, and seldom more difficult than in rural communities where small populations make multiple business and family relationships all but inevitable. The question is how well MCEC documented and managed its conflicts to the benefit of its various stakeholders. The tragedy in Platte, South Dakota underscores the need to be especially vigilant precisely when things seem to be going well and everyone knows and trusts everyone else. Circumstances can change—drastically and tragically—in an instant.—Michael Wyland