Two days after Burlington College announced its closure, a member of the board of trustees told local media: “I have heard that federal people have been asking questions” about $10 million in loans secured by Jane O’Meara Sanders, former president of the college and the wife of presidential candidate Bernie Sanders.
Tom Torti, secretary of Burlington College’s board of Trustees, tells Heat Street that while he has not personally been contacted or interviewed by federal authorities, he has heard talk of an ongoing probe. He declined to name his sources, adding that rumors abound in a small community and that federal investigations are less transparent than they should be.
In 2010, Ms. Sanders sought $10 million in tax-exempt loans on behalf of Burlington College so it could buy 32 acres of land from the Roman Catholic Diocese, which was selling the property to help offset the costs of a sex-abuse settlement.
In the loan documents, Sanders repeatedly claimed Burlington College had received more than $2 million in firm fundraising pledges commitments. Those commitments were crucial to securing the loan. But after Burlington received the loans and bought the land, much of that money never materialized, and the college quickly fell behind on its financial obligations.
As Heat Street has reported, Vermont Catholic parishioners sent a letter in January to the U.S. attorney in Vermont and the inspector general of the Federal Deposit Insurance Corporation, calling for an investigation into whether Ms. Sanders had committed federal bank fraud by misrepresenting the college’s fundraising commitments to secure loans for a land purchase.
Defrauding a bank is a federal crime, punishable by up to $1 million in fines and 30 years in prison.
Brady Toensing, the lawyer who sent the request for investigation on behalf of Vermont parishioners, is also vice chair of the Vermont Republican party. Ms. Sanders’ husband is running for the Democratic nomination for president.
Ms. Sanders resigned from Burlington College in September 2011, taking with her a $200,000 severance package.
The debt assumed under Ms. Sanders’ leadership continued to cripple Burlington College, prompting the regional accreditation agency to put it on two-year probation in 2014. The college said in a news release Monday that these financial problems were “insurmountable at this time,” so it would close before it lost its accreditation altogether in January 2017.
Burlington College’s spokeswoman, Coralee Holm, said by phone Wednesday that she could neither confirm nor deny an ongoing federal probe. “I have no idea what [Torti] said or why he said it,” Holm told Heat Street. “Mostly, my trustees are supposed to not be talking to the media.”
Board member Karrin Wilks said she didn’t know whether or not the federal government was investigating. Other board members could not be reached by deadline.
U.S. attorney Eric Miller had confirmed to Heat Street earlier this year that he had received the letter requesting an investigation, written by the vice chair of the Vermont Republican Party on behalf of Catholic parishioners.
“The only thing I’m able to tell you is that, as a general matter, our office does not comment on general requests to conduct criminal investigations,” Miller told Heat Street.
The Roman Catholic Diocese in Burlington, which sold the land underwrote a $3.65 million loan to Burlington College under Jane Sanders’ tenure, had no comment about reports of an investigation, a spokeswoman said Wednesday.
A spokesperson for People’s United Bank, which loaned Burlington College $6.7 million, wrote in an email, “Our policy is not to comment on any law enforcement investigations.”
Neither Ms. Sanders nor the Sanders campaign immediately responded to emailed requests for comment sent by Heat Street. A Sanders spokesperson earlier said that the allegations of fraud were “recycled, discredited garbage.”
Torti, the board member who said he’s heard about a possible investigation, said Burlington College had received undue attention because Bernie Sanders’ bid for the presidency.
“To make this a political issue is not fair,” Torti said. “I think it’s disrespectful to the former president who, along with the board, had a real vision for what Burlington College could become. …. We were really close to having our house in order, but we ran out of runway.”
— Jillian Kay Melchior writes for Heat Street and is a fellow for the Steamboat Institute.