Posted on 04/19/2016 7:10:31 AM PDT by COUNTrecount
Catholic parishioners want Bernie Sanders’ wife Jane investigated for federal bank fraud Letter stems from her time at Burlington College Diocese sold land to Burlington College—and the college defaulted on the loan that enabled it to buy the property, costing the diocese more than $1.5 million Parishioners say Jane Sanders may have knowingly misrepresented college’s fundraising commitments to get loans for the land Lawyer representing parishioners is vice chair of the Vermont Republican Party
Catholic parishioners in Vermont want Bernie Sanders’ wife investigated for federal bank fraud, according to a letter sent to the U.S. attorney in January and reviewed by Heat Street.
When Jane O’Meara Sanders served as president of Burlington College between 2004 and 2011, she oversaw an aggressive effort to enroll more students and expand the campus to accommodate a bigger student body. Part of that plan: Taking out hefty loans to finance the $10 million purchase of 32 acres of prime property from the Roman Catholic diocese at the end of 2010.
But Burlington College soon found itself unable to make its loan payments. The Roman Catholic diocese, which had sold off the land to help pay for a $17 million sexual-abuse settlement, ultimately lost between $1.5 million and $2 million, according to the letter calling for investigation, as well as several Vermont media outlets.
The diocese did not respond to a request for an interview. But a source with direct knowledge of the diocese’s involvement in the land acquisition says Burlington College almost immediately struggled to meet its obligations. Advertisement
“It was within a relatively short time after closing [the deal], they were experiencing financial problems that made it impossible to pay the diocese,” the source says, adding that Burlington soon went into default mode on its loan.
Parishioners now say that to secure loans to buy the land, Ms. Sanders misrepresented the amount that had been pledged to the college in its fundraising push.
Brady Toensing, who wrote the letter to the U.S. attorney, is vice chair of the Vermont Republican party. He called for an investigation on behalf of one named Vermont Catholic “and other aggrieved Vermont parishioners.”
The request for investigation notes that defrauding a bank is a federal crime; it’s punishable by up to 30 years in prison and $1 million in fines, according to federal code.
By publication, neither Ms. Sanders nor the Sanders campaign had responded to Heat Street’s detailed query, sent by email.
In a statement to WCAX, the local Burlington television channel, in January a Sanders spokesperson called the allegations “recycled, discredited garbage” and election-year mud slinging.
“These kinds of attacks on family members of candidates are one of the reasons why the American people are so disgusted with politics in America today,” he said.
To finance the diocese land purchase, Burlington College turned to the Vermont Educational and Health Buildings Finance Agency, a state entity that issues tax-exempt bonds to help libraries, health-care facilities and educational institutions.
In the application to VEHBFA, Ms. Sanders claimed Burlington College had received more than $2 million in fundraising commitments and pledges, according to the application.
With VEHBFA’s help, People’s United Bank gave Burlington College a $6.7 million tax-exempt loan, a financing arrangement that “would be governed by the following covenants/conditions,” including “commitment of (at minimum) $2,270,000 in grants and donations prior to closing,” according to a term sheet signed by the bank’s representative, Ms. Sanders and another college official.
An independent analysis conducted by the financial-services firm Public Financial Management Inc., for VEHBFA also notes that the People’s United Bank loan is “contingent upon. . . the minimum commitment of $2.27 million of grants and donations prior to closing,” detailing Burlington’s claims about its unrestricted fundraising commitments.
The bond purchase agreement, loan agreement, and tax certificate and agreement all note Burlington’s representation that it would receive $2.27 million in fundraising commitments, collections and grants. Ms. Sanders signed all three documents.
The diocese also underwrote a $3.65 million loan to Burlington College for the property acquisition. It agreed to give the repayment of its debt lower priority than People’s United Bank after reviewing the claims the college made to VEHBFA and the bank, referencing the bond purchase agreement and loan agreement, both of which include Ms. Sanders’ fundraising commitments.
But it quickly became apparent that Burlington College’s short- and long-term fundraising promises were not being met. In fiscal year 2011—a year when Burlington said it had confirmed pledges of $1.2 million—it raised only $279,000, local news outlet VTDigger.org reported.
The diocese took a big hit on its loan, losing between $1.6 million and $2 million in principal and interest, according to the request for investigation, which includes what it describes as excerpts from the diocese’s financial papers as an exhibit. VTDigger.org drew similar conclusions after examining the diocese’s financial statements in late 2015.
It’s unclear whether People’s United Bank took a loss. Matt Mahoney, the loan officer at the time of the agreement, declined Heat Street’s request for an interview, saying it would be inappropriate to comment. The current regional manager for commercial lending in Northern Vermont did not return repeated phone calls and emails. People’s United Bank has declined to speak to other news outlets on the issue.
A source with first-hand knowledge of the college’s financial situation says Ms. Sanders “absolutely did not intentionally overstate the anticipated funding.”
Burlington received an anonymous bequest, which the college leadership understood would include an immediate cash gift of $1 million, with the possibility of additional future donations, the source says. But the donor backtracked, in part because her investment adviser recommended against it, this person said. Two other potential large donors made promises for significant gifts but “in the end, these simply did not materialize.”
Nonprofit Research Collaborative, which studies fundraising by not for profits, recently surveyed 1,071 nonprofit organizations and asked about their capital campaigns, including schools like Burlington College. It found that typically, 91 percent to 94 percent of fundraising pledges are delivered on, with only 6 percent to 9 percent going uncollected.
“That’s nowhere close to what [Burlington] experienced,” says Diana Newman, executive vice president for the Benefactor Group, which specializes in capital campaigns, endowment building and fundraising. “Bad stuff can happen, and it doesn’t necessarily mean the institution isn’t on the up and up and doing the best it can. But [Burlington] would be a definite outlier.”
Toensing says several parishioners blame Ms. Sanders. “She was the president of the college, and she misrepresented confirmed donations to the bank,” he says. “I don’t see how she couldn’t have known the figures she offered were inaccurate.”
Before coming to Burlington College, Ms. Sanders had been director of youth services for the city of Burlington, appointed to the position by her then-boyfriend, Bernie. Her career also includes stints at Sanders’ campaign and congressional offices and a year as interim president of Goddard College.
Early into her time as Burlington College’s president, Ms. Sanders focused on increasing enrollment. In a current bio, Ms. Sanders advertises “significantly expanding its campus and degree programs.” The purchase of diocese land was a key part of that plan.
Adam Dantzscher, who then served as chair of Burlington College’s board of directors, tells Heat Street that at the time, buying the land looked like a “huge opportunity” for the school to expand its campus on ideal property for a bargain price.
“There were a lot of financial people looking at this that thought the college could do this,” Dantzscher says. “Economic issues after the fact—who can control that?”
Despite Ms. Sanders’ ambitions for expanding the college, she received mixed reviews during her tenure. Several of her staffers described her to local press as an energetic visionary. But by 2008, 74 students and nearly a dozen faculty sought an emergency meeting to address a “crisis of leadership.”
VTDigger.org reported one faculty member as saying there was a “pattern of intimidation, spying and targeting of critical voices” on campus. She later told Seven Days that “as much as I want Bernie to win, the idea of [Jane Sanders] in the White House or having any power at all is deeply disturbing.” The professor did not respond to Heat Street’s multiple queries. (Another issue that has raised some questions about her tenure: In at least a couple of instances, family members or friends of Jane Sanders won contracts with the school. See this story for more details.)
Ms. Sanders left in September 2011, taking with her a $200,000 severance package. Meanwhile, the college faltered.
The diocese began imposing heavy penalties, claiming the college had defaulted on its loan. Burlington College disagreed, the Chronicle of Higher Education reported, “saying that People’s United Bank has not authorized the college to make payments to the diocese.”
By 2014, the regional accrediting agency placed Burlington College on probation for two years, citing its unstable finances and running deficits. After reviewing the college’s audit, the accrediting agency also raised questions about whether Burlington could even make summer payroll, according to Seven Days.
Ms. Sanders said at the time that she had left Burlington College with a thorough plan to pay off the purchase. “They didn’t carry it out,” she told VTDigger.org.
Ultimately, the college avoided bankruptcy by selling off 27 acres of the former diocese property to a real-estate developer, VTDigger.org reported.
On Jan. 11, 2016, Toensing sent the letter to the U.S. attorney in Vermont, requesting an investigation into the land deal. He also forwarded the letter to the inspector general of the Federal Deposit Insurance Corporation.
The FDIC inspector general’s office referred Heat Street to the Vermont U.S. attorney, Eric Miller, who confirmed that he had received the complaint. “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 says.
Toensing says he believes Ms. Sanders’ political status helped Burlington College acquire the land and escape the scrutiny other prospective borrowers would have received. “First and foremost, they should have demanded solid evidence that these confirmed contributions were real,” Toensing says.
The executive director of VEHBFA says Ms. Sanders’ political connections “played no role whatsoever” in the agency’s decision. Another board member echoed that sentiment, but added that he had still voted against issuing the tax-exempt bonds.
But a third VEHBFA member, Tom Pelham, who also opposed the bond issuance after raising various concerns, says he believes some on the board were “overly impressed” with the Sanders family and thus “more deferential.”
“I want to say this clearly: I didn’t see, nor did anyone see, nor were there any accusations of any strong-arming,” Pelham says. “But I also think that if this had been some other thinly financed entity that was making the presentation, it might have gotten more scrutiny.”
The diocese put the land up for sale to help cover the costs of a $17 million sexual-abuse settlement. Burlington College acquired the property for $10 million, even though the city had valued it at nearly $20 million in 2010. It’s unclear, though, if the college got a discount on the property; John Vickery, the assessor for the city of Burlington, says the $10 million was probably in line with the actual market value of the land.
The diocese land, widely considered one of the most desirable properties in the city, had been zoned for mid-rise residential structures. By rezoning the property’s approved usage and allowing the land to go to a tax-exempt nonprofit college, the city of Burlington missed out on a potential source of revenue—one of the concerns raised by dissenting VEHBFA board members.
— Jillian Kay Melchior writes for Heat Street and is a fellow for the Steamboat Institute.
Communists lie cheat and steal - nothing new here.
so there are no good guys in this story...
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