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BURLINGTON — Republican activist and attorney Brady Toensing is challenging an assertion by Jane Sanders that she left Burlington College in good financial standing.

In a Boston Globe article published Saturday, Sanders said that before she departed as college president in September 2011 “we were in the best shape the college had ever been in.”

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Her husband, U.S. Sen. Bernie Sanders, I-Vt., has said much the same.

Jane Sanders also criticized national reporters for not fact checking allegations Toensing made. “If they just looked into public documents, they could see that his allegations of the financial difficulty during my tenure are not true at all,” she told the Globe.

Toensing said, on the contrary, a review of public documents shows the college’s finances did deteriorate on Sanders’ watch. The college closed last year under what it called the “crushing weight” of debt. As president, Sanders engineered a multimillion-dollar loan for the college to buy lakefront property.

“Within seven months of the loan closing, while Ms. Sanders was still president, the college had already defaulted on the loan,” Toensing wrote in an email to VTDigger.

Jane Sanders did not return a voicemail left on her personal cellphone requesting comment for this report.

The U.S. Department of Justice is investigating aspects of the land deal, and Jane Sanders has hired a legal team to help her navigate the probe.

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The Sanderses have declined to comment on the federal investigation, which was prompted by complaints Toensing made in 2016. The couple and their surrogates dismiss the complaints as a takedown attempt by a known partisan.

VTDigger, which has covered the college’s financial troubles since 2011, has reported that Jane Sanders overstated pledged gifts used as collateral for the People’s United Bank loan.

The college closed in May 2016 because of financial difficulties stemming from its 2010 purchase of the former Roman Catholic Diocese of Burlington headquarters on Lake Champlain.

The college bought the property with money borrowed from the diocese and a loan of $6.7 million in tax-exempt bonds issued by a state financing agency and backed by People’s United Bank.

Toensing sought audits and other financial records for the college as part of a public records request filed with the state agency.

Toensing says those records indicate the college defaulted on the loan before Sanders left.

A closing statement for the People’s loan shows that Burlington College provided a $375,000 debt service reserve fund to be held by the bank, likely as further assurance of repayment.

For the full closing statement, click here.

The audits say the reserve fund was to be tapped “in the event of a loan default.”

It appears, from financial statements in the fiscal 2012 audit, that the college used money in the reserve fund to make loan payments a few months before Sanders resigned from Burlington College in September 2011.

Toensing says the payments from the reserve are a clear indication the college defaulted on the loan during Sanders’ tenure and that the school was in deep financial trouble.

In the audit for fiscal 2011, the reserve fund holds $375,727 at the close of the year on June 30, 2011. The following year, as of June 30, the reserve fund holds only $14,727, showing the college spent $361,000 of the total. Based on the interest rate and monthly payments specified in the loan document, that would mean the loan was in default for much of that year.

The Vermont Educational and Health Buildings Financing Agency is the state entity that issued the tax-exempt debt backed by People’s. In the audits, the reserve fund is titled “VEHBFA Debt Service Reserve Fund.”

For the full fiscal year 2011 audit, click here, and for the full 2012 audit, click here.

A comparison of the loan terms and the college’s payouts suggests the loan was in default by July 2011.

For the entire 2012 fiscal year, from July 2011 to June 2012, the school made payments on the loan of only $15,000 from sources other than the reserve fund.

But that’s far less than the monthly interest payment the 4.39 percent rate would yield — $24,510 — suggesting the reserve fund was tapped before Sanders was forced out by the board of trustees.

Don Keelan, a certified public accountant from Arlington, who is also a vocal critic of the Sanderses, said the fiscal 2012 audit suggests Burlington College was overextended.

For one thing, he said, the school had a working capital deficit of 64 cents on the dollar.

That means, based on known obligations for the next 12 months, Burlington College had only 64 cents to pay each dollar of what it owed, Keelan said in an email.

“The ideal that we work for is 2 to 1, so two dollars of assets to cover every dollar of liability,” Keelan said. “A deficit in current assets is a major red flag for any organization.”

Also, taking into account the college’s long-term obligations, its debt to equity ratio — a basic measure of financial health — was 6 to 1, according to Keelan. In other words, for every $6 it owed, it had $1 of equity. A debt to equity ratio of more than 2 to 1 is generally considered cause for concern.

“It’s not unusual to see two dollars of debt to a dollar of equity, but when you start creeping beyond that, especially with a nonprofit, that’s not good,” Keelan said.

Most nonprofit colleges are lucky if tuition revenue covers even 50 percent of their operations, Keelan said. That means many rely on charitable gifts to pay down long-term debt, he said, something Burlington College had hoped to do but didn’t.

The college’s debt ratio also doesn’t take into account the plan at the time to invest millions in renovations of the former Catholic diocese orphanage building on the lakefront property, Keelan said. That plan was not fully implemented.

In the Globe article, Jane Sanders accused Toensing of sexism for suggesting she needed her husband to help her secure the People’s loan. Toensing’s second complaint to federal authorities alleges that Sen. Sanders used his influence to pressure the bank to make the loan.

The source underlying that complaint, a top GOP state lawmaker, recently threw cold water on that allegation, saying it came from a former People’s employee with no direct knowledge of the loan.

Rep. Don Turner, R-Milton, the House minority leader, called the allegations “hearsay,” but Toensing is sticking by his complaint, saying many investigatory leads are hearsay.

Toensing also took aim at Sanders’ allegation that his complaint was sexist.

“The only thing more desperate and irrelevant than calling the investigation partisan is calling it sexist,” he wrote in an email to VTDigger.

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