Recently it has been reported that Jane Sanders has hired a criminal defense attorney to defend her in the FBI investigation regarding the bank loan that she obtained for Burlington College. I wanted to write this to provide some context to this case and give some background on the accounting rules associated with this from a non-partisan view.

First, I will explain the elements of fraud.

Civil fraud requires that (1) a material misrepresentation be made in which (2) the person making the misrepresentation knows it is false or made it with reckless disregard for the truth, (3) intending that the victim act on the misrepresentation, and that (4) the victim was justified in relying on the misrepresentation. What would make civil fraud into criminal fraud would be that the person committing the fraud intended to defraud.

Here are the facts we know about the Jane Sanders case so far:

Sanders had a plan for Burlington College to purchase additional land and buildings from the Roman Catholic Diocese for $10 million to expand their school. At the time Burlington was financially struggling and this plan from Jane Sanders was a way to boost enrollment and aid their finances.

In order to obtain this loan, the Vermont Educational and Health Buildings Finance Agency (VEHBFA) and People’s United Bank required that the college provide proof of a minimum commitment of $2.27 million in pledged donations.

Sanders claimed the College had $2,644,700 in pledges that were confirmed and substantiated by written agreements. Under nonprofit accounting standards, these pledges must be supported by a written pledge agreement that is legally enforceable. It is important to note here that these pledges were not an estimate or a guess on what would be donated in the future, but are solid agreements in which donors have contractually agreed to donate a specific amount of money by a specific date.

One of the pledges was listed as six annual installments of $150,000 with a seventh annual installment of $100,000 totaling $1 million. However, the donor, Corinne Bove Maietta, has stated that she never made any such agreement and only committed to donating an unspecified amount upon her death. In addition this donor claimed that she never signed any written agreements although Jane Sanders had personally asked her to do so.

In addition, one of the Burlington College trustees , Jonathan Leopold, has stated that he was informed that the donor who had pledged the $1 million donation had a “terminal illness”. He has also confirmed that he never saw the actual signed pledge agreements.

Christine Plunkett, who took over as president after Jane Sanders and was vice president of the college at the time of the loan and signed the loan agreement along with Jane Sanders, stated in reference to the $1 million dollar pledge that “the understanding at the time was that it was a cash gift and we proceeded until we understood it was a bequest.”

Yet another donor who was listing as pledging a donation, former trustee Ron Leavitt, has stated that he donated $30,000, but the pledge spreadsheet lists him as pledging an additional $30,000 which he claims is not accurate and states that he has not signed such a pledge. One other donor, former trustee Rob Michalak, claimed that the $5,000 in pledges that are listed for him are not accurate, but did not disclose the actual amount that he pledged.

None of the other 28 donors have publicly commented on whether or not the pledges listed for them by Sanders are correct, however, of the $2.6 million in pledges that Sanders claimed the College had obtained, only $676,000 were collected four years later. Before Sanders was terminated by the College in 2011, only $279,00 of the $1.2 million Sanders had listed as pledges receivable prior to that date were actually collected.

Overall, there are some serious issues with this incident, and at minimum some of the parties involved have committed gross negligence if not outright fraud. Sanders and Plunkett presented this accounting of $2.6 million in pledges, which was $400,000 over the minimum amount required to obtain the loan. However, over $1,000,000 in pledges were not valid, and at least Sanders knew they were not valid as she had personally asked the donor to sign the pledge and been rebuffed.

At this point, we can clearly see that there was a misrepresentation of material facts, as without the fraudulent pledges the College would not have met the minimum amount of pledges required to obtain the loan. Sanders knew that the pledges she was presenting to the bank were inflated, and that the bank was relying on this information to decide whether or not to approve the loan. Clearly the bank was justified in relying on the information submitted by Sanders. Thus it is clear that the victims in this situation have a strong claim of, at minimum, civil fraud.

It has been reported that the FBI is interviewing the donors and has requested the supporting documentation of the pledges from Burlington College. These types of investigations can take years to play out, and given that one of the parties is the wife of a Senator, it could take much longer. However, the argument that this is merely a partisan attack on Bernie Sanders and his family is clearly false.

Some additional major questions are:

1. Why did Sanders present this spreadsheet to the bank when she personally knew that the $1 million donor was not a valid pledge and that the donor had refused to sign a written agreement?

2. Who decided to list this donor’s pledges as a 6 year installment?

3. Who falsely informed the trustees that this donor was terminally ill and that the donation would be paid in full upon the death of the donor?

4. Why did the bank, the VEHBFA, and the Roman Catholic diocese not notice that many of the pledges were not substantiated with written documentation? Were they provided with forged documents to support these pledges?

5. How many of the other pledges are not actually supported by written evidence, and how many other pledges are recorded at inflated values?

All information in this article was compiled from publicly available information gained from the sites listed below.

http://heavy.com/news/2017/06/jane-sanders-bank-fraud-investigation-fbi-burlington-college-brett-seglem-bernie/

https://vtdigger.org/2017/05/04/burlington-college-donor-says-never-signed-pledge/

https://vtdigger.org/2015/09/13/jane-sanders-overstated-donation-amounts-in-loan-application-for-burlington-college/

https://assets.documentcloud.org/documents/2680892/LTR-to-USATTY-and-FDIC-IG-Re-Apparent-Fraud-Sen.pdf