Feds could be investigating Burlington College land deal

Posted Friday, May 20, 2016 3:46 pm

BURLINGTON >> The closing of Burlington College spilled into Bernie Sanders' presidential campaign this week, with questions about a land deal his wife orchestrated when she led the college and comments by two trustees and a former advisor suggesting federal authorities are conducting an investigation.

When school officials announced this week that the school would close due to the "crushing weight of the debt" incurred in 2010 when Jane Sanders, then Burlington College president, purchased a 33-acre lakefront campus on North Avenue, they would neither confirm or deny a federal probe.

Asked by a reporter at a Monday news conference if there was a federal probe into the land deal, current President Carol Moore said, "I have no comment."

Pressed by another reporter as to whether faculty or staff were interviewed or subpoenaed by federal investigators, Moore repeated, "There is no comment."

Friday, Moore told VPR she was not aware of any ongoing investigations into the school or its finances.

"As far as I know, the college itself is not under investigation," Moore said. She added that she could not comment on whether she or any of the faculty have received subpoenas.

Board of Trustees chair Yves Bradley similarly declined to comment on the existence of a federal investigation in an interview earlier this week.

During an April 25 interview, Burlington College trustee Jane Knodell, also a city councilor, said she heard there was a federal probe into the North Avenue purchase.

"I think I had heard that, but I wasn't sure if it was correct information or not," Knodell said.

Knodell initially said she heard there was a probe from someone who worked at the school, but later clarified this week that the information came from another trustee whom she declined to name.

Tom Torti, a trustee and president of the Lake Champlain Regional Chamber of Commerce, told Seven Days earlier this week, "I have heard that federal people have been asking questions."

David Coates, who was brought in as a financial advisor in September 2014, to help the struggling college stay afloat, said Thursday that he heard secondhand about a federal investigation three weeks or a month ago. Coates declined to say whom he heard about the investigation from.

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"Did I hear it from an FBI agent? No," Coates said, then added, "Where there's smoke there's fire."

A voicemail left Thursday for Jane Sanders was not returned.

That land deal Sanders executed five years ago has come under heightened scrutiny from local and national media after Monday's announcement that Burlington College will close its doors later this month.

The Sanders campaign has made no public statements about the closure of Burlington College. Requests for comment from VTDigger this week were not returned.

VTDigger reported last September that Jane Sanders asserted in a signed loan document used to obtain a $6.7 million loan from People's United Bank that the college had $2.6 million in confirmed pledges, of which only $676,000 was paid as of 2014.

The $2.6 million in confirmed donations included a $1 million bequest as a pledged donation that would be paid out over six years, even though the money would only be available after the donor's death.

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Burlington College still had the $1 million on its books as of September, 2015, though it had not received any of the money. School officials could not be reached Thursday to say what will happen to that bequest.

Two people listed as confirmed donors in the loan document have said their pledges were overstated, and they were not aware their pledges were used to secure the loan — though those pledges total less than $100,000.

In January, Vermont GOP officials sent letters requesting that U.S. Attorney Eric Miller and the Federal Deposit Insurance Corporation investigate Sanders for potential fraud. Miller said Thursday he was unable to confirm or deny the existence of a federal investigation.

An FBI spokesperson in Albany similarly told VTDigger in late-April that they could neither confirm or deny a federal investigation into the Burlington College land deal.

Mike Smith, who was brought in as interim president with Coates, helped manage the sale of 27 acres of the North Avenue property to developer Eric Farrell, allowing the college to significantly reduce its debt. Additional property was sold to Farrell in 2015, further reducing the college's debt.

Smith was quoted in Seven Days this week speculating that the controversy surrounding the loan and land deal gave People's United Bank cold feet, prompting them not to renew a line of credit the college was depending on to make it to the fall when tuition dollars would start rolling in again.

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Bradley, the board chair, offered a different explanation, saying that bankers at People's headquarters in Connecticut, who were less familiar with Burlington College, were tired of carrying the school — which was perpetually in the red — on their balance sheet.

Torti and other trustees have said the school was closer than ever to being solvent. Zach York, a trustee and Burlington College alumnus, said the school had its largest incoming class in a decade slated for the fall, and described it as "heartbreaking" that People's chose not to renew the line of credit in April.

"We were a semester away from finally climbing the mountain," Torti said.

Meanwhile, longtime faculty member Sandy Bair, chair of the Legal and Justice Studies program, described a scene of utter chaos at the school Thursday as students sought transcripts and faculty attempted to get their personal gear.

"This whole thing is so tragic I can't believe it," Baird said, while cleaning out her office Thursday afternoon.

Students who still owe the college money for tuition can't collect transcripts, Baird said, and it's unclear to her who they would need to pay or who will provide their transcripts once the school closes.

Baird said she was told by school officials that they needed to vacate the remaining North Avenue property by Friday, and the bank would be changing the locks that night.

"What's going to happen to the library?" Baird asked.

School officials did not respond to a request for comment Thursday as to how students should obtain transcripts and whether the locks will be changed Friday at midnight.

In the announcement Monday, school officials said Burlington College would cease operation on May 27.

Students marched in protest of the closing Friday, carrying a homemade coffin from the campus to the offices of Pomerleau Real Estate, where Bradley the board chair is a vice president.

Morgan True is VTDigger's Burlington bureau chief covering the city and Chittenden County. He can be contacted at mtrue@vtdigger.org.