By Fred Lucas | The Daily Signal
Sen. Bernie Sanders, I-Vt., is keeping quiet as a federal grand jury investigates a bank loan to a now-defunct private college once run by his wife.
Sanders’ Senate office has been declining media interviews in Vermont. A spokesman, Josh Miller-Lewis, said he did not have an answer for The Daily Signal on whether the senator or his Senate office was involved in a loan going through to benefit his wife, but said he would work on getting an answer.
The federal probe commenced in 2016 under the Obama administration’s Justice Department, according to The Washington Post and other news outlets.
A federal grand jury in Vermont has heard testimony in a case involving the tenure of the senator’s wife, Jane O’Meara Sanders, as president of Burlington College and a loan for a land purchase that led to the school’s demise.
A lawyer from Vermont who is also a Republican activist and Donald Trump campaign official asked federal investigators to open an inquiry into possible bank fraud, alleging that Jane Sanders misled lenders about Burlington College’s ability to pay back a loan.
The lawyer, Brady Toensing, asked investigators to explore whether Bernie Sanders used his office to influence the bank to make the loan.
“It is nonsense,” Bernie Sanders said in a May 2017 interview with WCAX, a Burlington TV station, adding:
But now there is a process going on, which was initiated by Trump’s campaign manager [in Vermont], somebody who does this all the time, has gone after a number of Democrats and progressives in this state. It would be improper at this point for me to add any more than that.
The website VTDigger, a Vermont-based investigative news website, has aggressively covered the story of Burlington College’s financial troubles under Jane Sanders’ leadership, and other state and national media outlets frequently cite its reporting.
Here are four keys to understanding the controversy surrounding Jane Sanders and Burlington College:
1. The Loan and the Land Deal
Toensing, a lawyer with the Washington firm of diGenova & Toensing and vice chairman of the Vermont Republican Party, was state chairman of Trump’s 2016 presidential campaign.
Toensing first asked for a federal investigation when Sanders was running for the Democrats’ presidential nomination in 2016.
“If Jane Sanders had been Jane Doe, she never would have gotten the loan [for the college],” Toensing told The Daily Signal last week. “But I now want the justice system to treat her like Jane Doe by conducting a fair, impartial, and thorough investigation. No one should be above the law, not even the spouse of a powerful United States senator.”
Toensing asked for an investigation of bank fraud in identical letters he sent in January 2016 to U.S. Attorney for the District of Vermont Eric S. Miller and Fred W. Gibson, acting inspector general for the Federal Deposit Insurance Corp., the agency that insures and regulates the nation’s banks. Neither man is still in office.
The relevant background, much of it in the Toensing letter and backed up by media accounts, centers on the Roman Catholic Diocese of Burlington’s sale of 33 acres in Burlington to the college in 2010 for $10 million as part of a planned campus expansion.
Burlington College did not have the means to buy the property outright, and sought approval for a loan. The 12-member board of the Vermont Educational and Health Buildings Financing Agency voted to issue tax-exempt bonds for the transaction, Politico and other news outlets reported.
People’s United Bank loaned the college $6.5 million to purchase the bonds. The diocese also loaned the college $3.6 million, with the understanding it would be paid back.
Under Jane Sanders’ leadership, Burlington College overstated pledged contributions by about $2 million in its presentation to the state financing agency and the bank, Toensing said in his letter to Miller, the U.S. attorney for Vermont, and Gibson, FDIC’s inspector general.
Sanders was president of Burlington College from 2004 until fall 2011. She previously was provost of Vermont’s Goddard College in the 1990s. She holds a doctorate in leadership studies in politics and education from Union Institute and University in Cincinnati. She is also a commissioner for the Vermont Economic Development Authority.
While at Burlington College, Jane Sanders acted as a corporate representative on behalf of the school for the $6.5 million loan, according to documentation Toensing included with his letter that he said he obtained through Vermont’s open records law.
To secure the loan, she assured People’s United Bank and the state bonding agency that the college had $2.6 million in pledges, according to public documents Toensing obtained through the public records law and included in his letter to investigators. The $2.6 million was to shore up confidence in the school’s ability to pay back the loan.
However, the college reportedly collected $279,000 by the end of fiscal 2011 and had a total of $676,000 by 2014—almost a $2 million shortfall in confirmed donations and grants.
Jane Sanders stepped aside in fall 2011, receiving $200,000 from Burlington College. This amount is recorded on both a college audit and on her husband’s Senate financial disclosure form, according to Toensing’s letter.
A Sanders family spokesman told Politico that the departure was the result of a “different vision for the school” between Jane Sanders and the administration.
Sanders told VTDigger that she was paid for a year of sabbatical contractually, which she called a standard practice in academia. She told the website: “The college was doing well when I left it and was poised for a promising future.”
Politico reported that Jane Sanders hired Washington lawyer Larry Robbins as well as Burlington lawyer Rich Cassidy, describing the latter as a “Sanders devotee.”
Robbins did not respond to voicemail and email messages Feb. 7 from The Daily Signal.
“I can’t say,” Cassidy said, when reached that day by phone and asked about the case.
When The Daily Signal asked whether he couldn’t speak because a grand jury is looking into the matter, Cassidy responded: “I don’t have anything to say.”
Asked if he could confirm reports that he represents Jane Sanders, the lawyer replied: “I can’t confirm or deny that.”
Jeff Weaver, cited in news accounts as a family spokesman, did not respond to two emails from The Daily Signal.
The Sanders Institute, a Vermont think tank founded last year by Jane Sanders, and Our Revolution, a Washington political group founded last year by Sanders supporters, also did not respond to emailed questions. Our Revolution referred The Daily Signal to another spokesperson, who did not respond.
2. Aftermath of College’s Demise
The Roman Catholic Diocese of Burlington reached a settlement with Burlington College in 2015, but reportedly lost nearly $2 million of its $3.65 million loan to the college as part of the land sale. (Documents cited in news reports say the diocese lost $1 million in principal payments and another $500,000 to $1 million in interest accrued but never paid over a five-year period.)
Burlington College, unable to sustain the debt, closed in May 2016. At the time, Bernie Sanders’ presidential campaign was nearing its end as Hillary Clinton continued to roll up more delegates to the Democratic National Convention.
Writing in The Chronicle of Higher Education in 2016, Jane Sanders’ successor as Burlington College president, Carol A. Moore, blamed Sanders and her administration for the decline:
BC’s fate was set when its former board members hired an inexperienced president and, six years later, approved the imprudent purchase of a $10 million piece of property for campus expansion. Enrollment that year was about 195 and the budget just over $4 million, less than half of this ill-advised investment. What were they thinking? Where was the Finance Committee when these decisions were being made? …
Who is to blame for this appallingly inappropriate business deal? Perhaps a board that steered clear of the tough questions which needed to be asked. Or a bank in the state of an influential senator—a senator, as it turned out, with bigger ambitions?
A Vermont judge ruled last August that the shuttered college still owes $728,944 to People’s United Bank and 12 percent interest until the debt is paid, plus legal fees and other costs.
Jim Foley, general counsel to the Vermont Education and Health Buildings Financing Agency, told The Daily Signal that his agency provided all documents and correspondence regarding the loan that the grand jury had subpoenaed.
Foley said Burlington College paid off the debt owed to the financing agency, and he isn’t aware that the college misled the agency.
“Burlington College started to have financial difficulties after it paid off our loan,” Foley said. “All of the events of interest happened after they paid off our loan. If there is a smoking gun, it’s not sitting in our agency.”
The public and taxpayers should be concerned about unanswered questions, said Pete Flaherty, president of the National Legal and Policy Center, a government watchdog group that is looking into the matter.
“The college collapsed. No one can claim [the case] was ginned up,” Flaherty told The Daily Signal, adding:
Just because someone is married to a senator does not mean someone is not accountable. That Bernie Sanders may have intervened means he should be investigated. My worry is that the Justice Department is paralyzed and currently unable to prosecute political corruption.
3. Did the Senator Use His Office?
In subsequent letters to investigators and to Bernie Sanders, Toensing noted that any pressure from Sanders’ Senate office could have run afoul of the law and Senate ethics rules.
At this point, however, no evidence has been made public that the senator or his staff got involved in the loan.
“I was recently approached and informed that Senator Bernard Sanders’s office improperly pressured People’s United Bank to approve the loan application submitted [in 2010] by the senator’s wife, Ms. Sanders,” Toensing wrote to investigators in a letter dated May 25, 2016, shortly after the college closed.
Citing Senate ethics rules, the lawyer and Republican activist said it isn’t proper for a relative of a member of Congress to get a favorable loan “because of the official position of a member.”
The Daily Signal reached Miller-Lewis by phone Feb. 5, and asked the Sanders spokesman whether the senator or staff from his office played any role in securing the $6.5 million loan from People’s United Bank to Burlington College in 2010.
Miller-Lewis said he would get back to The Daily Signal, but did not respond to subsequent phone and email messages.
People’s United Bank did not respond to several several phone messages left by The Daily Signal.
“People’s United, from what I understand, does not want to play in that sandbox,” the financing agency’s Foley told The Daily Signal, meaning he doesn’t believe the bank wants to talk about the matter publicly.
Foley said he is not aware that Sanders or anyone associated with the senator leaned on the Vermont Educational and House Buildings Financing Agency to approve the loan.
“I don’t think there was any contact between our office and Sen. Sanders’ office,” Foley told The Daily Signal. “A former board member, after seeing Jane Sanders’ presentation, didn’t even know she was the senator’s wife.”
Toensing also wrote to Sanders himself on May 25, 2016, asking that the senator’s office release any documents that would disclose his role in the diocese’s sale of the property to the college. The senator’s office did not respond, he told The Daily Signal.
In recent weeks, Sanders has refused to talk to some local media in Vermont unless reporters agreed to his condition that they not ask about family members, including his wife.
Such a condition also would cover the senator’s stepdaughter, Carina Driscoll, co-founder and director of the Vermont Woodworking School. She is Jane Sanders’ daughter by a previous marriage.
The newspaper Seven Days, in explaining the senator’s conditions, reported:
[Sanders spokesman Daniel] McLean made clear that two subjects would be off the table: Sanders, the spokesman said, was not interested in answering questions about ‘political gossip’ nor about the senator’s family. He did not elaborate on either condition. (Sanders’ wife, Jane O’Meara Sanders, has been under scrutiny by federal prosecutors over her role leading the now-defunct Burlington College. His stepdaughter, Carina Driscoll, is running for mayor of Burlington.)
4. The Grand Jury
A standing grand jury reportedly meets in Burlington every Thursday to hear cases.
Weaver, the spokesman for the Sanders family, last month issued a statement to Vermont Public Radio: “We have absolutely no reason to believe that there is a grand jury empaneled to examine Burlington College, Dr. Jane Sanders, or any aspect of Dr. Sanders’s service as president of Burlington College.”
One former Burlington College trustee, Yves Bradley, told Vermont Public Radio that the FBI had questioned him in the matter.
The Burlington Free Press last month reported that Robin Lloyd, a former member of the college’s Board of Trustees, testified to the grand jury.
“They’re trying to pull together where did the money come from to enable Burlington College to convince [People’s United Bank] and the diocese to go ahead with the deal,” Lloyd told the newspaper.
Reached last week by The Daily Signal, Lloyd said: “I’ve said all I’m going to say about this.”
Sarah Sleem contributed to this report.