Sanders told People’s United Bank that the college had $2.6 million in pledged donations to support the purchase of the former Roman Catholic Diocese of Burlington property on North Avenue. The college, however, received only $676,000 in actual donations from 2010 through 2014, according to figures provided by Burlington College.
That’s far less than the $5 million Sanders listed as likely pledges in the loan agreement, and less than a third of the $2.14 million Sanders had promised People’s Bank the college would collect in cash during the four-year period.
Two people whose pledges are listed as confirmed in the loan agreement told VTDigger that their personal financial records show their pledges were overstated. Neither were aware that the pledges were used to secure the loan.
Burlington College also cited 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.
People’s United Bank stipulated that at the time of the closing in December 2010, the school would provide a report as part of the loan agreement detailing “fundraising collections, commitments and grants equal to $2,270,000” and information that would satisfy the bank that pledges were “valid and enforceable commitments of the respective donors and granting parties.”
Sanders and the college responded with a record of confirmed and potential donors. The document lists $2.6 million in confirmed pledges and a total of $5 million in potential contributions from 31 donors. The loan agreement was signed by Sanders and Christine Plunkett who was then the vice president of administration and finance for Burlington College.
Sanders, wife of Sen. Bernie Sanders, I-Vt., who is now running for president, resigned under pressure from the Burlington College board of trustees nearly a year after obtaining the multi-million dollar loan. After both sides lawyered up, the board gave Sanders the title of president emeritus and a $200,000 severance package. Sanders was president of Burlington College from 2004 to 2011.
The school paid $10 million for the land, which was also supported by a $3.5 million loan from the diocese. Plunkett went on to succeed Sanders as college president before she too was forced out last year as the college struggled financially.
Jane Sanders is currently working on her husband’s presidential campaign. She did not respond to several interview requests, nor did she answer a set of questions that were emailed to a campaign spokesman.
In the months before her departure from Burlington College, Sanders’ inability to secure the pledges she asserted were “valid and enforceable” in the loan document was just becoming clear. In the fiscal year that ended in June 2011, Burlington College received cash donations of only $279,000 — that’s less than a quarter of the $1.2 million Sanders listed as confirmed pledges for that period, and not even 15 percent of the total $2.3 million that included potential pledges.
Members of the college’s board of trustees have never publicly explained why Sanders was asked to leave, but former trustee Robin Lloyd told Seven Days that Sanders’ difficulty meeting fundraising goals was a factor in her resignation. Greg Guma, who covered Sanders departure for VTDigger, reported that former trustee Jonathan Leopold was unhappy with her fundraising just days before her resignation was announced in September 2011.
In a recent interview, Leopold praised Sanders’ leadership, but he acknowledged that at the time he and other trustees were concerned when the pledges didn’t materialize. Sanders and other school officials had given presentations to the board confirming the $2.6 million in pledges.
Leopold never saw the actual signed pledge agreements, but he believes “the representations that were made at the time were made in good faith.”
“In hindsight a problem like this is an orphan, and there a lots of people who want to lay it at the feet of a specific person,” Leopold said.
Leopold emphasized that other members of the administration were also responsible for the capital campaign’s failure and a weak economy was also a factor.
He offered no concrete reason for Sanders being asked to resign, saying only that personally he “felt it was time for a change.”
Adam Dantzcher, board chair at the time, said Sanders’ fundraising promises were not a factor at all, but he would not say what led to her ouster. Several other trustees who were on the board in 2011 declined to comment for this report.
$1M bequest misrepresented
A $1 million bequest is still on the Burlington College books as part of the $1.35 million the school is still owed in pledges, officials say.
Sanders, for reasons that are unclear, listed the bequest in the loan document as a pledge that would be paid in $150,000 increments over five years with a final $100,000 payment in year six.
The bequest could not be paid out on that schedule because a bequest is a donation stipulated in one’s will that is paid at the time of death.
Most pledges are akin to a contract, though many nonprofits are loath to enforce pledges that don’t materialize because it can hurt future capital campaigns and cast an organization in a negative light.
School officials affirmed that the bequest is still listed as a pledge on the college’s books. Auditors are using an actuarial table based on the donor’s age to calculate the net present value of the bequest, or how much less the $1 million will be worth when it is received by the college because inflation will have reduced its value. The other $350,000 in pledges won’t be collected for several years, said Gibson Smith, Burlington College’s chief financial officer.
That leaves close to $620,000 in uncollected pledges Sanders listed as confirmed in the loan agreement. School officials say they don’t expect to collect that money.
Current Burlington College president Dr. Carol Moore said her administration has no record of the pledges Sanders cited in the loan document. Moore has made no effort to reconcile the pledges Sanders recorded in the loan agreement with what was on the books when she took over in December 2014.
“I’m not interested in wasting my time,” she said. If donors haven’t paid or made contact with the college for several years then it’s “highly unlikely” they will be honoring their pledges, she added.
Three months after Moore became president, the school sold 27 acres of the campus to developer Eric Farrell — a deal that was in the works prior to Moore becoming president. She refused to entertain questions about whether Burlington College could have held onto the land if the pledges Sanders listed were honored. Moore said her sole focus is the school’s future.
People’s United Bank, which declined multiple interview requests, also would not provide evidence that the confirmed pledges were valid. The loan officer at the time, Matt Mahoney, has left People’s and now works for a bank in Portland, Oregon. Mahoney declined to comment, saying to do so as former employee would be inappropriate.
It’s unclear if People’s United Bank made any effort to verify the contributions Sanders listed in the loan document.
VTDigger attempted to interview individuals listed as confirmed pledges in the loan document. Most refused to answer questions, but of those who did, two said their personal records show Sanders overstated their pledges.
Former trustees say their pledges were overstated
Former trustee Ron Leavitt is listed in a chart in the loan document as Rle (to differentiate him from another donor and former trustee Robin Lloyd). Next to his name is an ‘x’ in the confirmed donor column. His pledge is listed at $60,000 in two payments of $30,000 to be made in fiscal years 2011 and 2012.
Leavitt did make the first $30,000 contribution, and even discussed making a second gift of $30,000 with an official from the school, but he said in an email that he “certainly never made a full formal pledge of ($60,000).”
Mary Haas, Leavitt’s late wife, was a former trustee of the college as well, and was deeply involved with the school until her death in 2009, Leavitt said. He was interested in making an endowed gift with a naming option from her estate. But after discussions with his attorney, Leavitt discovered such a gift would not be tax deductible as it was not stated specifically in Haas’ will. Leavitt never made a further donation.
Michael Luck, whom Sanders hired as a vice president to assist with the college’s capital campaign, was the school official communicating with Leavitt at the time. He confirmed Leavitt’s version of events.
“He made it very clear he was juggling the estate business,” Luck said.
Luck was making regular reports to Sanders and other school officials about his progress on the fundraising campaign. Luck is a veteran of dozens of capital campaigns, he said. He’s also a principal at the fundraising consultancy Maple Leaf Management Group in Underhill. It’s typical to request of donors a signed letter for a formal pledge that includes the amount and over how many years it would be paid, he said.
Luck doesn’t recall ever soliciting such a letter for $60,000 from Leavitt, though he said he can’t be sure. Luck said he left files on the donors he worked with at the college. Current school officials said they had no such records.
Luck said he did not realize Leavitt was listed as a $60,000 confirmed contribution on the loan document. While he may have given Sanders a “hopeful” impression about the second $30,000, he does not recall telling her it was a “signed and sealed” pledge.
Former trustee Rob Michalak is a Burlington College alumni who now works at Ben & Jerry’s. Michalak is listed on the loan document as a $5,000 confirmed pledge. He recalls being asked to contribute to the school’s capital campaign along with other faculty and trustees.
However, he doesn’t recall pledging at the $5,000 level. After reviewing his own financial records, Michalak confirmed he did make a pledge and donation, but not for $5,000. He did not wish to share the actual amount of his contribution.
“It is curious,” Michalak said, that he would be listed at $5,000. Both Michalak and Leavitt said they were not aware their pledges were listed in the loan document.
The two former trustees’ pledged amounts are less than the $71,000 in pledges that Burlington College has written off in the past four years. School officials won’t confirm whether their pledges are among the writeoffs, citing their wish to keep donor records confidential.
Even if their pledges were written off, it appears they should never have been recorded as “valid and enforceable” in the loan agreement.
More information could reveal whether overstated pledges amount to fraud
There are two thresholds for proving that criminal fraud occurred under federal statutes, according to Assistant U.S. Attorney for Vermont Greg Waples, who has prosecuted such cases. Waples discussed what constitutes fraud using hypothetical examples, and did not address the Burlington College loan.
First, there must be a showing that the fraud was “knowingly and intentionally” committed, he said. Misstatements that result from ignorance or negligence don’t constitute criminal fraud, but could result in a civil action, Waples said.
In the case of Burlington College, it appears that Sanders overstated the pledges in the loan document, and misstated the nature of the $1 million bequest. Whether Sanders made misstatements intentionally or out of ignorance or negligence is unknown. VTDigger was unable to interview Sanders or Plunkett, and additional records were not available.
Secondly, prosecutors would need to show that the fraud was material, meaning that it could have impacted the plaintiff’s decision (in a case against Sanders or Burlington College, the plaintiff would be People’s United Bank). A showing of materiality doesn’t rely on whether the fraud did influence a plaintiff’s decision, only that it could have, Waples said.
The overstated pledges VTDigger has identified total less than $35,000, and would be unlikely to be considered material. However, close to $620,000 in confirmed pledges were never realized and are no longer being sought by the college, which means other pledges could have been overstated as well.
People’s United Bank is unlikely to pursue a civil action against Burlington College. That’s because, following the land deal with Farrell for $7.56 million, the school’s debt is greatly reduced and it’s in a better position to pay back the loan. A second deal to sell a former orphanage building on the North Avenue property to Farrell for $2 million will further improve the school’s financial position. That deal is expected to close in October.
If Burlington College were to have defaulted on the loan, the North Avenue property would have provided valuable collateral — the City of Burlington assessed it at $20 million.
The People’s United Bank loan was secured through the Vermont Educational and Health Buildings Financing Agency (VEHBFA), so that bonds with tax exempt interest could be issued to pay for the loan.
Over a five-year period, People’s United Bank remained the sole holder of bonds issued through the loan.
Because People’s continued to hold all of the debt, People’s and Burlington College were able to refinance the loan in January. As part of the new agreement, the bank terminated VEHBFA’s involvement and can no longer issue tax exempt bonds, according to Bob Giroux, VEHBFA’s executive director.
The new agreement offered the school greater flexibility for the lease or sale of the property, because the college was no longer bound by the public interest use requirements for tax exempt financing. That enabled the lakefront property to pass into the hands of a commercial developer.
Coveted lakefront property slated for large-scale housing development
Farrell eventually plans to build more than 700 housing units on the lakefront property, according to a Seven Days report. Plans are still solidifying, but the City of Burlington will likely have the opportunity to purchase 12 acres along the lake for a public park at a cost of $2 million.
Some city residents question the need for a large-scale housing project on the land. A group called Save Open Space Burlington is advocating for the land to be maintained as public space.
“Back when it was first announced that (Burlington College) would buy the land, I had hoped they would be stewards of the land,” said Ruby Perry, a member of Save Open Space.
Perry says the 12 acres of land slated for the park would be difficult to develop anyway, and she maintains the city is being shortsighted allowing the rest to become housing.
Burlington needs affordable housing, but Perry fears that Farrell’s development plans will largely benefit affluent residents.
Mayoral candidate and longtime Public Works director Steve Goodkind said a 12-acre public park is “going the right way,” but he wonders if more of the land couldn’t be preserved as open space, he said.
Vermont Land Trust President Gil Livingston told concerned residents at public meeting in August that while it could be possible to preserve more of the land, raising the $2 million already needed for a 12-acre park will be a challenge, according to the Seven Days report.
“There’s always a need for some type of development growth, and we do need housing. But there are areas that make this city what it is and the city and the developers don’t get that,” Goodkind said.
“Hopefully the battle is not over on this property,” he added.