Bernie and Jane Sanders lawyering up for FBI fraud investigation
Just when Bernie and Jane Sanders thought they had it made as the icons of the American left, along comes a mean old Republican to spoil it with accusations so serious that the FBI is investigating. In a long and sympathetic article, Politico Magazine explains:
Jeff Weaver, Sanders' longtime top political adviser who heads Sanders' political organization, Our Revolution, confirms to Politico Magazine that Bernie and Jane Sanders have lawyered up. The couple has retained Rich Cassidy, a well-connected Burlington attorney and Sanders devotee, and Larry Robbins, the renowned Washington-based defense attorney who has represented I. Lewis "Scooter" Libby and disgraced former Rep. Bill Jefferson, to represent Jane Sanders in the matter.
Now, President Donald Trump's Justice Department is handling an investigation that will proceed at the discretion of a U.S. attorney of Vermont that Trump has yet to appoint.
Jane is portrayed as a victim. The story is going to be that enemies of Bernie are hounding poor Jane:
"I made it clear I didn't want him to run," she told me at their campaign headquarters at the time, "but if he decided to, I would be behind him 100 percent."
The Snidely Whiplash villain in this piece comes from conservative aristocracy. LawNewz:
The investigation stems from an Jan. 10, 2016 letter sent to the then-U.S Attorney for Vermont, Eric S. Miller. The law firm diGenova & Toensing LLP, [that would be Joe diGenova and Victoria Toensing – ed.] representing local parishioners, contend that Burlington College President Jane Sanders engaged in fraud when her school purchased land from a Catholic diocese.
In 2010, the now-defunct Burlington took out a bank loan to make the deal, but that required a minimum commitment of $2.27 million in grant and donations. The letter, authored by Bracy C. Toensing, said she supplied evidence saying they had $2.6 million in the needed money.
But it didn't turn out to be the case, Toensing said.
"At the end of fiscal year 2001 (six months after closing on the loan), Ms. Sanders had collected only $279,000 in donations, which was less than 25 percent of the $1.2 million Ms. Sanders guaranteed to the bank that she would have collected in that year," he wrote.
Backed by six exhibits and a dozen documents, the four-page letter described how Jane Sanders had "orchestrated" the purchase of 33 acres along Lake Champlain in Burlington, Vermont's largest city, where her husband had minted his populist political brand as mayor. The deal closed in 2010, when the senator's wife was president of Burlington College, a tiny, obscure, nontraditional school that always seemed to be struggling for students and funds. The letter alleged that to secure a $10 million loan and execute her grand plan to expand the college, Jane Sanders had falsified and inflated nearly $2 million that she'd claimed donors had pledged to repay the loans.
Sanders had "successfully and intentionally engaged in a fraudulent scheme to actively conceal and misrepresent material facts from a federal financial institution," the letter alleged. It pressed for a federal investigation into potential bank fraud.
The media ignored the letter, but the FBI didn't.
Here is how the deal fell apart.
When Jane Sanders made the offer to the Roman Catholic Diocese, Burlington College was nearly broke – with an annual budget just below $4 million. In order to finance the property, Sanders secured a $6.5 million loan from People's United Bank in the form of a tax exempt bond purchase, and the Catholic Church agreed to carry a $3.65 million second mortgage on the property. Sanders told both institutions that Burlington college had $5 million in likely donor pledges and $2.4 million in confirmed pledges to be used to pay off the debt.
But wait – that was just for the property!
What Jane Sanders didn't plan for was the $6 million or so required to actually build out the campus on the property to include green space, athletic fields, lecture halls, and walkways. Oops!
Sanders' original claim of $2.4 million in confirmed donor pledges was quickly reduced to $1.2 million according to documents filed in the first fiscal year after the purchase – yet in records obtained by VTDigger, Burlington College received only $279,000. Despite hopes by Sanders and college trustees that they could boost enrollment and expand the student body, nothing changed – and the school failed at raising the money to satisfy it's loans.
And then Jane Sanders was fired, with a $200,000 severance package.
In order to try and avoid bankruptcy, Burlington college sold off pieces of the 33 acre property to a local developer – which allowed the institution to pay off some of the debt Jane Sanders had accumulated, however in April 2016 the bank called it's loan – and on May 28th, the college closed it's doors after 44 years in operation.
Joe Patrice offers a defense of sorts for Jane Sanders:
You can have confirmed, contractual deals for $1.2 million and only actually receive $279,000. Those are two completely different things. One could argue that only actualizing about a quarter of the total committed says something about the trajectory of the college's finances, but that's a much more nuanced argument than these two sentences suggest.
A third donor had offered a $1 million bequest, to be paid upon her death. Instead, the college's loan application counted it in funds to be paid out over the next few years.
Um… welcome to accounting. This account sounds shady, but – without vouching for any specific accounting principles – recognizing revenue in installments even if it's coming in a lump sum is perfectly acceptable. Again, that's not saying it was the appropriate way to account for this request, but the way this report reads makes counting funds over time seem like an insane tactic when it's just not.
Um...people do go to prison over accounting decisions on recognizing revenue and misleading shareholders, regulators, or lenders.
For the moment, Jane Sanders probably is less worried about being convicted by a Vermont jury than she and Bernie are about paying for those lawyers. For all their posturing against greed, Bernie and Jane are thrilled with the financial consequences of Bernie's campaign. They rushed out and spent more than their reported net worth on a third house last August like some seven-figure jackpot lottery winners. Saving and financial planning are not their strong suit, which is why people like Bernie and Jane should never be put in charge of anything, even a little hippie college.
I have known ambitious leftists like them – affluent, but with modest net worths – and almost without exception, they feel underprivileged when it comes to wealth, no matter how comfortable they may appear. Envy is the fuel of their radicalism, and they resent people who have more than they do. Deep down, they want the same stuff.
Paying for lawyers can ruin the net worth of a couple like Bernie and Jane. We'll know that the case is serious when they launch a legal defense fund.