Jane Sanders, wife of Sen. Bernie Sanders (Vt.), stands by her husband after a rally in 2015 during his presidential campaign. (Melina Mara/The Washington Post)
A rendering of the proposed Burlington College campus. (City of Burlington)
A federal investigation of a land deal led by Jane Sanders, the wife and political adviser of Sen. Bernie Sanders (I-Vt.), has accelerated in recent months — with prosecutors hauling off more than a dozen boxes of records from the Vermont college she once ran and calling a state official to testify before a grand jury, according to interviews and documents.
The investigation centers on the 2010 land purchase that relocated Burlington College to a new campus on more than 32 acres along Lake Champlain. While lining up a $6.7 million loan and additional financing, Jane Sanders told college trustees and lenders that the college had commitments for millions of dollars in donations that could be used to repay the loan, according to former trustees and state officials.
Trustees said they later discovered that many of the donors had not agreed to the amounts or the timing of the donations listed on documents Jane Sanders provided to a state bonding agency and a bank. That led to her resignation in 2011 amid complaints from some trustees that she had provided inaccurate information, former college officials said.
The land deal, the officials said, became a financial albatross for the 160-student school, contributing to its closure last year.
The questions from government investigators, as described by those who were interviewed or received subpoenas for documents, suggest that the inquiry is focused on Jane Sanders and alleged bank fraud, and not on her husband. But the inquiry could nonetheless create a political liability for the senator, who was a candidate for the 2016 Democratic presidential nomination and is the progressive movement’s most popular leader.
Jeff Weaver, a spokesman for the couple, denied wrongdoing late last week. Weaver told The Post that Jane Sanders hired a D.C. law firm this spring because she and her husband fear that President Trump’s Justice Department could use the investigation as a way to derail a potential 2020 challenger.
“While the Obama administration was in office, I don’t think anyone thought that these baseless allegations warranted hiring a lawyer,” Weaver said. “But with Trump and [Attorney General] Jeff Sessions at the helm, that’s a very different situation.”
The investigation began in early 2016 after Brady Toensing, a lawyer who was the state chairman for Trump’s presidential campaign, wrote to the U.S. attorney and federal bank regulators, alleging potential bank fraud. FBI agents conducted interviews last year, but the probe was not publicly confirmed until this April, when the local news outlet VTDigger.org reported that a federal prosecutor had asked that records from the college be preserved.
Last week, an attorney for the Vermont Educational and Health Buildings Financing Agency, which helped the college get financing, gave The Post a copy of an April subpoena ordering its executive director to turn over documents related to the loan. The subpoena is the first public confirmation that prosecutors have collected evidence to present to a grand jury.
Paul J. Van de Graaf, chief of the criminal division in the U.S. attorney’s office in Vermont, cited an ongoing investigation in declining to comment on the case or on the claim that it is politically motivated. The Justice Department also declined to comment.
Burlington College grew out of gatherings in its founder’s living room in the 1970s, drawing Vietnam War veterans and nontraditional students. Former administrators lauded the school’s small size and the opportunity for students to design their academic plans.
Jane Sanders became the college’s president in 2004, with the promise of boosting its profile and its fundraising. By 2010, Sanders was pushing the school to move from its storefront campus to waterfront property that belonged to the local Roman Catholic diocese.
The move would cost the college $10 million.
Sanders told trustees that the college could afford it, former trustees said. She projected a surge in enrollment in the coming year and presented financial documents showing $2.6 million in “confirmed” donations, two former trustees said. The donors were identified only by their initials — presumably to protect their anonymity, former trustees said.
The board decided to pursue the land purchase in May 2010. “The board made the decision based on the information Jane provided,” said Adam Dantzscher, chairman of the board at the time.
The college soon received a $6.7 million loan with the help of the Vermont Educational and Health Buildings Financing Agency, which issues tax-exempt bonds for schools and hospitals.
In addition to providing the donation spreadsheets to the agency, Sanders signed a document saying that the college “expects to receive pledged amounts” of about $2.27 million, records show.
“My gut was, this is biting off more than you can chew,” said Charly Dickerson, one of two board members who voted no after hearing a presentation from Sanders. “Their balance sheet was not all that strong.”
People’s United Bank bought the bond, meaning the bank became the lender. The college promised to pay the remaining $3.65 million to cover the entire $10 million purchase from the diocese over 10 years.
The donations were critical. An independent consultant warned in a report to the state bonding agency that the college’s ability to repay its loans from People’s United and the diocese “depends on its ability to raise sufficient capital through its capital campaign.” An undated report from the college touted a “firm commitment” of $1 million and a verbal commitment of $1 million more.
But only months after the college closed on the property purchase, trustees sensed problems.
“Things did not add up,” Dantzscher said. “The donations were not coming in.”
Trustee David V. Dunn said the college collected only about $125,000 through the summer of 2011. The trustees asked other college administrators to get in touch with donors, he said.
“What they were finding was different than what was represented,” he said. “Multiple donors were saying they had never committed to those amounts.”
One of the listed donations, for example, was a $1 million gift from Corinne Bove Maietta, a member of a well-known Burlington family. In fact, trustees learned, the $1 million had been intended as a bequest upon her death.
Maietta’s accountant, Richard Moss, confirmed the bequest and said his client went on to donate $50,000 to $100,000, a gift that was to be subtracted from the bequest. Moss said FBI agents contacted him in February or March for help in locating Maietta.
Maietta did not return a message from The Post.
By October 2011, the trustees asked Sanders to resign, in part because of the fundraising flap.
Sanders touted major accomplishments in her October 2011 report to college trustees, such as providing financial aid to students, expanding academic offerings and improving accreditation. “We have come a long way over the past seven years, and we should be proud of what we have achieved,” she wrote.
Four months after Toensing wrote the letter last year urging the U.S. attorney’s office to investigate, the college closed under financial distress, and the bank foreclosed on the property. It is unclear whether the bank lost money. People’s United spokeswoman Cynthia Belak declined to discuss the deal, saying that “as a matter of policy, we do not comment on matters related to our clients.”
The diocese said in a statement that it was “satisfied” with a settlement it reached with the college on repayment of the $3.65 million loan: In addition to the more than $540,000 in principal payments made on the loan, the college agreed to give the diocese $1.05 million in cash and a “$1 million investment” in a company it did not identify.
Dantzscher, the former college trustee who was among the donors on the list, said he considers himself a victim of financial mismanagement at the college.
“I would say everybody is a victim,” he said. “The community, the students, the employees, the board of directors. Everybody gets hurt.”
Dantzscher said he was contacted by law enforcement officials, but he declined to reveal details of the conversation. Speaking on the condition of anonymity, three other people familiar with the college’s financing said they were contacted by federal authorities.
Weaver, Sanders’s spokesman, said Jane Sanders was not at fault.
“Are there now going to be detractors who now want to blame Jane Sanders for all the failures that happened after she left?” he said. “Frankly, I’d be surprised if there weren’t.”
Weaver suggested that Bernie Sanders has been targeted by the GOP because he’s a popular politician who could challenge Trump for the presidency in three years. Weaver said the allegation is “right out of the Benghazi playbook.”
“But it is particularly nasty even for them — going after a political opponent’s spouse,” he said.
Weaver said that neither Jane Sanders nor Bernie Sanders had been contacted by law enforcement officials.
Still, Jane Sanders hired a Burlington attorney and a D.C. law firm this spring, amid signs that federal prosecutors were escalating their inquiry. VTDigger.organd Politico Magazine last month reported that Jane Sanders had retained counsel.
The Vermont Agency of Education took possession of the college’s business records after the school’s closure to ensure that graduates could still access their academic records. Federal prosecutors visited the state offices in April and carried out 20 to 30 boxes of the school’s business files, said Molly Bachman, general counsel for the education agency.
Also in April, the Vermont Educational and Health Buildings Financing Agency received a subpoena for records related to the land deal and all fundraising efforts, pledges and donations, according to a copy of the subpoena The Post obtained through a public records request. It is titled “grand jury investigation” and directs the bonding agency to contact a special agent with the Federal Deposit Insurance Corp., a banking regulator. The FDIC sometimes helps federal prosecutors in investigations that involve banking.
In response to the subpoena, Executive Director Robert Giroux turned over 900 pages of documents, agency lawyer James C. Foley Jr. said.
In recent weeks, lawyers for Sanders have called at least three former trustees trying to learn more about the investigation, those people said. Two said they were contacted by lawyers with a Burlington firm.
“I didn’t provide any answers,” Dantzscher said.
Dunn, who resigned from the board in 2011, did cooperate. He said he was contacted by phone twice — most recently in the last days of June — by Jennifer Windom, a partner at the D.C. firm Robbins Russell, which represented I. Lewis “Scooter” Libby, who was chief of staff to Vice President Richard B. Cheney and was prosecuted in connection with the Valerie Plame leak scandal.
“She said her firm was representing Jane, and she was trying to get background on the issue so she can help Jane,” he said.
Dunn said that although Sanders’s fundraising figures were inaccurate, he thinks she had good intentions.
“For me, personally, I don’t believe she had malicious intent. I don’t think it rose to that level,” he said. “Jane had an agenda that she wanted what was best for the college, and she stretched it beyond its capabilities.”