GOP targets Sanders over wife's role in land deal under investigation

WASHINGTON (Sinclair Broadcast Group) — The Republican National Committee took aim at the wife of Sen. Bernie Sanders, I-Vt., Monday, raising the prospect in a mass email and a blog post that a federal investigation involving Jane O’Meara Sanders’ work at Burlington College could land her in prison and tank his chances at another run for the presidency in 2020.

Sen. Sanders and Jane Sanders have both adamantly denied any wrongdoing and dismissed the probe as the result of a political vendetta, and there is currently no indication she will face criminal charges. However, recent media reports indicate the Federal Bureau of Investigation and federal prosecutors continue to conduct interviews and collect evidence, including using a grand jury to question at least one witness.

The investigation reportedly centers on a loan Burlington College received in 2010 when Jane Sanders was president of the small Vermont college. Discrepancies have been alleged between claims Sanders made in documents listing pledged donations for the school and the pledges and donations that were actually made.

Sanders was hired in 2004 to lead the school, which operated on an extremely small campus and enrolled less than 200 students, with the expectation that she would raise its profile and improve fundraising efforts.

In 2010, the college sought tax-exempt financing through the Vermont Educational and Health Buildings Financing Agency to purchase 32 acres of property on Lake Champlain from the Roman Catholic Diocese of Burlington where the school could build a new campus.

The VEHBFA approved $6.7 million in bonds, which would be purchased by People’s United Bank. The Roman Catholic Diocese agreed to a $3.65 million mortgage to make up the rest of the $10 million purchase price. To convince the college board of trustees and the financers to support the deal, Sanders submitted a spreadsheet that listed $2.6 million in confirmed pledges for donations and $2.5 million more in unconfirmed pledges, with the donors identified only by initials.

Six months later, less than $300,000 in donations had materialized, according to public records, far short of the $1.2 million Sanders had claimed would be collected by that time. At least five people who believe initials on the spreadsheet referred to them have since come forward and denied that they agreed to the amounts or timelines Sanders asserted.

In December 2011, Sanders was forced out of her position by the board of trustees. Board members have offered differing accounts of why Sanders was replaced and what role the land deal and concerns about her fundraising claims played.

In 2014, the college’s accreditation was suspended due to financial problems. According to the Burlington Free Press, in April 2016, the New England Association of Schools and Colleges moved to revoke its accreditation. Around the same time, People’s United Bank denied a request to renew the school’s $1 million of credit.

In May 2016, Burlington College shut down, with school officials citing the “crushing debt” incurred in the 2010 land purchase as a reason. In a letter to the Chronicle of Higher Education months later, the college president laid blame directly on Sanders’ “appallingly inappropriate investment.”

“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,” Carol Moore wrote, suggesting the board and the bank that signed off on the deal had some explaining to do.

Earlier that year, Brady Toensing, a Republican attorney who would later serve as co-chair of Donald Trump’s campaign in Vermont, sent a letter to then-Vermont U.S. Attorney Eric Miller and the acting inspector general for the Federal Deposit Insurance Corporation alleging that Jane Sanders committed federal loan fraud by misrepresenting the amount of confirmed grants and donations that had been pledged. He also claimed that her status as “the wife of a powerful United States senator” gave her the political clout to avoid the scrutiny that such a loan application would normally face.

In a later records request to the VEHBFA, Toensing specifically alleged that Sen. Sanders office “improperly pressured People’s United Bank to approve the loan application.”

An official investigation was opened into the transaction, though few details have been confirmed publicly. More than a half dozen people associated with Burlington College have told reporters they were contacted by the FBI and prosecutors, and agents have reportedly retrieved at least 20 boxes of the school’s records from the Vermont Agency of Education.

Most recently, in a development that led the RNC to blast out its prediction that Jane Sanders could be going to jail, VTDigger.org reported Sunday that former college board member Robin Lloyd confirmed she was questioned in front of a grand jury in October by Paul Van de Graaf, head of the criminal division of the U.S. attorney’s office.

However, Lloyd told another news site, Seven Days, that she has no idea if a grand jury was specifically empaneled to hear evidence regarding Burlington College. She received a subpoena only after refusing to speak to investigators without a lawyer, and she was called in on a Thursday, the same day the standing grand jury meets to hear evidence in various ongoing cases.

Legal experts say it is not uncommon for prosecutors to use standing grand juries to hear testimony, but not enough information about this case is public to say for sure whether that was what transpired here.

“That’s kind of how it rolls. That’s standard,” said former prosecutor Debbie Hines. “If you decline to speak to them voluntarily, then what the prosecutor is going to do is summon you with a subpoena to appear before a grand jury.”

“What happens is the agents go out there, the woman won’t talkso they give her a subpoena,” said James Wedick, former coordinator of the FBI Sacramento office’s white collar crime program.

Jeff Weaver, a spokesman for the Sanders family, has disputed the notion that Jane Sanders is under a grand jury investigation, and he insisted the latest news does not change that.

"We have absolutely no reason to believe that there is a grand jury empaneled to examine Burlington College, Jane Sanders, or any aspect of Dr. Sanders' service as president of Burlington College," Weaver said in a statement to Seven Days. "As best we can tell, the current news reports are simply recycling an account of a government interview of a witness from several months ago. Nothing new here."

An April 2017 letter from the U.S. attorney’s office to the VEHBFA obtained by the Washington Post included a reference to a grand jury and a subpoena for records, but it is again unclear from the available information if the grand jury in question is specifically probing this case.

“Generally speaking, unless it’s a huge case, the grand jury that’s empaneled for their durationthey’re going to hear anything that comes up within that timeframe,” Hines said.

Such subpoenas for documents are crucial to determining whether Sanders or anyone else involved with Burlington College committed a crime.

“That’s the problem with bank fraud,” Wedick said. “You need to prove that they intended to defraud them.... People have bad judgment and it’s not necessarily something that they deserve to go to prison for. That’s why white collar crime is so difficult, because you have to prove criminal intent.”

“It’s not an honest mistake,” Hines said of the legal standard for fraud. “It’s not, ‘Oh, ignorance, I didn’t know that.’ It’s an intentional crime.”

Prosecutors will also need to prove the misrepresentation was materially significant to the decision the bank made. That would depend on how much of the $5 million in confirmed and unconfirmed pledges claimed was determined to be fraudulent.

Regardless of the current status of the investigation, its existence complicates Sen. Sanders’ bid for reelection this fall and a potential run for the Democratic presidential nomination in 2020, something Republicans are acutely aware of.

“As Bernie gets ready to face Vermont voters in 2018 (and potentially Democratic primary voters in 2020), ‘bank fraud’ is the last thing he wants to be talking about,” Michael Ahrens wrote in the RNC blog post Monday.

The issue received little scrutiny in 2016, but Republican strategist Matt Mackowiak said Sanders will need to deal with it head-on if it continues to loom over him.

“It’s not a problem because Republicans sent out an email,” he said. “It’s a problem because of what transpired at that college.”

The pending investigation will likely take an emotional toll on Sanders until it is resolved, but the outcome is what will ultimately determine if it is fatal to his candidacy.

“Whether it’s a major concern or not I think would depend on the facts of the case,” Mackowiak said.

Though Sanders spokesman Weaver has emphasized that the investigation was reportedly spurred by a Vermont Republican Party official, and the case is now in the hands of a Trump-appointed U.S. attorney, the investigation was launched by the Obama Justice Department, making it difficult to write off as a purely partisan exercise.

Toensing rejected the claim of political motivation, noting that his initial records requests were filed in 2014, well before Sanders announced his candidacy, and the FBI investigation started in 2016 following media reports about the discrepancies in donations, not just his complaint.

“The FBI has not disclosed what prompted its investigation, but it was started under President Obama, his Attorney General Loretta Lynch, and his United States attorney, all of whom are Democrats,” he said.

He still sees significant unanswered questions about the loan.

“A major bank gave special, deferential treatment to the wife of the most powerful politician in Vermont,” Toensing said. “If she had been Jane Doe, instead of Jane Sanders, she never would have gotten this loan.”

The 2020 election is nearly three years away, but the clock is already ticking for Sanders to get this issue off the table if he wants to secure more support from the Democratic establishment than he saw in 2016.

“It’s pretty clear to me that 18 or 20 or 25 Democrats are going to run for president,” Mackowiak said. They will all be competing for the same donors and staff, and the longer this case goes on, the harder it will be for Sanders to build a formidable organization.

“Anything that makes a potential candidate less competitive is damaging,” he said.

Mackowiak believes Sanders needs to get this controversy behind him by the day after the midterm elections, but Gary Nordlinger, a political consultant and an adjunct professor in the Graduate School of Political Management at George Washington University, suggested he can still survive if it drags into mid-2019 as long as Jane Sanders is exonerated in the end.

“We’re barely into 2018 and we should certainly know before this year’s out whether the story has any staying power. If no indictments come out of this, then it will have very little impact,” he said.

“The sooner, the better, obviously,” he added.

A bigger problem for Sanders, Nordlinger expects, will be reviving the momentum that carried him through the 2016 primaries. Aside from Clinton, who lost to Barack Obama in 2008 and defeated Sanders in 2016, Democrats who lose the presidential nomination rarely come back and win it in another cycle.

“That’s sort of historic inertia against the Sanders candidacy,” he said.