Keith Borge, the former controller of the former College of New Rochelle was sentenced Aug. 28 to three years in prison for failing to pay $20.4 million in payroll taxes and filing fictitious financial statements that caused losses of more than $600,000 to investors in the college’s bonds.
CNR held its last graduation this month and has put its New Rochelle campus up for sale.
Borge, 63, of Valley Cottage, had pled guilty to the charges but argued that he was not the reason the 115-year-old Catholic institution had to close its doors. Several years of declining enrollments had caused a sharp decline in tuition revenue, he argued, and other administrators and the trustees had failed to address the financial strains.
His lawyer, Lee David Auerbach, had recommended no jail time. Federal prosecutors James F. McMahon and Daniel Loss had called for imprisonment, but said a nonbinding sentencing guideline of eight to ten years was not necessary to serve the interests of justice.
He broke the law. CNR is closed. Lives have been shattered, Gwen Adolph, chair of the board of trustees told the court.
“No sentence can change that.”
U.S. District Judge Vincent Briccetti agreed that Borge was not entirely at fault for CNR’s demise, but if college officials had known earlier what he knew, they might have been able to recover.
The judge acknowledged that Borge did not personally profit from the financial diversions. And he said he believes Borge when he says he was motivated by a desire to help the college by using payroll deductions to pay for operational costs.
But the crime, Briccetti said, is not the closure of the college. It is the failure to give the IRS its due and giving bond investors misleading information.
“This is really about concealment and deception,” the judge said.
Borge had created false documents, lied to supervisors and investors, and blamed other people for his own failings.
If he were really committed to CNR, he would not have retired in 2016 at age 60. He would have stuck it out and handled the financial problems openly and honestly.
Borge’s actions were similar to a Ponzi scheme, in that he had to keep the balls in the air and keep everything going until it collapsed.
The impact, Briccetti said, has been devastating to employees who devoted their lives to CNR, to students who must now make new arrangements, to alumni who are emotionally attached to the college and to a town that lost a bedrock.
“That’s a lot of loss,” Briccetti said.
The magnitude of the crime, the judge said, warrants incarceration. He granted a variance from the federal guidelines, because the crime was not violent, he did not profit from the crimes, he has been an otherwise lawful person, and his motive, though misguided, was to save the college.
Briccetti also sentenced him to three years of supervised release following his prison sentence, fined him $25,000 and ordered him to pay $13.3 million in restitution to the IRS.