The Securities and Exchange Commission said Thursday that it has charged the former controller of a New York-based not-for-profit college with defrauding municipal securities investors by concealing the college’s deteriorating finances.
According to the complaint, Keith Borge made numerous fraudulent misrepresentations and omissions regarding the financial condition of the College of New Rochelle to the investing public in its fiscal year 2015 audited financial statements.
The cumulative impact of Borge’s misconduct was significant: he prepared the college’s FY 2015 financial statements that falsely reported some $25 million in net assets, when actual net assets were in the red by about $8.8 million — an overstatement of roughly $33.8 million, the complaint states.
“Like many small private colleges prior to 2013, the college came under considerable financial stress as student enrollment declined and tuition revenues decreased, leading to chronic cash flow issues,” the complaint states.
Starting as early as 2013, Borge improperly withdrew funds designated for the college’s endowment to fund various operational expenses at the college.
The college is expected to cease operations in August 2019 as a result of its financial difficulties.
Borge created false financial records, failed to file payroll tax submissions as well as to assess the collectability of pledged donations that were increasingly unlikely to be received as donors became more frustrated with the college’s operations, according to the SEC.