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Keith Borge, 62, of Valley Cottage, has been sentenced to three years in prison, $25,000 in fines and will pay restitution that reaches as much as $13.2 million after pleading guilty securities fraud and failure to pay $20.4 million in payroll taxes.
As part of the plea, Borge, a resident of Valley Cottage in Rockland County, admitted to filing financial statements that inflated the college’s net assets and causing investors to lose $612,398. Borge had faced up to 25 years in prison and $300,000 in fines.
“Keith Borge failed to pay payroll taxes on behalf of CNR’s employees, and covered up CNR’s true financial condition," said United States Attorney for the Southern District of New York Geoffrey S. Berman. "Borge thereby denied CNR’s leaders the opportunity to address the college’s financial problems, defrauded CNR’s bondholders, and left the college with a $20 million tax liability. He is now paying the price for those crimes.”
The College of New Rochelle recently held its final graduation for students.
Borge had been with the college since 1979, becoming the vice president for finance in 2011 and the controller again in 2014 before his retirement two years later in 2016. When he retired, college officials launched an investigation and discovered $31.2 million in misappropriated funds, including $20 million in unpaid payroll taxes.
The investigation into the unpaid taxes determined that Borge failed to file the required tax returns and failed to pay the taxes due. It was also revealed that senior management did not provide accurate information to the Board about the college’s finances. The investigation also revealed other significant debts, liabilities, and depletion of assets - including the unrestricted endowment - that total more than $11 million.
CNR took extreme measures following the discovery of the misappropriated money, launching several fundraisers and soliciting donations for alumni. They raised millions of dollars, but the debt ultimately piled up, leading to Friday’s announcement. They sold off assets at a real estate auction and sought to secure a partnership to help the institution stay afloat.
With its doors now closed, the college’s 15.6-acre campus will be leased by Mercy for two years as they attempt to sell. The campus is spread over approximately 425,000-square-feet and includes 20 buildings.
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