← back to the registry
FB-005 Liberal-arts college · New York 2019

The College of New Rochelle — A 115-Year-Old College Undone By Its Own Books

fraudclosed2010s
Lifespan
1904–2019 · 115 yrs
Peak Enrollment
~4,000 (2010s)
Killed By
Financial fraud + debt
Status
Closed

Summary

The College of New Rochelle, a private college in New Rochelle, New York, founded in 1904 as the first Catholic women's college in the state, closed in the summer of 2019 after a financial concealment that its own trustees did not discover until the man responsible had already retired. It was, by the end, a secular-operating institution serving a substantially adult and minority student body, much of it through a network of branch campuses in New York City. Roughly 3,000 students were enrolled when the board announced, in February 2019, that the college would not survive the year.

The mechanism was not the familiar enrollment cliff but a fraud. The college's longtime controller, Keith Borge, had for years failed to pay over more than $20 million in federal and state payroll taxes while falsifying the college's financial statements to hide the hole. When he retired in 2016 and trustees brought in outside accountants, the investigation surfaced roughly $31 million in misappropriated funds and concealed liabilities — unpaid taxes, a drained endowment, federal grant money spent on operating costs, donations counted twice. Borge pleaded guilty in 2019 to securities fraud and failure to pay over payroll taxes and was sentenced to three years in prison. By then the institution could not be saved.

What followed was, by the grim standards of the closure era, a comparatively humane landing. Mercy College — a larger neighbor in Westchester and the Bronx — entered a teach-out agreement in March 2019, registered nearly 1,700 New Rochelle students for the fall, made offers to roughly 70 faculty and staff, leased three of the campuses, and took custody of the alumni transcripts and history. The College of New Rochelle held its final commencement on August 20, 2019, ceased operations, and entered Chapter 11 bankruptcy in September with some $80 million in liabilities.

What was lost was not only an institution but a particular kind of access. The School of New Resources had been built in 1972 expressly to bring a liberal-arts degree to working adults who had been shut out of one; its students were disproportionately Black, Latino, and older than the traditional undergraduate. They did not run the college's books, and they had no warning of what was on them. The dry edge of this story belongs to the concealment — a single officer who falsified the ledgers of a 115-year-old college for years. The students belong to the sober part.

Timeline

1904
Founded as the College of St. Angela
Mother Irene Gill of the Ursuline order opens the first Catholic women's college in New York State; it is renamed the College of New Rochelle in 1910.
1972
The School of New Resources
The college launches an innovative liberal-arts degree program for working adults, eventually operating branch campuses across New York City and serving a heavily Black and Latino student body.
2010s
Peak and decline
Enrollment across four schools peaks at roughly 4,000, then erodes as finances quietly deteriorate behind falsified statements.
2014–2016
The hole opens
Controller Keith Borge fails to pay over more than $20 million in federal and state payroll taxes while misstating the college's books to conceal the shortfall.
May 2016
The controller retires
Borge leaves; trustees engage outside accountants.
Late 2016
The discovery
The investigation surfaces roughly $31 million in unpaid taxes, drained endowment, misused federal grants, and falsified figures; the college becomes co-educational the same year.
Feb. 25, 2019
The end announced
The board says the college cannot continue and signs a memorandum of understanding with Mercy College; about 3,000 students are enrolled.
March 2019
The teach-out
Mercy College agrees to teach out most CNR programs, register nearly 1,700 students for fall, and hire some 70 faculty and staff.
March 2019
The guilty plea
Keith Borge pleads guilty in federal court to securities fraud and failure to pay over payroll taxes.
Aug. 10–20, 2019
The last bell
CNR ceases academic operations and holds its final commencement on August 20.
Sept. 20, 2019
Bankruptcy
The college files for Chapter 11 with roughly $80 million in liabilities.
2019
Sentencing
Borge is sentenced to three years in prison and ordered to pay restitution.

The College Built To Let People In

For most of its life the College of New Rochelle was an institution defined by who it admitted rather than who it turned away. It began in 1904 as the College of St. Angela, founded by the Ursuline order as the first Catholic women's college in New York, a serious liberal-arts education for women at a moment when such a thing was scarce. It grew steadily through the twentieth century, and even as the country's women's colleges thinned out, New Rochelle kept finding new constituencies rather than chasing the same shrinking one.

The defining move came in 1972, when the college opened the School of New Resources, a degree program designed for adults who had been shut out of higher education the first time — people working full time, raising families, returning to school in their thirties and forties and beyond. Operated through a constellation of branch campuses in the Bronx, Harlem, Brooklyn, and beyond, it became one of the largest such programs in the region, and its students were overwhelmingly Black, Latino, and older than the traditional undergraduate. By the 2010s the college spanned four schools — Arts & Sciences, Nursing, the Graduate School, and New Resources — enrolling roughly 4,000 in all. It was Catholic in founding and secular in daily operation, and its value proposition was access: a degree for the people the system tended to leave out.

The Ledger That Lied

That mission required money the college did not consistently have, and somewhere in the accounting the gap was papered over rather than confronted. The man at the center of the books was Keith Borge, the college's longtime controller. Over a span of years he simply stopped paying over the college's payroll taxes to the federal and state governments — more than $20 million by the second quarter of 2016 — and falsified the institution's financial statements to keep the omission invisible. He understated the tax liability by roughly $11 million, overstated accounts receivable by some $9.2 million by recognizing pledged donations twice, understated unpaid vendor bills, and inflated investment assets, producing statements that showed a solvent college where there was none.

The deception held until Borge retired in May 2016 and the trustees brought in outside accountants, who pulled the thread. What unspooled was roughly $31 million in misappropriated funds and concealed liabilities: the unpaid taxes, an endowment drained to cover operating costs, federal grant money spent where it should not have been, and a balance sheet that had been fiction. The college disclosed the catastrophe, and the federal government took an interest. In March 2019 Borge pleaded guilty in federal court to securities fraud and to failing to pay over payroll taxes; he was later sentenced to three years in prison and ordered to pay restitution. The crime was not exotic — it was an officer hiding that the bills were not being paid — but it had been compounding for years inside a 115-year-old institution, and by the time it was exposed the debts had grown beyond what any rescue could carry.

A Decent Exit From a Bad Situation

The college did one thing well at the end: it did not strand its students. Recognizing in early 2019 that insolvency was unavoidable, the board signed a memorandum of understanding with Mercy College, a larger neighbor with campuses in Westchester and the Bronx and a similar mission of access. The arrangement was carefully not a merger or acquisition — Mercy assumed none of CNR's debts or legal liabilities — but a teach-out: Mercy received approval to continue most of the college's academic programs, registered nearly 1,700 New Rochelle students for classes beginning in fall 2019, made offers to roughly 70 CNR faculty and staff, leased three of the campuses, and became the permanent home of the transcripts and the alumni record.

So the students who had trusted the College of New Rochelle with their tuition were, for the most part, given a path to finish, and the people who had taught them were given a chance to keep doing so. The College of New Rochelle ceased academic operations on August 10, 2019, held its final commencement on August 20, and filed for Chapter 11 bankruptcy on September 20 with roughly $80 million in liabilities. The contrast with the abrupt closures of the same era is the point: a fraud killed the institution, but a teach-out spared the students the second injury of being cut off mid-degree.

The Five Factors

01
Concentrated financial authority is a single point of failure
One controller, trusted and unaudited closely enough, was able to falsify a 115-year-old college's books for years. When the person who records the numbers is also effectively the person who certifies them, the institution has no independent line of sight into its own solvency.
02
Deferred obligations compound silently
Unpaid payroll taxes do not announce themselves; they accrue penalties and interest while the statements show health. By the time the concealment surfaced, the liability had grown past the point where any merger partner would assume it — which is precisely why no rescue materialized.
03
Mission-driven access raises the stakes of failure
The students most exposed were adult, working, and disproportionately Black and Latino — people for whom this college was the door back into education. When an institution serving the underserved collapses, the loss falls hardest on those with the fewest alternatives.
04
A teach-out is the difference between a closure and a catastrophe
The Mercy College arrangement let nearly 1,700 students continue, hired faculty, and preserved the records, without Mercy assuming the debt. A clean teach-out structure — programs continued, liabilities walled off — is the humane way to wind down an insolvent college.
05
Governance must verify, not trust
Trustees discovered the fraud only after the controller retired and outsiders examined the books. The board's job is not to take the financials on faith but to ensure independent verification of the institution's most basic obligations — like whether it is actually paying its taxes.

Aftermath

For the students, the outcome was as good as an insolvency permits: most transferred into Mercy College and finished, taught in many cases by the same faculty, on campuses Mercy leased to keep operations continuous. Mercy also took custody of the alumni transcripts and the institutional history, so that a New Rochelle degree remained a verifiable, living credential rather than a record orphaned by bankruptcy. The college itself dissolved through Chapter 11, its roughly $80 million in liabilities to be sorted by a court rather than recovered.

Keith Borge went to federal prison. The case became a reference point in higher education for a specific danger — not the demographic squeeze that claimed so many small colleges, but the internal-controls failure that let one officer hide insolvency until it was terminal. The lasting question the episode left was less about why a small private college runs short of money, which is common, than about why no one at the College of New Rochelle knew it for so long.

Lessons

  1. Never let one officer both keep and effectively certify the books; segregate financial authority and audit the most basic obligations — payroll taxes, debt service — independently and often.
  2. Treat unpaid statutory liabilities as an existential alarm, not an accounting footnote; they compound silently and can grow past the reach of any rescue before anyone looks.
  3. A board's fiduciary duty is to verify, not to trust; trustees who take clean-looking financials on faith are not governing, they are hoping.
  4. When closure is unavoidable, structure a teach-out that continues programs and preserves records while walling off the failed institution's debts — it is the difference between students who finish and students who are stranded.
  5. Mission-serving colleges owe their most vulnerable students the most rigorous stewardship, because those students have the fewest fallbacks when the institution fails.

References