Were the ratepayers in six Connecticut towns “victims” in a federal criminal case against a group of former utility executives accused of stealing public funds to pay for lavish annual trips to the Kentucky Derby and golf outings at a West Virginia resort?
That is a key question that will be argued at the upcoming trial of five former officials of a Norwich-based public utility cooperative indicted on charges of theft and conspiracy in the case, recently-filed documents in U.S. District Court in New Haven show.
The defendants were on the board of the Connecticut Municipal Electric Energy Cooperative (CMEEC), a coalition of municipally-owned utilities in Norwich, Groton City, Jewett City, Bozrah, South Norwalk, and East Norwalk that serve about 70,000 customers.
Indicted in 2018 by a federal grand jury after an FBI investigation, the accused – CEO Drew Rankin, Board Chair James Sullivan, Norwich Public Utilities General Manager John Bilda, Board member Edward DeMuzzio and CFO Edward Pryor – are no longer associated with the cooperative.
Prosecutors say they will present evidence that the trips in 2014, 2015 and 2016 cost hundreds of thousands of ratepayer dollars and did not relate to CMEEC business and its mission of delivering “efficient, low-cost and reliable electric power.”
“Instead, these trips and the related costs—which included travel expenses, private chartered airfare, first-class hotel accommodations, meals, tickets to sporting events, golf fees, souvenirs and gifts— were intended to personally benefit, compensate, and reward the charged defendants and their family members, friends, and associates,” Acting U.S. Attorney Leonard Boyle argued in a pre-trial memo filed last week.
Lawyers for the five defendants, however, say that the trips had legitimate “corporate value” as networking and strategy retreats for the group – and therefore there was no theft from ratepayers.
“The Government will not be able to prove its core allegation that the CMEEC Board retreats in question provided no corporate value, but rather were purely ‘for the personal, pecuniary and financial benefit of [the defendants and] their family members, friends, and associates,’ ” the defense lawyers wrote in a joint memo.
The defense lawyers are R. Bartley Halloran, Craig S. Raabe, Trent A. LaLima, Christopher M. Barrett, Thomas J. Murphy, William F. Dow, III, Daniel S. Noble, Alfred U. Pavlis, Elias Laris, James J. Healy and Kenneth Rosenthal.
The lawyers also challenge the prosecution’s assertions that ratepayers were victims in the case, arguing in documents that “there is no empirical evidence or analysis to support this claim.”
Jury selection is scheduled to begin next week, and the trial before Judge Jeffrey Meyer in early November.
Prosecutors intend to call witnesses who participated in the trips, including guests of the defendants.
Those witnesses, prosecutors say, will testify about what one grand juror called the “over the top” nature of the trips, including the use of “limousines and private chartered planes, the presence of alcohol, the entertainment activities, and the giving of gift bags for the participants (many of whom had no relation to CMEEC).”
The utilities involved in the case are Norwich Public Utilities, Groton Public Utilities, Jewett City Department of Public Utilities, South Norwalk Electric and Water, East Norwalk Electric Department, and Bozrah Light and Power.
Court documents also show that the defense lawyers are concerned about weeding out potential jurors who may be ratepayers or otherwise closely associated with those utilities, given that prosecutors consider them to be victims of the alleged theft of funds.
“The need to meaningfully screen potential jurors for pretrial and/or victim bias is thus particularly acute in this circumstance,” says one filing related to the defense’s request to be able to challenge and exclude potential witnesses.
The federal funds in question were received by CMEEC through the Department of Energy, Department of Housing and Urban Development, the Department of Education, and the Department of Defense.
Questions about the trips first emerged in late 2016, when Norwich and Groton officials opened ethics investigations, and a subsequent forensic audit of CMEEC’s books concluded the associated expenses “appeared inconsistent with CMEEC’s purpose,” court records show.
A planned trip in 2017 was subsequently cancelled.
Part of the prosecution’s case will include evidence allegedly proving that the defendants “concealed their criminal conduct” by designating trip-related costs as legitimate board expenses.
At least one of the defendants, they say, circulated “talking points” and made statements to the media that included the phrase “not a dime of taxpayer funds” was used to pay for the trips.
Prosecution court filings by Assistant U.S. Attorneys Sarah P. Karwan, Michael S. McGarry and Tara E. Levens counter that claim, asserting that “A CMEEC dollar is made up of Member Towns’ cents and that the trips did cost the Member Towns and their ratepayers money.”
The prosecutors also dismissed the defense claim that the trips were legitimate CMEEC business.
“Under the defendants’ version,” they wrote, “if there were a single phone call made, a single email read, or if one of the defendants or one of their guests uttered the word ‘electricity’ during the four-day trip, …the jury should find the defendants not guilty. They are wrong.”