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NEW HAVEN – Defense lawyers for five former officials of a public utility cooperative charged with misappropriating public funds to pay for extravagant corporate retreats to the Kentucky Derby and a golf resort filed a motion in court for a dismissal of the charges, claiming that federal prosecutors had failed to present evidence of criminal wrongdoing.
“The trial evidence has not lived up to the story the government spun in the indictment,” the lawyers claim in the filing made late last week in U.S. District Court after prosecutors presented their case against the former officials 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 serves about 70,000 customers
In an opposing motion, Acting U.S. Attorney Leonard Boyle argued it is clear that prosecutors have established that the trips in 2015 and 2016 were purely personal and had no legitimate business value.
Boyle argued that prosecutors have shown that the defendants are guilty of “wrongfully taking and spending hundreds of thousands of dollars on private jets, lavish dinners, and luxury hotels for themselves, their family, and their friends, all at CMEEC’s and the ratepayers’ expense,” according to the filing.
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 all no longer associated with CMEEC. They were indicted in 2018 by a federal grand jury after an investigation by the FBI.
Their lawyers argue that the trips to the iconic horse race and the Greenbrier golf resort in West Virginia had legitimate “corporate value” as networking and strategy retreats for the group, and therefore there was no theft from ratepayers.
“At bottom, the evidence establishes that the expenses used to pay for the Board retreats were in the budget and intended to further CMEEC’s team-building efforts,” the defense lawyers claim in their latest filing. “No reasonable jury could find that the defendants tried to conceal the retreats or the retreat expenses from the Board, or that the retreats were exclusively for the personal benefit of the defendants.”
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 proceedings before Judge Jeffrey Meyer are scheduled to resume today, but it is unclear when Meyer will rule on the defense’s bid to dismiss the charges.
Other than presenting evidence about what prosecutors call the “over the top” lavishness of the trips, the trial also has focused on whether or not the defendants made efforts to conceal the junkets by obscuring expenses in CMEEC’s accounting process.
The defense asserts in its filing late last week that testimony at the trial has shown that “the retreat expenses were approved by CMEEC’s Board of Directors, tracked openly as part of CMEEC’s finance and accounting operations, fully known to CMEEC staff, including all of the accountants, appropriately accounted for and booked on CMEEC’s general ledger, and reviewed by CMEEC’s auditors every year.”
But prosecutors challenge that claim in their response filing, saying that “rather than transparently informing the Board that the budget included expenses for Kentucky Derby and Greenbrier trips, including luxury hotels, private planes, spa treatments, and $10,000 dinners, the defendants hid all of those costs behind the single word, ‘Expenses.’ At the very least, this is a factual dispute that should be put to the jury.”
Other evidence presented was that some of the men circulated “talking points” that contained misleading information about the trips—including that “no ratepayer / taxpayer funds were used.”
“The sharing of talking points and the providing of materially false statements made in response to questions that were raised established the defendants’ entering into and participation in the unlawful agreement, their knowledge and criminal intent, and their intent to defraud,” Boyle wrote.
And although the trial has often focused on complex accounting testimony and arguments over whether CMEEC member towns and ratepayers can be considered “victims” in the case, Boyle wrote that the essence of his allegations against the men are simple.
“There was no work on the trips, no business presentations, and no meeting minutes or agendas,” the prosecutor said.” “Instead, the trips were purely for the sake of fun and pleasure.”