Lessons learned from Derby scandal saga
If you hold an executive position with a public or quasi-public agency and are thinking about using agency money to go on a junket or treat yourself to a new toy — under the guise that it is business related, of course — think again. If you are stretching the credibility of business related, don’t do it.
The sentencing of three electric-energy officials last week to brief stints in federal prison provides a warning. Taking advantage of a position of public trust, rather than living up to the ideals of that trust, can destroy careers, reputations, and even land a person in prison.
Last week three men, all formerly associated with an energy cooperative jointly owned by state municipal electric companies, reached the end of the line of their rationalizations. Federal investigators did not buy their excuses for using public money for their frivolity and neither did the jury in convicting them nor did U.S. District Court Judge Jeffrey A. Meyer in sentencing them.
Most public officials do what is right because it is right. Others need incentives. This case provides them.
The Connecticut Municipal Electric Energy Cooperative, an entity few in the region had heard of before it became embroiled in scandal, brought together Drew Rankin, who served as the co-op CEO, John Bilda, former Norwich Public Utilities general manager and former co-op vice chair, and James Sullivan, a former Norwich city council member, one-time congressional candidate, and past chair of the cooperative.
They were the ringleaders in organizing a series of highly costly annual trips to the Kentucky Derby from 2013 through 2015. They planned a return in 2016, until investigative reporting uncovered the practice. The trips included family members and associates. The scheme ended up using about $1.1 million in cooperative money for the derby excursions that featured pricey hotels, restaurants and other extravagances. It must have been fun.
During those years there were also junkets to an expensive West Virginia golf resort.
The energy cooperative works with municipally owned utilities — in this area electric companies in Norwich, the City of Groton, Bozrah, and Jewett City — to purchase power. A “Margin Fund” managed by the co-op is intended to help stabilize consumer electric rates from market spikes. Instead, it became a slush fund for the trips.
Judge Meyer sentenced Rankin, who cooked up the idea of the trips and of using the fund, to a year in prison and three years of supervised release. The judge sentenced both Bilda and Sullivan to six months imprisonment and three years of supervised release.
The sentences were all significantly less than called for by sentencing guidelines or recommended by the prosecutor. The case again shows the double-standard as to how white-collar criminals are treated compared to common criminal defendants. Folks have faced far longer sentences for stealing much less.
But, as the judge noted, time in prison is only one part of the punishment the three received. Bilda and Sullivan have long been active in their community. With their actions, they irreparably damaged their reputations and caused their families anxiety as the case dragged on for years through Covid-related and other delays.
To varying degrees, these men have continued throughout the process to rationalize their use of the cooperative funds as legitimate business expenses. Only Sullivan, in his sentencing remarks, offered contrition, admitting to a “a serious lapse of judgment” and saying he “did not think about the consequences of my actions and how they would be perceived.”
The arrogance and sense of entitlement it took to lead these men to think it was OK to use the cooperative money for their own extravagant fun times is staggering. But intermingled with those funds were federal dollars, leading to the federal prosecution.
The jury convicted Bilda, Sullivan, and Rankin of one count each of theft from a program receiving federal funds for the 2015 derby and West Virginia trips.
The case drags on. Appeals are likely and Rankin and Sullivan face a second federal indictment of conspiracy and theft for allegedly using CMEEC funds to pay for $100,000 of Sullivan’s personal expenses and travel costs.
One more point. This abuse of power became known because of great local newspaper reporting. Day Staff Writer Claire Bessette relentlessly pursued every lead. The public and prosecutors may not have learned of this matter if not for that reporting. As newspapers decline, and news deserts grow with no local coverage, one must wonder who is getting away with what.
But not around here.
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