FBI investigation into local utilities includes new subpoena, grand jury inquiry
Norwich Public Utilities has paid nearly $50,000 in legal bills related to an apparently ongoing FBI investigation into the utility’s relationship with the Connecticut Municipal Electric Energy Cooperative, including a new subpoena received in late February.
The FBI launched its investigation into CMEEC and its member utilities on Oct. 28, 2016, after news reports revealed that CMEEC had hosted lavish trips to the Kentucky Derby for dozens of top staff, board members from the owner municipal utilities, CMEEC vendors, family members and public officials. The trips cost a collective $1.02 million from 2013 to 2016.
The Day recently received copies of legal bills incurred by both Groton City and by NPU in connection with the FBI investigation in response to an April 19 Freedom of Information Act request. NPU has paid the Hartford firm Reid and Reige, P.C., a total of $49,963 for bills dating from Nov. 1, 2016, through March 19, 2018. Groton City’s total legal costs were much lower at about $6,000 to the firm Berchem, Moses & Devlin, P.C., of Milford. When including work on a local ethics violation investigation, Groton’s legal bills climb to more than $30,000.
CMEEC has not yet provided documents in a similar April 19 FOIA request filed by The Day for its legal costs pertaining to the FBI investigation.
A review of records and public statements made at the time the investigation started showed that on Oct. 28, 2016, agents arrived at several local offices, including NPU, Groton Utilities, Bozrah Light & Power and Jewett City Department of Public Utilities and Norwich City Hall with subpoenas seeking financial information and details about the Kentucky Derby trips and CMEEC’s and the utilities’ finances. CMEEC confirmed at the time that a “government inquiry” had been made.
The Norwich legal bills describe many hours spent reviewing and analyzing the subpoena, conference calls among various attorneys and with NPU administrators and finance and IT staff members and the FBI investigators. NPU General Manager John Bilda, NPU Division Manager Steve Sinko and then-utilities commission Chairwoman Dee Boisclair and Vice Chairman Robert Groner attended the 2016 Kentucky Derby trips. Bilda and Sinko attended all four years and Boisclair also attended in 2013 and 2014.
Representing the government were Assistant U.S. Attorney Douglas Morabito, who is listed in the criminal division at the New Haven office; Sarah P. Karwan, listed in September 2017 as deputy chief of the Financial Fraud and Public Corruption Unit in New Haven, and Special Agent Marc LaFrance in the FBI New London office, according to the bills.
In a flurry of activity from November 2016 through January 2017, the NPU attorneys referred to culling emails for relevant information, document searches, reviewing electronic stored information — called ESI repeatedly throughout the invoices — and holding strategy sessions with attorneys and NPU officials to prepare the subpoena responses. Throughout February 2017, the attorneys were reviewing final documents “for responsiveness” to the subpoena.
A new subpoena from the U.S. Attorney’s Office arrived in late February 2018. On March 14, attorney Thomas V. Daily described a “telephone conference with (NPU Assistant General Manager Chris) LaRose regarding response to grand jury subpoena,” and production of NPU’s response to the subpoena. On March 19, the attorneys finalized a cover letter to Karwan of the Financial Fraud and Public Corruption Unit and created a CD sent by Federal Express that day.
FBI comes calling
Groton City attorney Bryan LeClerc held a conference call “with client” on Oct. 31, 2016, to discuss the investigation. LeClerc reviewed the subpoenas and held several conference calls with the FBI's Morabito and LaFrance, other attorneys and Groton City officials over the next two months before finalizing documents for transmittal on Jan. 19, 2017.
In March of this year, the attorneys held conference calls with former Mayor Marian Galbraith and current Groton City Mayor Keith Hedrick, as well as calls with Special Agent LaFrance.
NPU spokesman Chris Riley said utility officials would have no comment on the FBI investigation or the legal bills. Hedrick, who was elected Groton City mayor in May 2017, said he has not been contacted by anyone at the FBI regarding the investigation and hasn’t been involved other than receiving the legal bills.
“That doesn’t mean anything,” Hedrick said, “that the investigation is ongoing or is closed.”
Galbraith could not be reached for comment. She said throughout the ethics investigation that she was unaware of the Kentucky Derby trips until the newspaper accounts in October 2016.
Officials from the utilities and the U.S. Attorney’s Office have declined to comment on the investigation. But some details, including references to a grand jury, were revealed in a 447-page report compiled by Jack Edwards into ethics complaints against Groton Utilities officials who had participated in the Kentucky Derby trips. Edwards, a retired inspector for the chief state's attorney, was hired by the city to investigate the ethics complaints and report to the Ethics Commission.
Groton resident Michael Boucher filed an FOIA request to obtain the report, and a copy, with eight pages containing blacked-out redactions, is on file in Groton City Hall. Boucher has filed an FOIA complaint seeking the redacted pages. City officials said the redacted portions contain attorney-client privileged information.
Boucher, a frequent critic of Groton Utilities and CMEEC, said he was contacted by the FBI in summer of 2017 after he posted comments to news stories on the Groton City ethics investigation but he told the two agents he had no inside information for them.
“The FBI pulled up at my house unannounced and asked if I had an inside source,” Boucher said. “... They were interested in ‘the culture of taking’ I discussed in my blogs. I talked to them for about 20 minutes.”
From Bozrah to Groton
In a two-page statement provided to Edwards for the ethics investigation, Heidi Comeau, executive administrator in the Groton City mayor's office, wrote that GU Director Ron Gaudet came to the mayor’s office on Oct. 28, 2016, to provide a copy of the subpoena received that afternoon at Bozrah Light & Power, which is owned by GU.
At about 4 p.m. that day, the FBI agent arrived in Groton and met with Gaudet, Comeau, GU finance general manager David Collard and GU information technology general manager Sue Blanchette. Comeau described the subpoena as “very detailed” and wrote in her statement that Gaudet told the agent he did not keep information such as itineraries of the Kentucky Derby trips. He referred the agent to CMEEC for that information.
“There were general conversations about GU’s relationship with CMEEC,” Comeau wrote in the statement. “The type of information the agent might be looking for — David Collard stated that we would not have much. ... Sue Blanchette and I were both probing as to the type of information being sought, how inclusive, format for delivery, etc.”
The agent told the group he would interview each of the participants individually as part of the investigation, Comeau wrote.
In 2016, Groton utilities commission member Edward DeMuzzio, Collard and Gaudet attended the Kentucky Derby trip, Gaudet for only one day. Former Groton City Mayor Dennis Popp also attended in 2016. DeMuzzio also attended in 2014 and 2013.
Comeau wrote that Gaudet welcomed the investigation, quoting him as saying, “It will be nice to have a third party look at this and prove we did nothing wrong.” Comeau wrote that she then cut off the “informal” discussion and told the agent the city “needed to take a moment to look at what was being asked of us and inform our counsel of what was happening.”
Gaudet had alerted then-Mayor Galbraith at 3:14 p.m. on Oct. 28 in an email that Bozrah Light & Power had just received the subpoena “for all information related to the CMEEC trip, other communications with CMEEC and some more information related to bids.” He wrote that he expected the same request would come to Groton “soon.”
In his own summary of his investigation, Edwards wrote on Dec. 12, 2016, that he verified that CMEEC reserved a private jet through Mystic Air at Groton-New London Airport for the trip, and he contacted the Galt House, where the group stayed in Louisville. Edwards reported a three-day Derby weekend stay would average between $4,000 and $5,000 per room and tickets to the Friday Kentucky Oaks race would be $600 each and the Kentucky Derby on Saturday, $900 each.
“I inquired if the FBI had requested data prior to my call,” Edwards wrote. “I was told ‘not from I personally.’”
In a Dec. 1, 2016, entry that contains two redacted paragraphs, Edwards wrote that he contacted the FBI’s New London office and talked to LaFrance, who told Edwards he would not respond to any questions.
“I will advise LaFrance of interviews in advance so I do not impair his case,” Edwards wrote.
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