New Haven — Attorneys gave opening statements Monday on the first day of the federal trial of five former utility cooperative officials involved in planning Kentucky Derby trips that cost more than $1 million.

“Are you ready for some genuine Kentucky experiences and Derby fun?” Assistant U.S. Attorney Sarah Karwan read to the U.S District Court jury from a 2015 invitation that Drew Rankin, chief executive officer of the Connecticut Municipal Electric Energy Cooperative, sent to 32 board members. The government alleges the lavish trip used money that belonged to several municipal utilities’ ratepayers.

The trip included a private jet, gifts, meals, liquor and tickets to sporting events for dozens of officials associated with the energy cooperative, including board members, top staff, their spouses, family members, friends and business associates.

A similar-toned invitation written by Rankin was sent to 44 guests in advance of the 2016 Kentucky Derby trip, Karwan told the jury during her opening statement.

Rankin, former CMEEC Chief Financial Officer Edward Pryor, former Norwich Public Utilities General Manager John Bilda and former CMEEC board members James Sullivan of Norwich and Edward DeMuzzio of Groton face felony charges of conspiracy and theft from a program that receives federal funds.

The charges stem from annual trips CMEEC arranged for dozens of top staff, board members, some family members, local political leaders, vendors and others from 2013 to 2016. Four of the defendants face four theft charges, while Sullivan faces three charges, as he resigned from his CMEEC and Norwich utility commission positions prior to the 2016 Kentucky Derby trip.

Karwan started her opening statement for the prosecution with quotes from Rankin’s invitations and associated emails to and from top-level participants. Of a $54,000 private jet out of Groton-New London Airport, Rankin allegedly wrote in an email: “It’s more expensive, but much more classy." Karwan also listed the tally of over $200,000 for limousines and souvenirs and $2,200 for “ladies’ scarves.”

One person allegedly responded: “You spoil us,” Karwan read. And Rankin’s alleged response to that: “You deserve all of this and then some.”

Karwan argued the cooperative was created to allow the municipally owned utilities to work together to save money for their electric ratepayers.

But once she concluded, attorneys for each of the five defendants referred to some of the same invitations and the same state law to defend the actions of their clients. They argued the law allowed CMEEC to function as a corporation, including holding corporate retreats.

The defense attorneys said the “board retreats” or “strategic retreats” were important and successful board events to bring unity and cohesiveness to what had been an underperforming and dysfunctional organization prior to Rankin’s arrival.

Attorney Craig A. Raabe, representing Rankin, told the jury the defense evidence will show that the Kentucky Derby retreats were legal and are allowed by the state statute that created the cooperative to allow municipal utilities to work together to reduce rates and improve revenue for member utilities.

Raabe and other defense attorneys argued that there were no attempts by board members and trip participants to “hide” the trips, and that the CMEEC board of directors approved the expenses through their annual budget deliberations.

Raabe said Rankin was hired by CMEEC in 2011 to turn around the underperforming cooperative, which had been engaged in costly energy contracts. He characterized board members as acting in the interests of their individual utilities, rather than the cooperative and said Rankin organized the board retreats to foster better cooperation, board bonding and trust.

Raabe argued that the effort worked, and CMEEC in 2015 saved its member public utilities more than $40 million in electric energy costs.

“And he did it with his management style of celebrating successes,” Raabe said.

Attorney Thomas J. Murphy, representing Bilda, again cited the dysfunction of the cooperative board and said Rankin increased the cooperative’s transparency with members, cut expenses and increased revenues. Murphy too said Bilda committed no crimes and stressed his highly regarded performance as head of NPU prior to publicity about the Kentucky Derby trips and subsequent charges.

Murphy said Bilda attended the trips as part of his duties to attend CMEEC functions. He brought his wife and family members, as did others, Murphy said. The idea for the trips, Murphy said, was to allow board members to be social and for “team building.”

Murphy and other defense attorneys stressed that the board approved the trips through the annual budget process, that outside annual audits were done on the cooperative’s financial records, and neither the auditors nor CMEEC’s former General Counsel, Phillip Sussler, raised any alarms that the trips could be illegal.

Attorney Daniel S. Noble, representing Pryor, said his client worked for CMEEC, with Rankin as his boss. Noble said Pryor attended the trips at Rankin’s invitation and had no role in arranging or planning the outings.

“He didn’t attend to have vacation with his bosses,” Noble said. “No, his bosses asked him to, and it was his job to go.”

Former CMEEC board member Paul Yatcko, who first served as Groton Utilities director and later as CEO of South Norwalk Electric and Water, was subpoenaed to testify by U.S. prosecutors. Yatcko, now retired and not a board member, said he was invited to the Kentucky Derby trips and to an October 2015 trip to the Greenbrier resort in West Virginia, but never attended. He said he had conflicts but said he never objected to the trips at board meetings or to cooperative staff.

Yatcko answered technical questions about the operations of the cooperative and its relationship with the member utilities.

Assistant U.S. Attorney Michael McGarry showed Yatcko a series of email exchanges among Rankin, Sullivan, Bilda and DeMuzzio regarding the August 2015 trip by the four of them to The Greenbrier resort. Rankin characterized the trip as a “scoping” trip to “evaluate” the golf courses, accommodations and historic World War II-era bunkers designed to protect government leaders during wartime in advance of a larger board retreat there in October 2015.

Sullivan allegedly sent an email to Rankin, Bilda and DeMuzzio in response to Rankin's golf trip proposal stating: “Is your name ‘I deserve a raise?’” DeMuzzio, Bilda and Yatcko all were members of the cooperative board’s compensation committee, but Yatcko testified he was unaware of the August 2015 trip.

In response to a series of questions from McGarry, Yatcko said he did not recall any votes or discussions by the board regarding the Greenbrier or the Kentucky Derby trips.

Other emails among Bilda, Rankin and DeMuzzio involved discussions of Rankin’s alleged lobbying for a raise, citing surveys of compensation of other public utility CEOs. Yatcko said he was not included in any of those exchanges and would have liked to be included in any messages in which Rankin lobbied for a raise.

In cross examination, Yatcko said he did vote at one time to grant Rankin a raise for his performance, but said he abstained from an increase based on the CEO compensation survey.

Under cross examination by attorney R. Bartley Halloran, representing Sullivan, Yatcko said CMEEC’s financial performance did improve under Rankin’s early tenure, including recovery from the departure of Wallingford Department of Public Utilities, a large  member of the cooperative.

But Yatcko said he saw no difference in the relationship of board members prior to the Kentucky Derby trips and told attorneys he could not directly associate success of the cooperative with the Kentucky Derby or Greenbrier trips.

 c.bessette@theday.com