Criminal trial of utility officials involved in Kentucky Derby trips starts Monday
Nearly three years to the day after five utility officials stood in New Haven federal court to face indictments on charges related to their roles in planning lavish trips to the Kentucky Derby, they will stand trial in the same courthouse on those charges.
Jury selection was held this past week, and the criminal trial begins at 8:45 a.m. Monday in New Haven federal court.
Former Connecticut Municipal Electric Energy Cooperative CEO Drew Rankin, former CFO 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 in association with the trips. Two other trips were made to The Greenbrier luxury golf resort in West Virginia.
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.
CMEEC is owned by its member municipal utilities: Norwich Public Utilities, Groton Utilities, Bozrah Light & Power, Jewett City Department of Public Utilities, South Norwalk Electric and Water and Norwalk Third Taxing District. The defendants allegedly used money derived from CMEEC revenues that had been intended to be returned to the member municipalities as rate-stabilization funds.
The defendants argue that the money used for the trips was CMEEC money, not belonging to the members, and the state statute that created CMEEC allowed it to function as a corporation, including allowing board retreats, such as those to the Kentucky Derby and golf resort.
The trial had been postponed twice during the COVID-19 pandemic, and over the past three years, the defendants have been granted permission to travel on personal or business trips throughout the country and abroad.
A slew of motions, countermotions and oral arguments were filed in October, as the defendants requested Judge Jeffrey A. Meyer to reconsider his denial of motions to dismiss the case on several grounds. Defendants also asked the court to preclude U.S. attorneys from characterizing the trips as “lavish,” and to refrain from referring to the CMEEC member towns, their ratepayers or taxpayers as “victims” of the alleged thefts.
Another motion by the defendants requested that U.S. attorneys not be allowed to introduce evidence or mention that CMEEC is paying for the defense of the five former utility cooperative officials. CMEEC has paid nearly $4 million to the teams of attorneys representing the five defendants based on CMEEC bylaws that called for indemnification of CMEEC officials for alleged wrongdoings.
The Day requested an updated total of the legal fees paid to cover the defendants’ legal costs. But CMEEC attorney Joseph Martini said in an email to The Day Friday, "we have been informed that a formal written objection will be made with respect to the FOIA request.” He wrote CMEEC intended to comply with the request to release the cost total.
CMEEC is engaged in a separate federal civil suit against its indemnification insurance company, National Union Fire Insurance Co. of Pittsburgh, challenging the company’s denial of coverage for the legal defense costs. While CMEEC had hoped to resolve that dispute prior to the criminal trials, attorneys for both parties recently agreed to continue the case until 30 days following the conclusion of the criminal trials.
Defense attorneys called references to the legal costs “irrelevant” to the criminal charges.
Separate from the trial that begins Monday, Rankin and Sullivan face a second indictment on charges of two counts each of conspiracy and theft for allegedly using nearly $100,000 in CMEEC funds to reimburse Sullivan for personal expenses, including travel. The parties agreed to start that trial at the conclusion of the first case.
Attorneys for the five defendants also requested the government not be allowed to introduce evidence of alleged other “prior bad acts” by Sullivan and Rankin. Sullivan resigned from CMEEC and the Norwich Board of Public Utilities Commissioners in fall of 2015 following an investigation into alleged sexual harassment of an NPU employee. NPU paid a $35,000 settlement to the alleged victim in 2016. Rankin’s alleged bad acts were not defined.
Another request asked that prosecutors refrain from mentioning Sullivan’s actions regarding the solar power firm Brightfields. Sullivan was a paid lobbyist for the firm while serving as a CMEEC board member and chairman of the Norwich utilities commission, and he voted on solar contracts with Brightfields while sitting on the boards.
As of Friday, rulings by Judge Meyer on most of the motions were not filed on the case docket.
The government’s trial memo, filed Oct. 12 by acting U.S. Attorney Leonard C. Boyle, outlined the government’s argument that the defendants were charged for their leadership roles in allegedly using money belonging to CMEEC and its member towns “for their personal benefit to pay for a series of lavish trips to the Kentucky Derby and to the Greenbrier golf resort in West Virginia.”
Boyle stated the government will show that the trips did not relate to CMEEC business or the cooperative’s statutory mission of providing low-cost, reliable electric rates to members.
“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.”
In their trial memo, the defendants’ attorneys jointly stated that the defendants have pleaded not guilty and will show the government cannot prove “the core allegation” that the CMEEC board retreats were solely for personal benefit.
The defense attorneys said they plan to call several witnesses and, depending on the government’s case, “the defendants will determine at the appropriate time whether they will elect to testify in their own defense.”