Indicted CMEEC officials seek dismissal of all federal charges

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All five defendants charged in federal indictments with conspiracy and theft in connection with lavish trips to the Kentucky Derby and a West Virginia golf resort for the Connecticut Municipal Electric Energy Cooperative have filed motions to dismiss the cases entirely, citing federal government overreach and false and misleading information.

One motion called the indictments “baseless media-driven prosecution.”

The five officials, former CMEEC CEO Drew Rankin — fired May 9 following a closed-door meeting — 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 were indicted Nov. 8 following a two-year investigation by the FBI and IRS.

Each was charged with one count of conspiracy and three counts of theft from a program receiving federal funds for their roles in planning CMEEC-hosted and -funded trips to the Kentucky Derby for CMEEC board members, top staff, family members and dozens of invited guests, including vendors and local politicians. The trips from 2013 through 2016, plus unrefunded deposits for a 2017 trip, collectively cost $1.2 million using the cooperative’s profit margin account revenues otherwise designated for electric rate stabilization for member municipal utilities.

Rankin and Sullivan face the same charges in a second indictment for CMEEC’s payments of nearly $100,000 in alleged personal expenses and travel for Sullivan. Sullivan, the former cooperative board chairman, is a federal lobbyist but was not a registered lobbyist for CMEEC.

One motion to dismiss filed by Rankin’s attorney, Craig A. Raabe, called the case “nothing more than the federal government's attempted criminalization of business judgment that is authorized by a state statute.” Raabe and attorneys for the other defendants cited the state law that created CMEEC, which granted the cooperative “any and all powers that might be exercised by a natural person or private corporation.”

They argued that planning business retreats and so-called team-building exercises, including to the Kentucky Derby and The Greenbrier golf resort — “two mainstay corporate retreat locations,” Raabe wrote in Rankin’s motion — was part of their authorized activities, and the federal government was overreaching by criminalizing activities authorized in the state statute.

The attorneys also argued there was no theft of federal funds, since the money used for the trips was CMEEC’s own generated revenue, not the federal funds cited in the indictments. Bilda’s attorney, Thomas J. Murphy, wrote that CMEEC received a U.S. Department of Energy SmartGrid grant to upgrade utility customer metering systems.

“The margin ‘account’ included no federal funds,” Murphy wrote, “which explains why the indictment makes no claim that federal funds were used to pay for these retreats.”

Attorneys also challenged the claim that the CMEEC board never approved the funds for the trips during open meetings. The margin fund and the administration budget listed as “board expenses” or “delegation related expenses,” and purchase orders for the 2016 trip were “clearly stated that the cost was for ‘board strategic retreat 2016 expenses,” Raabe wrote. Further, he wrote, board members were invited on the trips and many attended for years without complaint.

“The supposed victim of Mr. Rankin’s ‘theft’ knew about the repeated retreats, did not restrict them in any way and many board members voted with their feet by attending the retreats,” Raabe wrote. “That is not ‘theft.’”

In Sullivan’s motion, attorney Trent LaLima argued that Sullivan departed the CMEEC board in October 2015, yet the indictment charged him with counts associated with activities in 2016, when he did not have any official role with CMEEC.

Pryor, through his attorney, Michael English, argued that federal investigators “intentionally or negligently” misled Pryor by first assuring him and CMEEC’s counsel that Pryor was not a potential target of the indictments. In the motion, English wrote that Pryor initially declined to be interviewed regarding the retreats until government representatives informed CMEEC’s counsel, Joseph W. Martini, that Pryor was merely a witness. Pryor did not have his own attorney present and did not seek potential immunity.

“The interview was, however, an ambush,” English wrote. “During the interview, federal agents aggressively accused Mr. Pryor of wrongdoing in an attempt to intimidate Mr. Pryor into cooperating with the Government.”

The defendants are asking the New Haven U.S. District Court judge for an evidentiary hearing to present their motions to dismiss the cases.

c.bessette@theday.com

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