CMEEC seeks over $10 million in restitution for Kentucky Derby trips, legal costs
Jul. 8—The utility cooperative that planned and hosted lavish trips will ask a federal judge Wednesday morning to award over $10 million in restitution for losses incurred from three former officials convicted of theft for their roles in planning and attending the trips.
The trips to the Kentucky Derby and The Greenbrier golf resort in West Virginia were hosted by the Connecticut Municipal Electric Energy Cooperative for board members, top staff, family, business associates and public officials from 2013 through 2016.
The trips, along with deposits on a 2017 trip that was canceled due to public outcry, collectively cost more than $1.2 million. CMEEC used revenues the cooperative was supposed to divide among the six member municipal electric utilities to help stabilize rates for customers.
CMEEC, under new leadership since 2018 indictments, is deemed the victim in the criminal case that saw three former officials ― former CEO Drew Rankin, former Norwich Public Utilities General Manager John Bilda and former CMEEC board and Norwich utilities chairman James Sullivan ― convicted of one count each of theft from a program receiving federal funds.
CMEEC seeks restitution for amounts well beyond the cost of the trips from the three convicted former officials. The cooperative will ask for all money spent in 2015, plus $9.5 million in legal bills paid for all five initial defendants, and CMEEC's legal costs throughout the federal investigation, trial, sentencing up to and including Wednesday's restitution hearing.
"Because this work is and will be ongoing through the entry of the restitution order, a final number will be presented to the Court at the restitution hearing," U.S. attorneys wrote in their restitution memo to Judge Jeffrey A. Meyer.
In their response to the court, defense attorneys for the three convicted men called CMEEC's request: "legally unjustifiable — and grossly unfair — to lay the full amount of the 2015 retreat expenses at the feet of just these three defendants."
The arguments will be heard during a restitution hearing in U.S. District Court in New Haven. The rulings will close one chapter in a seven-year controversy that brought down careers and changed state laws governing the CMEEC.
Free on bond
Rankin, Bilda and Sullivan each were convicted of one count of theft from a program receiving federal funds for the 2015 trips to the Kentucky Derby and The Greenbrier resort.
In May, Rankin, chief organizer of the trips, was sentenced by Judge Jeffrey A. Meyer to 12 months in prison and three years of supervised release. Bilda and Sullivan each received six months in prison and three years of supervised release.
All three will remain free on bond pending their appeals.
The three were acquitted of conspiracy and two other theft charges, and a third theft charge was withdrawn by federal prosecutors during the November 2021 trial.
Two other defendants, former Groton Utilities commissioner Edward DeMuzzio and former CMEEC CFO Edward Pryor, were acquitted of all five charges in connection with the trips.
Court appeals of the convictions; a second criminal case against Rankin and Sullivan and one new civil federal court case remain pending in federal courts.
'Wish list' of demands
Attorneys for Bilda, Rankin and Sullivan lashed out at the prosecutors' memo and at CMEEC's demands, writing in a joint pre-hearing memo that instead of analyzing actual costs attributed to the three men, the government prosecutors just passed along CMEEC's "wish list" of demands for restitution.
The defense attorneys objected to any restitution for CMEEC's costs related to Pryor and DeMuzzio and objected to costs associated with the acquitted or withdrawn charges.
They repeated arguments made during the criminal trial that the Kentucky Derby trips and October 2015 Greenbrier trips were board retreats approved in the CMEEC budget. All board members were invited and aware of the trips. As such, the attorneys argued, CMEEC cannot claim them as financial losses.
The defense attorneys said if there is any restitution ordered, it should be limited to the cost of an August 2015 trip to The Greenbrier attended only by Rankin, Bilda, Sullivan and DeMuzzio.
"Accordingly, restitution for the 'actual loss' incurred by CMEEC should be limited to each defendant's pro rata share of the August 2015 Greenbrier trip, which totaled $21,447.39, or $5,361.85 per defendant," the defense attorneys wrote.
The attorneys stressed that to date, CMEEC has not asked for reimbursement for the costs of any of the trips from "uncharged" trip attendees, including from four current CMEEC board members who went on one or more Kentucky Derby trips.
Following the criminal convictions and sentencings of Rankin, Bilda and Sullivan, the CMEEC board voted May 18 to cease future legal coverage for the three men and voted June 7 to seek reimbursement for legal costs paid to them.
The board was required, under its bylaws at the time, to cover the legal defense of board members and staff.
According to court documents, CMEEC has paid $1.47 million in legal bills to Sullivan; $2.47 million to Rankin and $1.42 million to Bilda. Those costs are included in the court restitution request.
Judge Meyer not done with CMEEC cases
On June 21, Rankin filed a civil lawsuit against CMEEC in the same federal court in New Haven, challenging the board's refusal to pay further legal costs to cover Rankin's appeal of his conviction to the U.S. Second Circuit Court of Appeals in New York and a second upcoming criminal trial.
Rankin and Sullivan will be tried in New Haven court on two counts each of conspiracy and theft in a case alleging CMEEC during Rankin's tenure reimbursed Sullivan for nearly $100,000 in personal expenses and travel. That case was put on hold pending the conclusion of the first case and now is scheduled to begin in January, also before Judge Meyer.
Rankin's newly filed civil suit also was assigned to Meyer.
Once the restitution rulings are made, former NPU General Manager Bilda could face another civil lawsuit in state court. Still angry NPU customers have been pressuring state Attorney General William Tong to file suit to revoke Bilda's city of Norwich pension of $147,000 per year. Bilda was allowed to retire with full pension in a separation agreement with NPU following his indictment on Nov. 8, 2018.
State law calls for the attorney general to seek revocation of state or municipal officials' pensions upon conviction of crimes involving theft of public funds.
Tong's office has said they are monitoring the case. In this type of case, the state typically waits until after the court decides sentences and restitution.
New law prevents lavish retreats on public dime
Public shouts of outrage reached Hartford following the October 2016 newspaper stories detailing the Kentucky Derby trips, with chartered private jets, guest lists including family members, CMEEC business associates, then Norwich Mayor Deberey Hinchey and former Groton City Mayor Dennis Popp, itineraries of horse races and lavish dinners.
State Sen. Heather Somers, R-Groton, championed legislation in the spring 2017 state legislative session, which amended the statute that created CMEEC to allow small municipal utilities to purchase wholesale power at more competitive prices. The amendment expanded the board of directors, allowing each member municipal government to appoint a board member directly, as opposed to members that represented the utilities.
CMEEC is owned by six municipal utilities: Norwich Public Utilities, Groton Utilities, Bozrah Light & Power, Jewett City Department of Public Utilities, South Norwalk Electric and Water and Third Taxing District of Norwalk. The cooperative secures and sells wholesale electricity to its member utilities.
The state ordered a forensic audit of CMEEC's finances, which confirmed an even broader culture of lavish spending on golf outings, dinners and events locally as well as on the retreats.
The state also created a consumer advocate position, who attends meetings and can question expenditures or practices. And state law now calls for CMEEC to hold board retreats in state, with business agendas, minutes and budgets approved by the board.
"Such retreat or activity shall not include any entertainment or gifts of value other than that approved by the cooperative utility board," the legislation stated.
