Municipal electric cooperative officials indicted
Two executives of the Norwich-based Connecticut Municipal Electric Energy Corp. and three present or former members of the organization’s board of directors have been charged with offenses related to the misuse of federal funds, according to indictments unsealed this week.
CMEEC is a public corporation that that runs utility services in Norwich, where it is based, and in the eastern Connecticut municipalities of Groton, Jewett City and Bozrah; as well as in Norwalk through South Norwalk Electric & Water and the Norwalk Third Taxing District, which each have representatives on CMEEC’s board.
Drew Rankin, CMEEC’s chief executive officer, and Edward Prior, who is the organization’s chief financial officer, were among the five individuals named in indictments returned by a federal grand jury in New Haven on Tuesday. Also named in the indictments were:
John Bilda, a Norwich employee who represents the city on the CMEEC board.
Edward DeMuzzio, a Groton resident who represented the city on the CMEEC board and was its secretary.
James Sullivan, a Norwich resident who served on CMEEC board and was its chairman until October 2015.
Sullivan’s wife is U.S. Rep. Linda Sanchez, DCalif., who this week abandoned a plan to pursue a position in House leadership to deal with the criminal charges.
Each of the defendants appeared before U.S. Magistrate Judge Robert M. Spector in New Haven on Thursday and entered a plea of not guilty to the charges. Each of them were released on a $100,000 bond.
The first indictment charges each defendant with one count of conspiracy, which carries a maximum prison term of five years, and three counts of theft concerning a program receiving federal funds. That offense that carries a maximum 10-year prison term.
The second indictment charges Rankin and Sullivan with one count of conspiracy and three counts of theft involving a program that receives federal funds.
The indictments involve the used of more than $9 million CMEEC received from the U.S. Department of Energy between 2010 and 2015. U.S. Attorney John Durham said CMEEC’s agreement with its members calls for any excess revenue to be returned to the communities and their electric ratepayers.
“Instead of protecting these funds ... these defendants are alleged to have used the CMEEC Margin Account as a secret slush fund to pay for lavish junkets for themselves and their family and friends, as well as for other inappropriate expenses,” Durham said in a statement.
The Federal Bureau of Investigation and the Internal Revenue Service are part of the investigation, which led to the indict- ments that were returned.
The first indictment alleges Rankin, Sullivan, Bilda, DeMuzzio and Pryor planned and organized lavish trips outside of Connecticut to the Kentucky Derby in 2015 and 2016 and to a luxury golf resort in West Virginia. None of the trips were related to CMEEC business, but were intended to personally benefit, compensate and reward the co-conspirators, their family members, friends and associates.
The trips cost more than $800,000 and included travel expenses, private chartered airfare, firstclass hotel accommodations, meals, tickets to sporting events, golf fees, souvenirs and gifts.
The first indictment alleges that in January 2015, Pryor directed a new account be created to pay for the costs of the Kentucky Derby trips without a vote by the CMEEC board and any approvals from the cooperative’s member towns.
Between January 2012 and August 2015, Rankin authorized the payment of numerous personal expenses for Sullivan, including airfare for dozens of flights Sullivan took, trips for Sullivan and his family members to attend the Kentucky Derby in 2013, 2014, and 2015, and airfare for Sullivan’s wife to travel to Key West, Fla., in December 2014.