Victim and paymaster
T he Connecticut Municipal Electric Energy Cooperative was formed to accommodate bulk-purchasing of electricity to benefit the customers of the six municipal utilities that own it. Lately, however, it has also been serving as a legal defense fund.
It is paying the defense costs for five former employees and co-op officials who are under federal indictment for alleged criminal behavior during their time with the energy cooperative.
This is sort of like hiring folks to do painting in your home. But while they’re painting, they’re also helping themselves to your jewelry. And when they get arrested, you must pay for their lawyers and expert witnesses.
CMEEC CEO Drew Rankin; Chief Financial Officer Edward Pryor; Norwich Public Utilities general manager and board vice chair John Bilda; board Chairman James Sullivan of Norwich, and board Treasurer Edward DeMuzzio of Groton — all no longer with the co-op — face charges of conspiracy and theft from a program receiving federal funds. CMEEC provided trips to the Kentucky Derby, calling them board retreats, from 2013 through 2016 for top staff, board members, family and dozens of invited guests. Two trips were taken to The Greenbrier resort in West Virginia.
Prosecutors contend tapping a CMEEC account to pay for the junkets, with no reasonable business justification, was criminal. A trial is set for October.
Records obtained by The Day show legal costs for the defendants approaching $2.2 million.
Because the behavior took place in their official capacities, the cooperative is obligated to cover defense expenses, a judge ruled. Making matters worse, the cooperative’s insurance company, National Union Fire Insurance Co., has denied coverage of the legal costs. CMEEC is suing the insurer.
If the defendants are found guilty, or cop to guilty pleas, the energy cooperative can, and should, seek to claw back from them the money spent on their defense. Prosecutors would also likely ask for an order of restitution. In the meantime, these costs are undermining the coop’s mission to hold down rates for the customers of Groton Utilities, Norwich Public Utilities, Jewett City Department of Public Utilities, Bozrah Light & Power, and two Norwalk utilities.
It is questionable, of course, how much money CMEEC could realistically get from the defendants, even with guilty verdicts.
These astronomical costs are another painful reminder of what can happen due to inadequate accounting rules and oversight. That’s changed at CMEEC but, unfortunately, far too late.