United States v. Rankin

651 F.Supp.3d 523

UNITED STATES of America v. Drew RANKIN, James Sullivan, and John Bilda, Defendants.

No. 3:18-cr-272 (JAM)

United States District Court, D. Connecticut

Signed January 6, 2023

Conor M. Reardon, DOJ-USAO, New Haven, CT, Michael S. McGarry, Tara E. Levens, U.S. Attorney's Office, New Haven, CT, Douglas P. Morabito, Koskoff Koskoff & Bieder, PC, Bridgeport, CT, Sarah P. Karwan, U.S. Attorney's Office, Hartford, CT, for United States of America.

Christopher M. Barrett, Craig A. Raabe, Izard, Kindall & Raabe, LLP, West Hartford, CT, William H. Paetzold, Moriarty, Paetzold & Sherwood, LLC, Glastonbury, CT, Daniel Scott Noble, Finn Dixon & Herling LLP, Stamford, CT, for Defendant Drew Rankin.

Hubert J. Santos, Law Offices of Hubert J. Santos, Hartford, CT, R. Bartley Halloran, Kaitlin A. Halloran, Halloran & Halloran, Hartford, CT, Trent A. LaLima, Santos & LaLima, P.C., Hartford, CT, Daniel Scott Noble, Elias Laris, Finn Dixon & Herling LLP, Stamford, CT, for Defendant James Sullivan.

Thomas J. Murphy, James John Healy, Cowdery & Murphy, LLC, Hartford, CT, for Defendant John Bilda.

RULING DENYING PENDING MOTIONS

Jeffrey Alker Meyer, United States District Judge

A federal trial jury returned verdicts of guilty against three defendants—Drew Rankin, James Sullivan, and John Bilda—for misappropriating property from a local government agency that received federal benefits. The three defendants have filed numerous motions for judgment of acquittal, for a mistrial and new trial, for dismissal of the indictment, and for disclosure of grand jury records. For the reasons set forth at length in this ruling, I will deny the motions.

BACKGROUND

This case is about the Connecticut Municipal Electric Energy Cooperative, which everyone calls CMEEC ("See-Meck"). CMEEC is a publicly owned company created under a Connecticut law designed "to permit municipal electric utilities in Connecticut to join together and form cooperative public corporations ... for the purpose of furnishing efficient, low cost and reliable electric power in their areas of operation." Conn. Gen. Stat. § 7-233a. CMEEC's main function was to go into the open market and buy blocks of electric power to furnish to municipal utilities at prices that were cheaper than the utilities could get if they bought it themselves.¹

CMEEC was owned by several Connecticut municipalities that the indictment refers to as the "Member Towns."² It had a board of directors with representatives from each of its several members.³ The two members with the largest ownership shares of CMEEC were the City of Norwich and the City of Groton.⁴

The prosecution of this case resulted from a public scandal that broke in late 2016. News reports emerged that CMEEC had paid for large group trips to the Kentucky Derby involving private jet travel, luxury accommodations, and high-priced premium ticket packages. This in turn led the FBI to investigate whether the defendants had violated a federal statute—18 U.S.C. § 666(a)(1)(A)—that makes it a crime under certain circumstances to embezzle, steal, obtain by fraud, or otherwise intentionally misappropriate property from local towns or public governmental entities like CMEEC that receive federal benefits.

In November 2018, a federal grand jury returned an indictment against the following five defendants:

• Drew Rankin, CMEEC's chief executive officer;

• James Sullivan, CMEEC's chairperson of the board of directors and a CMEEC board representative from Norwich until late 2015;

• John Bilda, a CMEEC board representative from Norwich;

• Edward DeMuzzio, CMEEC's board secretary and a CMEEC board representative from Groton; and

• Edward Pryor, CMEEC's chief financial officer.

The indictment charged all five of the defendants with a conspiracy to violate § 666 and also with substantive violations of § 666 in the years 2014, 2015, and 2016. It alleged that the defendants used money that was "owned, and under the care, custody, and control of CMEEC and the CMEEC Members" to take "lavish trips" to "personally benefit, compensate, and reward [them and] their family members, friends, and associates."⁵ The indictment further alleged that "[t]hese trips did not relate to CMEEC business, CMEEC Member business, and the furnishing of efficient, low-cost and reliable electric power."⁶

It took about three years to bring the case to trial. Some of the delay was because of extensive and complex pre-trial motions.⁷ Some of it was because of a snafu with the production of company documents from CMEEC.⁸ And the rest of the delay resulted from the onset of COVID-19.

The trial evidence was presented over several weeks in November and December 2021. Consistent with the detailed allegations of the indictment, the evidence focused on five different group trips that were organized by Rankin and paid for by CMEEC to either the Kentucky Derby or to the Greenbrier, a luxury resort in West Virginia.⁹ By way of background, I will review the major parts of the government's evidence in its case-in-chief, the defendants' evidence in the defense case, and the jury's verdicts.

Trip to the Kentucky Derby in 2015

The first trip at issue was to the 2015 Kentucky Derby.¹⁰ At Rankin's direction, his assistant made arrangements in June 2014 through a ticket broker to purchase 30 premium "Trophy Room" ticket packages for more than $200,000.¹¹ Rankin later sent out an invitation to CMEEC's board of directors billing the event as a "strategic retreat" for "you as dedicated and awesome Board Members and your Strategic Guests/Partners" to enjoy a "weekend of celebration and strategic time together, learning more about each other through unique shared experiences."¹²

All five of the defendants except DeMuzzio attended the 2015 Kentucky Derby.¹³ There was no documentary evidence that the defendants did any work on this trip. For example, the agenda for the trip had entries like "street festivals" and "[e]at, drink, be merry, and watch races all day"—but not any work meetings.¹⁴

The trip was also lavish. The ticket-and-hotel package cost about $7,000 for each person, in addition to a group dinner for $10,827 and about $54,000 in private jetfare.¹⁵ When the private jet company warned Rankin that "going by private charter [would] be much more expensive than flying on a scheduled commercial airline," Rankin replied that he wanted to do it anyway because it would be "much more convenient and classy."¹⁶

In all, the 2015 Derby trip cost about $300,000—more than $9,000 per guest.¹⁷ Yet many if not most of the guests had nothing or little to do with CMEEC's business activity. For example, Sullivan—who was then serving as chairman of CMEEC's board of directors—brought his brother, his sister-in-law, his son, a young woman who was his bartender, and his bartender's friend.¹⁸ The bartender worked at a bar in a building where Sullivan lived in Washington, D.C., and she testified about how Sullivan had invited her and a guest to ride on the private jet and to enjoy the all-expenses-paid lodging and tickets to the Kentucky Derby and how neither she nor her guest had anything to do with CMEEC.¹⁹

Bilda—a board member from Norwich—brought not only his wife but also his parents who lived in Florida and who had no connection to CMEEC.²⁰ CMEEC paid an extra $1,653 for Bilda's parents to fly to Kentucky.²¹

CMEEC also covered extra travel costs for Rankin's personal guest, including nearly $200 to ship her hat and glasses to the Derby.²² All in all, the trip participants included just 4 CMEEC employees (including Rankin), just 7 of CMEEC's board members (including Bilda and Sullivan), and then 21 guests who held no position with CMEEC.²³

Trip to the Greenbrier in August 2015

Next there was a trip in August 2015 to the Greenbrier. The trip came about in July 2015 when Rankin sent an email to Sullivan, Bilda, and DeMuzzio. He explained that he was planning "to have a board strategic retreat in October at The Greenbrier in West Virginia. Prior to such, I thought it would be beneficial for the four of us to visit the place in August to check it out and craft the agenda."²⁴ He said that he wished to "share with you our 10 year strategic plan [for] an enhanced operating system" and suggested that they take a few days to "evaluat[e] the hotel and [golf] Course," with "more evaluation" to follow.²⁵ Bilda soon replied that, with one scheduling exception, "[e]verything else can be adjusted for something as important as this."²⁶

A week later Rankin sent out another email confirming a four-day trip to the Greenbrier and noting the following golf course itinerary:

• Aug 4 Arrive

• Aug 5 The Old White, then The Greenbrier

• Aug 6 The Old White, then Oakhurst Links (1884 course where we use hickory sticks and era balls, with era outfits available)

• Aug 7 morning tour of bunkers, then fly home²⁷

Rankin also added a link to the Greenbrier website: "You have to check this place out,,,,,,,,,,,,,,,,,,,."²⁸

In response to this itinerary, Sullivan replied: "Is your name 'I deserve a raise?'" Rankin responded: "I always like to think so :-) I thought we would love the historic nature of Oakhurst."²⁹

A few days before the trip, Rankin sent out another email, reminding Sullivan, Bilda, and DeMuzzio that "[f]or the recreational activities, shorts and collared shirts are permitted, and we will have forecaddies as well." But he also suggested that for "dining and some bars, ... we [should] all bring a blazer, dress slacks, etc ... which will provide the full experience ?."³⁰

The foursome's trip to the Greenbrier cost more than $21,000 which Rankin billed to CMEEC.³¹ The bill included more than $3,000 for airfare to West Virginia, including nearly $500 for seating upgrades.³²

It also included the foursome's dinner one night for $1,100 and then dinner a second night for $900.³³

Rankin's assistant—whose job was to make travel plans for CMEEC and to classify for accounting purposes the charges made by Rankin to the company's credit...