The U.S. Appellate Court in New York has rejected all aspects of the appeal by three former utility officials who had challenged their federal convictions on theft charges in connection with lavish trips to the Kentucky Derby and a West Virginia golf resort in 2015.

Former Connecticut Municipal Electric Energy Cooperative CEO Drew Rankin, former Norwich Public Utilities General Manager John Bilda and former CMEEC and Norwich utilities commission chairman James Sullivan all had appealed their December 2021 jury convictions on one count each of theft stemming from trips to the Kentucky Derby and The Greenbrier resort in 2015.

CMEEC also had filed a petition to the same U.S. Court of Appeals for the Second Circuit in New York.

The three-judge Appellate Court panel ― Gerard E. Lynch, Joseph F. Bianco and Maria Araújo Kahn ― released a 140-page decision Friday rejecting the four main arguments by the three men, saying the U.S. District Court in New Haven acted properly in conducting the criminal trial and that federal prosecutors had not prejudiced the jury with evidence not pertinent to the charges at hand.

The judges also rejected CMEEC’s petition to the same court seeking to overturn U.S. District Court Judge Jeffrey A. Meyer’s ruling that CMEEC should not receive restitution for the more than $9 million in attorney fees it spent to defend the three convicted CMEEC officials and two others who were acquitted on all charges.

In the decision, Judge Lynch spelled out reasons for rejecting each of the four challenges the CMEEC defendants had argued, repeatedly using the words: “Defendants’ misappropriation of funds to pay for what were, in fact and by design, personal vacations.”

The three were convicted on one count each of theft from a program that had received federal funds in connection with three trips hosted by CMEEC in 2015, one to the Kentucky Derby and two to The Greenbrier golf resort in West Virginia. Also in 2015, CMEEC made deposits on the planned trip to the 2016 Kentucky Derby, including a private chartered jet, expensive lodging and restaurant dinners, and entertainment.

Media brought trips to light

The trips came to light in fall of 2016, when media reports prompted public outcry and the federal investigations that led to indictments in 2018.

Rankin was sentenced May 16, 2023, to 12 months in prison and three years of probation and ordered to pay restitution of $374,400, with Meyer calling him the chief orchestrator of the trips.

Over the next two days, Sullivan and Bilda were each sentenced to six months in prison and three years’ probation and ordered to pay $187,400 each in restitution to CMEEC.

The sentencings and restitution orders were put on hold by Judge Meyer pending the appeals as was a second criminal trial of Rankin and Sullivan.

In that case, Rankin and Sullivan face theft charges stemming from alleged use of CMEEC funds to reimburse Sullivan for nearly $100,000 in personal expenses. That case is pending before Judge Meyer.

Once the District Court is notified of Friday’s ruling, Judge Meyer will schedule a sentencing report date for Rankin, Bilda and Sullivan, said Thomas Carson, spokesman for the U.S. Attorney’s Office for the District of Connecticut on Friday.

Attorney Daniel S. Noble, who presented the defendants’ case during a hearing on May 13 before the appellate court panel, could not be reached to comment Friday on whether they would seek to appeal to the U.S. Supreme Court.

CMEEC officials declined to comment on Friday’s ruling.

CMEEC is an electric utility cooperative owned by six municipally owned public utilities: Norwich Public Utilities, Groton Utilities, Bozrah Light & Power, which is owned by Groton Utilities, Jewett City Department of Public Utilities, South Norwalk Electric and Water and Third Taxing District in Norwalk. The money used for the trips came out of a CMEEC revenues fund intended to be distributed to the member utilities to help stabilize electric rates.

Lavish trips or strategic retreats?

Throughout the criminal trial and in the appeals arguments, the defendants argued that the CMEEC money used for the trips they called “strategic retreats” did not belong to the members but was controlled by CMEEC and was properly used for the cooperative’s corporate business. They argued that the CMEEC board approved the trips, and the expenses were not concealed.

They argued that the jury was prejudiced by references during the trial to details of the 2016 Kentucky Derby trip, although prosecutors had dismissed a theft charge pertaining to the 2016 expenses.

In another argument, the defendants had claimed that the entire case should be dismissed, because CMEEC did not receive more than $10,000 in federal funds in 2015.

The court rejected that claim, agreeing with the district court’s evidence that CMEEC received $864,000 that year, and it was irrelevant that the cooperative distributed the money among its member utilities for equipment upgrades.

The ruling strongly rejected claims that the money was not misappropriated from the member utilities and residents and taxpayers in the member utilities’ towns.

“The evidence was more than sufficient for the jury to conclude that Defendants expended CMEEC’s funds for their own benefit,” Lynch wrote, “and that Defendants lacked a good-faith belief that the trips provided a legitimate benefit to CMEEC.”

Addressing the claim that the trips were legitimate business retreats, the judges cited evidence from the trial that itineraries at The Greenbrier and Kentucky Derby trips listed entertainment, dinners, golf outings, horse races, parties and entertainment.

The listed purpose of the fall 2015 Greenbrier trip was to discuss a new CMEEC operating system. But the judges noted that CMEEC had discussed that system several months earlier. And during the fall trip, only two meetings were planned to discuss business, and one of them was canceled in favor of a resort tour.

“Nor were there any events designed to enhance ‘team-building,’” Lynch wrote. “As Rankin himself wrote in the Derby itineraries, guests would arrive at the Derby for a group dinner and then be left to ‘[a]fter dinner fun on your own,’ while on the following two days guests would ‘[e]at, drink, be merry, and watch races all day’ with ‘[e]veryone on their own for the balance of evening.’”

c.bessette@theday.com