CMEEC executive pensions, legal fees at stake in latest court filings

The pension of former Norwich Public Utilities General Manager John Bilda and another executive's efforts to reinstate payment of his legal fees are among the latest issues being argued in the lengthy corruption cases involving lavish trips to the Kentucky Derby and a West Virginia golf resort.The continuing civil and criminal cases in federal and state courts follow the U.S. Appellate Court's Sept. 6 denial of the appeals of three former Connecticut Municipal Electric Energy Cooperative executives found guilty of thefts in connection with the case. On Sept. 6, the U.S. Court of Appeals for the Second Circuit in New York rejected the appeals of CEO Drew Rankin, Bilda and former CMEEC and Norwich Public Utilities commission chairman James Sullivan seeking to overturn their December 2021 convictions.The three were each convicted by a jury in the U.S. District Court in New Haven on one count of theft from a program receiving federal funds in connection with 2015 trips to the Kentucky Derby and The Greenbrier. Dozens of CMEEC board members, top staff and invited guests used CMEEC revenues intended to help stabilize electric rates for member municipal utilities to pay for the trips.In May 2023, U.S. District Judge Jeffrey A. Meyer sentenced Rankin to 12 months in prison and three years of probation and ordered him to pay restitution of $374,400. Meyer sentenced Sullivan and Bilda to six months in prison and three years' probation and ordered each to pay $187,400 in restitution to CMEEC.Meyer has not yet scheduled the date the men have to report to prison, which is the next step in the criminal case, court officials said.A second criminal case also is pending in which Rankin and Sullivan face federal theft charges for allegedly using CMEEC revenue to reimburse Sullivan for nearly $100,000 in personal expenses.AG seeks to revoke or reduce Bilda's pensionTwo civil court cases involving the former CMEEC officials are also winding their way through court proceedings.By state law, the state Attorney General's office is required to file a petition in state Superior Court either to revoke or reduce the pension of a state or municipal official convicted of criminal offenses related to their positions.Bilda was awarded an annual pension of $147,297 by the Norwich Personnel and Pension Board after signing a separation agreement with NPU after he was indicted in the CMEEC case in 2018.Attorney General William Tong filed the petition in Hartford Superior Court in December, but the case is progressing slowly. Assistant Attorney General Richard M. Porter and Bilda's attorney, Jacques Parenteau, filed their complaints and responses this summer, and the case is scheduled for arbitration on May 9, 2025.In his complaint on behalf of the state, Porter wrote that Bilda's conviction was tied to his role as NPU general manager, in that his NPU position gave him a seat on the CMEEC board of directors that planned and took the trips to the Kentucky Derby and The Greenbrier. The trips were funded using CMEEC revenues intended to be divided among the six municipal utilities that own the cooperative, including NPU, to be used to stabilize electric rates."The misappropriated funds that paid for the luxury trips were diverted from, and would otherwise have gone to, the City of Norwich's fund to stabilize the electricity costs for Norwich's ratepayers," Porter wrote in his complaint.Parenteau countered saying Porter's argument is off base, calling it a "misguided mission to revoke John Bilda's pension." In his response, Parenteau argued that the federal charges, trial and conviction were based on the actions of CMEEC officials. The cooperative is not a state or municipal entity defined in the pension revocation law."There is not one allegation in the complaint that states John Bilda was exercising any power or duty that he possessed as the General Manager of NPU when he took the actions that resulted in the conviction," Parenteau wrote.Parenteau filed a motion to strike the state's claim, saying the attorney general did not state a claim for any reason contained in the state pension revocation law. Porter objected to that motion."The Defendant exploited his position as a public official to benefit himself, his friends, and his family by spending hundreds of thousands of public dollars on luxury trips using funds that were intended to reduce the electric bills of municipal ratepayers," Porter wrote.Rankin seeks continued coverage of legal costsFollowing the May 2023 sentencings and restitution orders by U.S. District Judge Meyer, CMEEC informed Rankin, Bilda and Sullivan that it would no longer pay for their legal defense, including their appeals and the second criminal case against Rankin and Sullivan.CMEEC had paid more than $9 million in legal fees for five initial defendants based on the cooperative's bylaws that called for indemnifying officers and executives in criminal allegations unless they are found liable for "willful and wanton negligence or misconduct in performance of their duties."On June 8, 2023, CMEEC also sought reimbursement from the three convicted former officials following their sentencings based on a document signed by all five defendants at the start of their criminal trial. In it they promised to reimburse CMEEC for the legal costs if they were found guilty making them ineligible for the coverage.CMEEC claims it paid more than $2.5 million for Rankin's defense.Rankin filed a civil suit in the same U.S. District Court in New Haven seeking to order CMEEC to continue paying for his defense through the appellate process and for the second criminal indictment.Judge Meyer has scheduled a hearing for Oct. 1 in the New Haven court to hear arguments on Rankin's request to force CMEEC to pay the legal fees and on his motion to dismiss counterclaims by CMEEC in the case.Rankin's attorney Craig A. Raabe has argued that his client had not been "ultimately determined" to be ineligible for the legal fees coverage, because the appeal in the first case had not yet been concluded and the second criminal trial had not yet begun.Raabe also argued that the agreement signed by the five initial CMEEC defendants ― which included former CMEEC CFO Edward Pryor and former board member Edward DeMizzio who were found not guilty ― was "unenforceable."Raabe argued that CMEEC in an arbitration proceeding with Rankin agreed to pay for legal costs through the appeals of both cases.CMEEC's attorney Michael T. McCormack said Rankin's conviction makes him ineligible to receive legal fees, and accused Rankin of fraud for signing the document and then claiming it is unenforceable.In a counterclaim, McCormack claimed Rankin "acted in bad faith" by accepting legal fees for five years under the agreement, "with the intention not to honor his obligations under the Affirmation and Undertaking."c.bessette@theday.com