United States District Court, D. Connecticut
OMNIBUS RULING RE DEFENDANTS' MOTIONS TO DISMISS
THE INDICTMENT AND FOR OTHER RELIEF
JEFFREY ALKER MEYER UNITED STATES DISTRICT JUDGE.
federal grand jury has returned an indictment charging the
five defendants in this case with conspiring to and
misappropriating funds for personal purposes. The five
defendants were officers or directors of the Connecticut
Municipal Electric Energy Cooperative (CMEEC), a public
corporation created to provide low-cost electric power for
certain member towns. The indictment alleges that the five
defendants misused funds of CMEEC and the member towns for
trips to the Kentucky Derby and to a luxury golf resort in
now move to dismiss the indictment and for other relief. They
principally argue that the trips at issue were lawful
“corporate retreats” and that the Government has
overreached by criminalizing conduct that is allowed under
state law. They also accuse the Government of a wide range of
misconduct during the investigation of the case. One of the
defendants moves for a severance, and all of the defendants
seek bills of particulars.
mostly deny defendants' motions. I conclude that the
indictment on its face validly alleges that the five
defendants conspired to and misappropriated funds for
personal purposes, notwithstanding their fact-based arguments
that they acted for valid corporate purposes. I also conclude
that there is no merit to defendants' claims that the
indictment should be dismissed due to any misconduct by the
Government. Lastly, I conclude there are no grounds for
severance or for the grant of a bill of particulars.
indictment alleges the following facts. CMEEC was “a
cooperative public corporation created under the laws of the
State of Connecticut to permit municipal electric utilities
in Connecticut to join together for the purpose of furnishing
efficient, low cost and reliable electric power in the
municipalities' areas of operation.” Doc. #1 at 1
(¶ 1). “CMEEC provided wholesale electric power to
the Member Towns, who, in turn, provided electricity to
residential and commercial ratepayers in their respective
towns through each CMEEC Member's municipal
utility.” Id. at 1-2 (¶ 1).
“CMEEC's purpose was to allow the Member Towns to
provide electricity at a cheaper cost to their ratepayers
than if the Member Towns were purchasing wholesale electric
power on their own.” Id. at 2 (¶ 1).
various “members” included several towns and
taxing districts in Connecticut. Id. at 1 (¶
1). Each of these “member towns” were
“owners” of CMEEC, and each “executed an
agreement through its respective municipal electric utility
outlining the terms and conditions under which the CMEEC
Members participated together in CMEEC.” Id.
at 2 (¶ 2).
“was managed in its day-to-day activities” by a
board of directors “made up of representatives from
each Member Town.” Id. at 3 (¶ 5).
CMEEC's bylaws specified that CMEEC's chief executive
officer was responsible for the preparation each year of a
general administrative budget that would include all
necessary expenses, and the board of directors was required
to vote on CMEEC's budget approvals and revisions.
Id. at 4 (¶ 7).
to CMEEC's membership agreement, “all revenues less
incurred expenses received by CMEEC” were designated as
“CMEEC Margin.” Id. at 4 (¶ 8). The
CMEEC margin was required to be allocated and/or disbursed
each month to each of the member towns to help keep their
electricity costs stable for ratepayers. Ibid.
five defendants in this case are:
• Drew Rankin, CMEEC's chief executive officer;
• James Sullivan, CMEEC's chairperson of the board
of directors and a board representative from one of the
member towns (the City of Norwich);
• John Bilda, a board representative from the City of
• Edward DeMuzzio, CMEEC's board secretary and a
board representative from another member town (the City of
• Edward Pryor, CMEEC's chief financial officer.
Id. at 4-5 (¶¶ 9-14).
to the indictment, the five defendants joined in a criminal
conspiracy from 2014 to 2017 “to conduct the business
and affairs of CMEEC for their personal, pecuniary and
financial benefit, and for the personal, pecuniary and
financial benefit of their family members, friends, and
associates.” Id. at 6-7 (¶¶ 16-17).
Defendants allegedly “planned, organized and directed
lavish trips outside of the State of Connecticut including
trips to the Kentucky Derby in Louisville, Kentucky, and to a
luxury golf resort in West Virginia, ” and
“[t]hese trips did not relate to CMEEC business, CMEEC
Member business, and the furnishing of efficient, low-cost
and reliable electric power to the Member Towns and their
ratepayers.” Id. at 7 (¶ 19).
indictment goes on to list various aspects of defendants'
conduct that were additional “parts” of this
• Source of funds for the trips-that the
defendants “paid for the trips with CMEEC funds and
CMEEC Member funds, ” id. at 7 (¶ 20);
• Lack of required approval by and disclosures of
trip costs to board of directors-that defendants
“did not seek the approval of the CMEEC Board of
Directors for these trips and did not include the costs for
the trips as budget expenses in the annual general
administrative budgets proposed to and approved by the CMEEC
Board of Directors, ” id. at 7-8 (¶ 21);
• Misappropriation of funds for trips from CMEEC
margin account-that defendants “directed that the
funds used in part and in whole to pay for the trips come
from the CMEEC Margin account, in violation of the CMEEC
Membership Agreement, without a vote of the CMEEC Board of
Directors and without the written consent of the Member Towns
as required by the Membership Agreement, ” id.
at 8 (¶ 22);
• Misleading description of trip expenses-that
defendants “directed that the funds used in part and in
whole to pay for the trips be designated as ‘board
expenses' and ‘delegation related expenses' in
reports concerning the CMEEC Margin account, ”
ibid. (¶ 23);
• Lack of disclosure of trips to non-participating
CMEEC employees-that defendants “did not disclose
to CMEEC employees, including senior-level employees, the
fact of the trips, and encouraged those invited to the trips
not to discuss the trips with non-attendees, ”
ibid. (¶ 24); and
• False statements about trips-that “when
the fact of the trips became public knowledge, [some of the
defendants] made false statements about the trips to
representatives of Member Towns and to the press, including
misleading statements about the purpose of the trips, the
identities of those attending the trips, and the funds used
to pay for the trips, ” ibid. (¶ 25).
indictment then alleges dozens of overt acts in furtherance
of the conspiracy. Id. at 9-17 (¶¶ 26-61).
These allegations focus on four different trips from 2015 to
2016-two to the Kentucky Derby and two to a luxury golf
resort in West Virginia as described below.
Derby trip-April/May 2015
first trip was to the Kentucky Derby for several days in late
April and early May 2015. The arrangements for this trip
began in June 2014 when defendant Rankin (who was CMEEC's
chief executive officer) executed a purchase order for more
than $200, 000 to pay for the trip without identifying the
trip expenses in any budget presented to the CMEEC board of
directors. Id. at 9 (¶ 27). Defendant Pryor
(who was CMEEC's chief financial officer) directed that a
new “contra-margin” account be created for the
costs of the Kentucky Derby trips to come from the CMEEC
margin account, allegedly in violation of the CMEEC
membership agreement and without a vote of the CMEEC board of
directors or consent of the member towns. Ibid.
30 people were invited to take part in the 2015 Kentucky
Derby trip, including all of the defendants except DeMuzzio,
and guests including certain CMEEC board members, employees,
friends, and associates. Id. at 9-10 (¶ 31).
Among the invitees were defendant Sullivan's brother,
sister-in-law, and his minor son. Ibid. The trip
costs included a charter plane from Connecticut to Kentucky,
event tickets, hotel rooms, food, and gift bags. Id.
at 9 (¶ 27), 11 (¶ 35).
pamphlet prepared for the attendees, Rankin described the
trip as a “2015 Strategic Retreat: Members and Guests
Appreciation Celebration, ” adding “[a]re you
ready for some genuine Kentucky Experience and Derby
Fun?” Id. at 10 (¶ 32). The pamphlet
described the trip as dedicated to “tak[ing] a few
moments to celebrate and honor you as dedicated and awesome
Board Members and your Strategic Guests/Partners.”
Ibid. The total cost for this trip was about $294,
917, all paid for “with Member Towns' funds from
the CMEEC Margin account.” Id. at 11 (¶
Virginia golf trip-August 2015
second trip was to a luxury golf resort in West Virginia in
August 2015 about three months after the Kentucky Derby trip.
Id. at 11-12 (¶¶ 39-43). This trip
included only the defendants Rankin, Sullivan, Bilda, and
DeMuzzio. Before the trip, Rankin emailed Sullivan, Bilda,
and DeMuzzio describing the trip as one to “evaluate
the location” for another strategic retreat.
Id. at 11-12 (¶ 39). Sullivan (who was
CMEEC's board chairman) sent a reply stating, “Is
your name ‘I deserve a raise?'” Id.
at 12 (¶ 42). Rankin also sent the group an email with a
description of the cottage at the golf resort that he had
reserved and a schedule of the golf courses they would visit.
Id. at 12 (¶ 41). The total cost of this second
trip was $21, 447, and invoices approved by Rankin for the
trip noted that it was in connection with the board of
directors' “compensation committee.”
Id. at 12 (¶ 43).
Virginia golf trip-October 2015
third trip was a return to the same luxury golf resort in
West Virginia in October 2015 with a larger group. Rankin
sent an email to representatives of CMEEC's board of
directors inviting them to a “Member Delegation
Strategic Retreat” at the golf resort, stating that
“[t]he retreat is planned off site and out of state to
enable full focus on strategic issues, celebratory review of
results, and general social/team building.”
Id. at 12 (¶ 44). The total cost of this trip
was approximately $112, 443.98 and was “paid for with
Member Towns' funds in the CMEEC Margin account.”
Ibid. (¶ 47). Among the trip expenses were $2,
264.57 for seventeen “ladies' scarves, ” as
well as $3, 426.80 in custom golf balls and hats from an
entity owned by defendant Bilda's wife. Id. at
13-14 (¶¶ 45, 47-49).
Derby trip-May 2016
next trip involved a return to the Kentucky Derby in May
2016. Rankin initially approved a purchase order for this
trip in May 2015, and this purchase order “was charged
against the CMEEC Margin.” Id. at 11 (¶
37). The trip included about 40 guests, including Bilda's
parents, the wife and mother-in-law of a CMEEC board member
who was not attending the retreat, CMEEC vendors, a close
friend of DeMuzzio's who lived in Florida, a son-in-law
and daughter of a CMEEC vendor, and the mayor of one of the
CMEEC member towns. Id. at 14 (¶ 51). Shortly
before the trip, Rankin sent an email to the participants
advising that “we have an excellent agenda scheduled to
produce maximum fulfillment, all in expression of
appreciation to each of you for helping CMEEC be
successful.” Ibid. The trip involved charter
plane travel from Connecticut to Kentucky, followed by
attendance at the Kentucky Derby and related events.
Id. at 14-15 (¶ 53). The total cost of the trip
was approximately $374, 169, “paid for with CMEEC and
Member Towns' funds.” Ibid.
after the 2016 Kentucky Derby trip, Rankin executed another
purchase agreement for 40 ticket packages to the Kentucky
Derby in 2017, including for event tickets, hotel rooms,
food, gift bags, and transport. Id. at 15 (¶
54). But several months later, the news media and others made
inquiries about the trips that had occurred, and Rankin and
Bilda responded with inaccurate and misleading information.
Id. at 15-17 (¶¶ 56-60). The planned 2017
trip to the Kentucky Derby did not happen, and CMEEC
eventually received a refund of only about $90, 000 of the
$298, 960 it had already paid. Id. at 17 (¶
One of the indictment broadly alleges that the five
defendants joined in a criminal conspiracy from 2014 to 2017
to misappropriate funds that belonged to CMEEC and its member
towns. Id. at 6 (¶ 16). The indictment alleges
a conspiracy in violation of 18 U.S.C. § 371 with an
objective to violate a separate federal criminal law, 18
U.S.C. § 666(a)(1)(A), that generally prohibits the
knowing or intentional misappropriation of funds from
agencies that receive federal funding.
Ibid. Counts Two through Four of the indictment
charge all five defendants with substantive counts of
misappropriation of funds in 2014, 2015, and 2016 from a
program receiving federal funds, in violation of 18 U.S.C.
§ 666(a)(1)(A) and 18 U.S.C. § 2.
666(a)(1)(A) by its terms applies to a wide range of acts
including embezzlement, stealing, obtaining by fraud, knowing
conversion, or other intentional misapplication of property.
For simplicity, this ruling will refer generically to such
intentional acts as “misappropriation.” The
indictment otherwise alleges specific threshold requisites
for a violation of section 666: that defendants were
“agents” of CMEEC and/or the member towns, Doc.
#1 at 4-5 (¶¶ 9-14), that CMEEC, its member towns,
and their respective utilities were each a “government
agency, ” id. at 2 (¶ 3), and that CMEEC
and members towns annually received more than $10, 000 in
federal funds for particular years as specified in the
indictment, id. at 2-3 (¶ 4).
five defendants have each filed numerous motions and largely
joined in each other's motions. These motions can be grouped
into the following categories: (A) motions challenging the
adequacy or legal basis for the indictment, (B) motions
alleging misconduct by the Government, (C) a motion for
severance, and (D) motions for bills of particulars. I will
consider each group of motions in turn.
Challenges to the sufficiency of the indictment
challenge the adequacy of the indictment on multiple grounds.
Rule 7(c) of the Federal Rules of Criminal Procedure requires
that an indictment contain a “plain, concise and
definite written statement of the essential facts
constituting the offense charged.” An indictment is
legally sufficient and will not be dismissed if it tracks the
elements of the offense and alleges facts (such as time and
place) with sufficient precision to give a defendant fair
notice of the charge he must defend against at trial.
See, e.g., United States v. Bout, 731 F.3d
233, 240 (2d Cir. 2013). Moreover, when an indictment alleges
a conspiracy, it need not allege with technical precision all
the elements essential to the commission of the crime that is
the object of the conspiracy. Ibid. As the Second
Circuit has explained, “[a]n indictment need not be
perfect, and common sense and reason are more important than
technicalities.” United States v. Stringer,
730 F.3d 120, 124 (2d Cir. 2013).
a criminal defendant may move to dismiss an indictment on
grounds that the prosecution does not have enough evidence to
prove its charge at trial. But this is not a proper
challenge, because the federal rules do not authorize judges
to engage in a pre-trial inquest to decide if the prosecution
will have enough evidence to prove its case at trial. See
Costello v. United States, 350 U.S. 359, 363-64 (1956).
Instead, a judge must allow the prosecution an opportunity to
marshal and present its evidence at trial; only then may a
defendant challenge the sufficiency of the evidence by way of
a motion for judgment of acquittal pursuant to Fed. R. Crim.
P. 29 at the close of evidence in the case. See United
States v. Huet, 665 F.3d 588, 595 (3d Cir. 2012).
short, the validity of an indictment is tested by the
adequacy of its allegations, not by whether the prosecution
can ultimately prove its case. And for this reason, when a
court considers a defendant's pre-trial motion to dismiss
an indictment, it must be alert to arguments that may be
artfully framed as if challenging the sufficiency of the
indictment but that in reality invite the judge to decide if
the prosecution can meet its evidentiary burden at trial.
See United States v. Triumph Capital Grp., Inc., 260
F.Supp.2d 462, 465 (D. Conn. 2002).
Awareness and approval of CMEEC board of
first challenge is premised on their assertion that
CMEEC's board of directors knew of and approved the trips
in question. Defendants argue that they cannot have committed
a misappropriation of corporate funds if their actions were
approved by the company's board of directors. Citing
those portions of the indictment alleging that members of
CMEEC's board of directors were invited to attend one or
more of the trips at issue, they argue that “[o]ne does
not engage in ‘theft' by planning a corporate
retreat, even if ‘lavish,' if the fiduciaries of
the supposed ‘victim' know the corporation is
paying for the retreat and those fiduciaries voluntarily
attend and enjoy the retreat: year after year.” Doc.
#85 at 6-7 (emphasis omitted). In the alternative, defendants
argue that the inclusion of the CMEEC board members and the
ostensible business purpose of the trips fatally contradicts
the indictment's allegations that the defendants acted
with the necessary improper intent. Ibid.
not agree for several reasons. First, the indictment alleges
that defendants “did not seek the approval of the CMEEC
Board of Directors for these trips and did not include the
costs for the trips as budget expenses in the annual general
administrative budgets proposed to and approved by the CMEEC
Board of Directors.” Doc. #1 at 7-8 (¶ 21);
see also Id. at 8 (¶¶ 22-24) (similar
allegations of lack of board vote, obfuscation of nature of
trip expenses, and nondisclosure of trips to senior-level
CMEEC employees). Accordingly, notwithstanding any other
allegations of the indictment that defendants interpret to
mean that one or more members of the board of directors were
aware of the trips, the indictment sufficiently alleges that
there was no ...