UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT Grand Jury N-18-1 UNITED STATES OF AMERICA v. DREW RANKIN, JAMES SULLIVAN, JOHN BILDA, EDWARD DEMUZZIO and EDWARD PRYOR CRIMINAL NO. 3:18cr ( ) VIOLATIONS: 18 U.S.C. § 371 (Conspiracy) 18 U.S.C. § 666(a)(1)(A) (Theft Concerning Program Receiving Federal Funds) 18 U.S.C. § 2 (Aiding and Abetting) INDICTMENT The Grand Jury charges: GENERAL ALLEGATIONS At all times relevant to this Indictment: 1. The Connecticut Municipal Electric Energy Cooperative (“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. CMEEC’s members included the City of Norwich, the City of Groton, the Borough of Jewett City, the Second Taxing District of the City of Norwalk, the Third Taxing District of the City of Norwalk, and the Town of Bozrah, Connecticut (collectively, the “CMEEC Members” or “Member Towns”). 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. 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. According to CMEEC’s public website, “[t]he municipal utilities do not conduct their electric operations for shareholder profit . . . . The customers and citizens of the municipality are the only ‘shareholders’ for municipal utilities.” 2. As the owners of CMEEC, each Member Town executed an agreement through its respective municipal electric utility outlining the terms and conditions under which the CMEEC Members participated together in CMEEC (the “Membership Agreement”). In addition, CMEEC operated pursuant to a set of bylaws (the “CMEEC Bylaws”). 3. Each CMEEC Member and its respective municipal electric utility was a “government agency” as that term is defined by 18 U.S.C. § 666(d)(2). CMEEC was a “government agency” as that term is defined by 18 U.S.C. § 666(d)(2), i.e., “a department, independent commission, administration, authority, board, and bureau, and a corporation and other legal entity established, and subject to control, by a government and governments for the execution of a governmental and intergovernmental program[.]” 4. Each CMEEC Member received benefits in excess of $10,000 under a Federal program involving a grant, contract, subsidy, loan, guarantee, insurance and other form of Federal assistance during each 12-month period described in Counts Two through Four. CMEEC received benefits in excess of $10,000 under a Federal program involving a grant, contract, subsidy, loan, guarantee, insurance and other form of Federal assistance during each 12-month period described in Counts Two through Four. More specifically, CMEEC received over nine million dollars from the United States Department of Energy between 2010 and 2015. In addition, each Member Town also received benefits in excess of $10,000 under a Federal program involving a grant, contract, subsidy, loan, guarantee, insurance and other form of Federal assistance during each 12-month period described in Counts Two through Four. For example, the City of Norwich and the City of Groton received hundreds of thousands from the United States Department of Housing and Urban Development and the United States Department of Defense between 2014 through 2016. 5. CMEEC was managed in its day-to-day activities by a board (“CMEEC Board of Directors”) made up of representatives from each Member Town. The CMEEC Board of Directors was responsible for the operational affairs and business of CMEEC. The CMEEC Board of Directors set policy for CMEEC and performed other duties and responsibilities as determined by applicable state statutes and by the CMEEC Bylaws. Pursuant to the CMEEC Bylaws, all CMEEC Board of Directors meetings had to be conducted within the State of Connecticut and had to be open to the public. 6. Pursuant to CMEEC Bylaws, the CMEEC Board of Directors determined what salary, compensation and expense reimbursement that each board representative received for their work on behalf of CMEEC. Until 2016, CMEEC Board of Directors representatives received $500 for each board meeting attended in person, $250 for each board meeting attended by telephone, and $200 for each board committee meeting attended. Beginning in November 2016, pursuant to a CMEEC Board of Directors vote, representatives received $600 for each board meeting attended in person. 7. The CMEEC Bylaws provided that each year the chief executive officer of CMEEC “shall cause to be prepared a general administrative budget for each year[,]” which budget was to include “an estimate of the amount of receipts and expenditures for general administrative purposes during the ensuing year, including all expenses necessary to conduct the operational responsibilities of CMEEC.” A vote of the CMEEC Board of Directors was required for all CMEEC budget approvals and budget revisions. 8. The CMEEC Membership Agreement provided that “all revenues less incurred expenses received by CMEEC” were designated as “CMEEC Margin.” The CMEEC Membership Agreement further provided that all “CMEEC Margin received in a given month shall be allocated and/or disbursed on the first day of the next calendar month[,]” to each Member Town in proportional share to that Member Town’s ownership percentage in CMEEC. Unless otherwise designated, the funds allocated in the CMEEC Margin account for each Member Town were allocated and/or disbursed to a rate stabilization fund for that Member Town, which fund was designed to help keep electricity costs stable for ratepayers. 9. The defendant DREW RANKIN was the chief executive officer of CMEEC, appointed by the CMEEC Board of Directors and responsible for the planning, operations, and administrative affairs of CMEEC. RANKIN was responsible for the preparation of a general administrative budget for CMEEC for each year for approval by the CMEEC Board of Directors, to include an estimate of the amount of receipts and expenditures for general administrative purposes during the year “including all expenses necessary to conduct the operational responsibilities of CMEEC.” RANKIN was an agent of CMEEC. 10. Until October 2015, the defendant JAMES SULLIVAN was a City of Norwich representative and the chairperson of the CMEEC Board of Directors. SULLIVAN was responsible for presiding at all meetings of the Board of Directors. SULLIVAN was an agent of CMEEC and the City of Norwich. 11. The defendant JOHN BILDA was a City of Norwich representative on the CMEEC Board of Directors and an employee of the City of Norwich. BILDA was an agent of CMEEC and the City of Norwich. 12. The defendant EDWARD DEMUZZIO was a City of Groton representative and the secretary of the CMEEC Board of Directors. DEMUZZIO was an agent of CMEEC and the City of Groton. 13. The CMEEC Board of Directors had committees, including the compensation committee, which was responsible for determining the compensation of RANKIN as CMEEC’s chief executive officer. BILDA and DEMUZZIO were members of the compensation committee. 14. The defendant EDWARD PRYOR was the chief financial officer of CMEEC with responsibility for financial planning and reporting. PRYOR was an agent of CMEEC. COUNT ONE (Conspiracy) 15. realleged. Paragraphs 1 through 14 of this Indictment are 16. From in or about 2014 through 2017, the exact dates being unknown to the Grand Jury, in the District of Connecticut and elsewhere, the defendants RANKIN, SULLIVAN, BILDA, DEMUZZIO and PRYOR, did unlawfully, knowingly and intentionally conspire, combine, confederate and agree with one another and with others, known and unknown to the Grand Jury, to commit an offense against the United States, that is, being agents of CMEEC, an agency of a local government receiving in one year periods (beginning on January 1 of 2014 and 2015), benefits in excess of $10,000 under grants and federal assistance awarded by the United States Department of Energy, and, as specified above, being agents of CMEEC Members, each a local government receiving in one year periods (beginning on January 1 of 2014, 2015, 2016, and 2017), benefits in excess of $10,000 under grants and federal assistance from various federal agencies, did embezzle, steal, obtain by fraud, and otherwise without authority knowingly convert to the use of any person other than the rightful owner and intentionally misapply property valued at $5,000 or more that was owned, and under the care, custody, and control of CMEEC and the CMEEC Members, in violation of Title 18, United States Code, Section 666(a)(1)(A). Purpose and Object of the Conspiracy 17. A purpose and object of the conspiracy was for the defendants RANKIN, SULLIVAN, BILDA, DEMUZZIO and PRYOR, and others known and unknown to the Grand Jury, 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. It was further a purpose and object of the conspiracy to conceal the conspiracy from others. Manner and Means of the Conspiracy 18. The manner and means by which the defendants RANKIN, SULLIVAN, BILDA, DEMUZZIO and PRYOR and others known and unknown to the Grand Jury sought to and did accomplish the objects of the conspiracy included, among others, the following: 19. It was part of the conspiracy that the co-conspirators 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. These 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. Instead, these trips and the related costs for these trips were intended to personally benefit, compensate, and reward the co-conspirators, their family members, friends, and associates. Costs for the trips included travel expenses, private chartered airfare, first-class hotel accommodations, meals, tickets to sporting events, golf fees, souvenirs and gifts. 20. It was further part of the conspiracy that the co-conspirators paid for the trips with CMEEC funds and CMEEC Member funds. 21. It was further part of the conspiracy that the co-conspirators 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. 22. It was further part of the conspiracy that the co-conspirators 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. 23. It was further part of the conspiracy that the co-conspirators 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. 24. It was further part of the conspiracy that the co-conspirators 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. 25. It was further part of the conspiracy that when the fact of the trips became public knowledge, the co-conspirators 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. Overt Acts 26. In furtherance of the conspiracy and to effect the objects of the conspiracy, the co-conspirators committed and caused to be committed the following overt acts, among others, in the District of Connecticut and elsewhere: 27. On or about June 2, 2014, RANKIN, on behalf of CMEEC, executed a purchase agreement with QE.LLC for thirty (30) ticket packages to the 2015 Kentucky Derby, including event tickets, hotel rooms, food, and gift bags, in the amount of $206,970. This item was not identified as an expense in any budget presented to the CMEEC Board of Directors. 28. On or about January 19, 2015, PRYOR directed that a new “contra-margin” account be created for the costs of the Kentucky Derby trips to 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 consent of the Member Towns. 29. On or about January 26, 2015, RANKIN and PRYOR received an email from a CMEEC employee stating “Ed asked for a new account needed for a Board Retreat purchase order that will be excluded from the Administrative dashboard. The new account is 650000130-XX-XX. Let me know if you have any questions.” 30. On or about January 29, 2015, RANKIN approved purchase order #003837 in the amount of $54,021 for roundtrip chartered air service from Groton to Louisville for the 2015 Kentucky Derby. The purchase order stated that the cost was a “CMEEC Contra Margin BOD” expense and was charged against the CMEEC Margin. 31. In or about March and April 2015, RANKIN invited CMEEC Board Members, select CMEEC employees, friends, and associates to attend a multi-day trip to the 2015 Kentucky Derby with all expenses paid for by CMEEC. The invited guests included SULLIVAN’s brother, sister-in-law, and minor son. The Kentucky Derby trip was not noticed on the agenda for, or discussed during, the March 26, 2015, CMEEC Board of Directors meeting. 32. On or about April 10, 2015, RANKIN sent a 16-page pamphlet entitled “2015 Strategic Retreat: Members and Guests Appreciation Celebration” be sent to the invited guests for the 2015 Kentucky Derby trip. On the top of the first seven pages of the pamphlet were the official seals of the Member Towns’ municipal utilities. The introduction written by RANKIN stated: “Are you ready for some genuine Kentucky Experience and Derby Fun? Yes, a most wonderful time of year, where we take a few moments to celebrate and honor you as dedicated and awesome Board Members and your Strategic Guests/ Partners, who give so much of your precious time and talent to CMEEC and the CMEEC Member Utilities.” 33. On or about April 10, 2015, RANKIN sent an email to a CMEEC employee with the subject: “Perform discretely [sic]—gift bag preparation and issuance.” The email contained a list of some of the invited guests for the 2015 Kentucky Derby trip. The email directed: “Each couple receives a gift bag . . . in each gift bag place two gifts (brown satchell [sic]) . . . in each brown satchell [sic], verify it contains one glass, one binoculars, one leather bound pad, and one wine vacuum top. There should be 29 satchells [sic], as I took one already. You can have one satchell [sic].” 34. On or about April 14, 2015, a CMEEC Board of Directors representative sent an email to RANKIN stating “Thank you for the gift bag. You know how to spoil us. See you next week.” RANKIN replied that same day: “You deserve all this and then some. You and your peers give so much and it is my joy to attempt an equitable reward.” 35. On or about April 30, 2015, through May 3, 2015, RANKIN, SULLIVAN, BILDA and PRYOR, and others known and unknown to the Grand Jury, traveled via chartered plane from Groton to Louisville, Kentucky, where they attended the 2015 Kentucky Derby and related events. The total cost of the trip, paid for with Member Towns’ funds from the CMEEC Margin account, was approximately $294,917. 36. On or about May 4, 2015, RANKIN, on behalf of CMEEC, executed a purchase agreement with QE.LLC for forty (40) ticket packages to the 2016 Kentucky Derby, including event tickets, hotel rooms, food, and gift bags, in the amount of $279,960. 37. On or about May 5, 2015, RANKIN approved purchase order #003990 in the amount of $284,960 for the forty (40) ticket packages to the 2016 Kentucky Derby. The purchase order stated that the cost was for “Board Strategic Retreat 2016 expenses” and was charged against the CMEEC Margin. 38. On or about June 29, 2015, BILDA approved an expense report that he submitted to the City of Norwich for $206.61 in connection with his personal expenses for the 2015 Kentucky Derby trip. 39. On or about July 9, 2015, RANKIN sent an email to SULLIVAN, BILDA and DEMUZZIO, proposing that the four of them take a trip the following month to a luxury golf resort in West Virginia to “evaluate the location” for a potential CMEEC strategic retreat. 40. On or about July 9, 2015, BILDA sent a reply email to RANKIN, SULLIVAN and DEMUZZIO concerning his availability for a trip to the golf resort stating in part: “Everything else can be adjusted for something as important as this.” 41. On or about July 17, 2015, RANKIN sent an email to SULLIVAN, BILDA and DEMUZZIO stating that he had reserved a four-bedroom cottage at the luxury golf resort for the four of them the following month. RANKIN included a proposed schedule of the golf courses the four would visit. 42. On or about July 17, 2015, SULLIVAN sent a reply email to RANKIN, BILDA and DEMUZZIO stating: “Is your name ‘I deserve a raise?’” 43. On or about August 4, 2015, through August 7, 2015, RANKIN, SULLIVAN, BILDA, and DEMUZZIO traveled from Connecticut to a luxury golf resort in West Virginia for the purpose of a golf-outing trip. The total cost of the trip was approximately $21,447. Invoices approved by RANKIN for the trip note that it was in connection with the Board of Director’s “compensation committee.” 44. On or about September 14, 2015, RANKIN sent an email to the representatives of the CMEEC Board of Directors inviting them to a “Member Delegation Strategic Retreat” at the luxury golf resort in West Virginia. RANKIN stated: “The 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.” This trip was not noticed on the agenda for, or discussed during, the September 24, 2015, CMEEC Board of Directors meeting. 45. On or about September 22, 2015, CMEEC paid for the purchase of $3,426.80 in custom golf balls and hats from an entity owned by BILDA’s wife in connection with the October 2015 trip to the luxury golf resort in West Virginia. The golf balls were imprinted with the faces of several of the invited guests on the trip and were intended as gifts in connection with the trip. 46. On October 8, 2015, RANKIN emailed a “2015 Fall Strategic Retreat, Members and Guests Appreciation Celebration” pamphlet to the invited guests for the October 2015 trip to the luxury golf resort in West Virginia. On the top of the first five pages of the pamphlet were the official seals of the CMEEC Members’ utilities. 47. On or about October 20, 2015, through October 23, 2015, the co-conspirators and others known and unknown to the Grand Jury traveled from Connecticut to a luxury golf resort in West Virginia. The total cost of the trip, paid for with Member Towns’ funds in the CMEEC Margin account, was approximately $112,443.98. 48. On or about October 23, 2015, on the final day of the trip to the luxury golf resort in West Virginia, 17 scarves were purchased for $2,264.57 from the “ladies shop” at the resort for the trip members to take home and give as gifts, which purchase was later approved by RANKIN. The scarves were paid for with Member Towns’ funds in the CMEEC Margin account. 49. On or about October 29, 2015, PRYOR approved purchase order #004230 in the amount of $58,724.20 for the luxury golf resort in West Virginia. The purchase order stated that the cost was for “[Golf Resort] Board Retreat” and was charged against the CMEEC Margin. 50. On or about February 25, 2016, BILDA made a motion at a CMEEC Board of Directors meeting to modify the compensation package of RANKIN retroactive to January 1, 2016, which motion was seconded by DEMUZZIO. The modification increased RANKIN’s overall compensation. 51. On or about April 27, 2016, RANKIN sent an email to the invited guests for the 2016 Kentucky Derby trip. The email included the “list of participants for the strategic retreat” and stated “we have an excellent agenda scheduled to produce maximum fulfillment, all in expression of appreciation to each of you for helping CMEEC be successful.” The list of participants included BILDA’s parents, the wife and mother-in-law of a CMEEC Board of Directors representative who was not participating in the trip, CMEEC vendors, DEMUZZIO’s close friend who lived in Florida, the son-in-law and daughter of a CMEEC vendor, and the mayor of a CMEEC Member. 52. In or about April 2016, BILDA cautioned one of the invited guests for the upcoming Kentucky Derby trip that she should be “careful who you talk to about the trip.” 53. On or about May 5, 2016, through May 8, 2016, the co-conspirators and others known and unknown to the Grand Jury traveled via chartered plane from Groton to Louisville, Kentucky, where they attended the Kentucky Derby and related events. The total cost of the trip, paid for with CMEEC and Member Towns’ funds, was approximately $374,169. 54. On or about May 23, 2016, RANKIN, on behalf of CMEEC, executed a purchase agreement with QE.LLC for forty (40) ticket packages to the 2017 Kentucky Derby, including event tickets, hotel rooms, food, gift bags, and transportation in the amount of $290,960. 55. On or about June 29, 2016, BILDA approved an expense report that he submitted to the City of Norwich for $456.69 in connection with his personal expenses for the 2016 Kentucky Derby trip. 56. On or about September 30, 2016, RANKIN sent an email in response to a Freedom of Information Act request to a reporter for a local newspaper, which email attached the attendee list for the October 2015 trip to the luxury golf resort in West Virginia. Omitted from that list were the individuals who attended the trip but who were not CMEEC employees or CMEEC Board Members. In addition, RANKIN attached the attendee list for the 2016 Kentucky Derby trip. Omitted from that list were the names of BILDA’s parents who attended the trip. RANKIN falsely stated that CMEEC paid for the retreats “through Non Member funds generated by CMEEC not related to Member utilities or their customers. The Member utility customers do not realize an expense with the trip nor is the related expense paid for by Member utilities’ customers.” RANKIN underreported the costs of the Kentucky Derby and the luxury golf resort in West Virginia trips by tens of thousands of dollars. 57. On or about October 4, 2016, RANKIN sent an email in response to a series of questions to a reporter for a local newspaper, which email falsely stated that the 2016 Kentucky Derby trip was funded through “Non-member funds,” and falsely stated that individuals from the “Third Taxing District” of Norwalk had attended the trip. RANKIN underreported the costs of the 2016 Kentucky Derby trip by tens of thousands of dollars. 58. On or about October 19, 2016, BILDA forwarded to a member of Groton Utilities an email entitled “talking points,” which included: “First and foremost—not a dime of taxpayer or NPU funds were used on any part of this trip. Transportation, lodging, food—all expenses were covered by CMEEC.” The “talking points” also stated: “We carefully considered whether or not it was appropriate for us to participate in this type of team-building exercise and determined that it would be worthwhile.” 59. On or about October 21, 2016, BILDA falsely stated to a reporter for a local newspaper that the 2016 Kentucky Derby trip “did not cost the ratepayers or taxpayers a dime.” 60. On or about October 24, 2016, RANKIN sent an email to an elected official of a Member Town who had requested additional information about any “strategic retreats other than the Kentucky Derby trips of 2015 and 2016.” RANKIN attached the attendee list for the October 2015 trip to the luxury golf resort in West Virginia. RANKIN omitted from that list the names of individuals who attended the trip but who were not CMEEC employees or CMEEC Board Members. RANKIN did not disclose the fact of the August 2015 trip that RANKIN, SULLIVAN, BILDA and DEMUZZIO had taken to the luxury golf resort in West Virginia. RANKIN forwarded his email to DEMUZZIO. 61. On or about May 18, 2017, Q.E. LLC refunded CMEEC approximately $90,000 of the $298,960 CMEEC had already paid in connection with the planned trip to the 2017 Kentucky Derby. The remaining balance of the funds paid by CMEEC was charged against the CMEEC Margin. All in violation of Title 18, United States Code, Section 371. COUNT TWO (Theft Concerning a Program Receiving Federal Funds) 62. Paragraphs 1 through 61 of this Indictment are realleged. 63. From on or about January 1, 2014, through December 31, 2014, in the District of Connecticut and elsewhere, the defendants RANKIN, SULLIVAN, BILDA, DEMUZZIO and PRYOR, being agents of CMEEC, an agency of a local government receiving in the one year period beginning on January 1, 2014, benefits in excess of $10,000 under grants and federal assistance awarded by the United States Department of Energy, and being agents of CMEEC Members, each a local government receiving in the one year period beginning on January 1, 2014, benefits in excess of $10,000 under grants and federal assistance from various federal agencies, did embezzle, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly convert, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly convert to each of their own use property and funds valued at $5,000 or more, which property and funds were owned by and under the care, custody and control of CMEEC. All in violation of 18 U.S.C.§§ 666(a)(1)(A) and 2. COUNT THREE (Theft Concerning a Program Receiving Federal Funds) 64. Paragraphs 1 through 61 of this Indictment are realleged. 65. From on or about January 1, 2015, through December 31, 2015, in the District of Connecticut and elsewhere, the defendants RANKIN, SULLIVAN, BILDA, DEMUZZIO and PRYOR, being agents of CMEEC, an agency of a local government receiving in the one year period beginning on January 1, 2015, benefits in excess of $10,000 under grants and federal assistance awarded by the United States Department of Energy, and being agents of CMEEC Members, each a local government receiving in the one year period beginning on January 1, 2015, benefits in excess of $10,000 under grants and federal assistance from various federal agencies, did embezzle, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly convert, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly convert to each of their own use property and funds valued at $5,000 or more, which property and funds were owned by and under the care, custody and control of CMEEC. All in violation of 18 U.S.C.§§ 666(a)(1)(A) and 2. COUNT FOUR (Theft Concerning a Program Receiving Federal Funds-2016) 66. Paragraphs 1 through 61 of this Indictment are realleged. 67. From on or about January 1, 2016, through December 31, 2016, in the District of Connecticut and elsewhere, the defendants RANKIN, SULLIVAN, BILDA, DEMUZZIO and PRYOR, being agents of CMEEC Members, each a local government receiving in the one year period beginning on January 1, 2016, benefits in excess of $10,000 under grants and federal assistance from various federal agencies, did embezzle, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly convert, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly convert to each of their own use property and funds valued at $5,000 or more, which property and funds were owned by and under the care, custody and control of CMEEC. All in violation of 18 U.S.C. §§ 666(a)(1)(A) and 2. A TRUE BILL ________________________________ FOREPERSON UNITED STATES OF AMERICA JOHN H. DURHAM UNITED STATES ATTORNEY _________________________________ DOUGLAS P. MORABITO ASSISTANT UNITED STATES ATTORNEY _________________________________ SARAH P. KARWAN ASSISTANT UNITED STATES ATTORNEY UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT Grand Jury N-18-1 UNITED STATES OF AMERICA v. DREW RANKIN and JAMES SULLIVAN, CRIMINAL NO. 3:18cr ( ) VIOLATIONS: 18 U.S.C. ? 371 (Conspiracy) 18 U.S.C. ? 666(a)(1)(A) (Theft Concerning Program Receiving Federal Funds) 18 U.S.C. ? 2 (Aiding and Abetting) INDICTMENT The Grand Jury charges: GENERAL ALLEGATIONS At all times relevant to this Indictment: 1. The Connecticut Municipal Electric Energy Cooperative ("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. CMEEC's members included the City of Norwich, the City of Groton, the Borough of Jewett City, the Second Taxing District of the City of Norwalk, the Third Taxing District of the City of Norwalk, and the Town of Bozrah, Connecticut (collectively, the "CMEEC Members" or "Member Towns"). 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. 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. 2. As the owners of CMEEC, each Member Town executed an agreement through its respective municipal electric utility outlining the terms and conditions under which the CMEEC Members participated together in CMEEC (the "Membership Agreement"). In addition, CMEEC operated pursuant to a set of bylaws (the "CMEEC Bylaws"). 3. Each CMEEC Member and its respective municipal electric utility was a "government agency" as that term is defined by 18 U.S.C. ? 666(d)(2). CMEEC was a "government agency" as that term is defined by 18 U.S.C. ? 666(d)(2), i.e., "a department, independent commission, administration, authority, board, and bureau, and a corporation and other legal entity established, and subject to control, by a government and governments for the execution of a governmental and intergovernmental program[.]" 4. CMEEC received benefits in excess of $10,000 under a Federal program involving a grant, contract, subsidy, loan, guarantee, insurance and other form of Federal assistance during each 12-month period described in Counts Two through Four. More specifically, CMEEC received over nine million dollars from the United States Department of Energy between 2010 and 2015. In addition, each Member Town also received benefits in excess of $10,000 under a Federal program involving a grant, contract, subsidy, loan, guarantee, insurance and other form of Federal assistance during each 12-month period described in Counts Two through Four. More specifically, the City of Norwich received hundreds of thousands from the United States Department of Housing and Urban Development between 2012 through 2016. 5. CMEEC was managed in its day-to-day activities by a board ("CMEEC Board of Directors") made up of representatives from each Member Town. The CMEEC Board of Directors was responsible for the operational affairs and business of CMEEC. The CMEEC Board of Directors set policy for CMEEC and performed other duties and responsibilities as determined by applicable state statutes and by the CMEEC Bylaws. Pursuant to the CMEEC Bylaws, all CMEEC Board of Directors meetings had to be conducted within the State of Connecticut and had to be open to the public. 6. Pursuant to CMEEC Bylaws, the CMEEC Board of Directors determined what salary, compensation and expense reimbursement that each board representative received for their work on behalf of CMEEC. Until 2016, CMEEC Board of Directors representatives received $500 for each board meeting attended in person, $250 for each board meeting attended by telephone, and $200 for each board committee meeting attended. Beginning in November 2016, pursuant to a CMEEC Board of Directors vote, representatives received $600 for each board meeting attended in person. 7. The CMEEC Bylaws provided that each year the chief executive officer of CMEEC "shall cause to be prepared a general administrative budget for each year[,]" which budget was to include "an estimate of the amount of receipts and expenditures for general administrative purposes during the ensuing year, including all expenses necessary to conduct the operational responsibilities of CMEEC." A vote of 51% or greater of the CMEEC Board of Directors was required for all CMEEC budget approvals and budget revisions. 8. The CMEEC Membership Agreement provided that "all revenues less incurred expenses received by CMEEC" were designated as "CMEEC Margin." The CMEEC Membership Agreement further provided that all "CMEEC Margin received in a given month shall be allocated and/or disbursed on the first day of the next calendar month[,]" to each Member Town in proportional share to that Member Town's ownership percentage in CMEEC. Unless otherwise designated, the funds allocated in the CMEEC Margin account for each Member Town were allocated and/or disbursed to a rate stabilization fund for that Member Town, which fund was designed to help keep electricity costs stable for ratepayers. 9. The defendant DREW RANKIN was the chief executive officer of CMEEC, appointed by the CMEEC Board of Directors and responsible for the planning, operations, and administrative affairs of CMEEC. RANKIN was responsible for the preparation of a general administrative budget for CMEEC for each year for approval by the CMEEC Board of Directors, to include an estimate of the amount of receipts and expenditures for general administrative purposes during the year "including all expenses necessary to conduct the operational responsibilities of CMEEC." RANKIN was an agent of CMEEC. 10. Until October 2015, the defendant JAMES SULLIVAN was a City of Norwich representative and the chairperson of the CMEEC Board of Directors. SULLIVAN was responsible for presiding at all meetings of the Board of Directors. SULLIVAN was an agent of CMEEC and the City of Norwich. 11. The CMEEC Board of Directors had committees, including the compensation committee, which was responsible for determining the compensation of RANKIN as CMEEC's chief executive officer. COUNT ONE (Conspiracy) 12. Paragraphs 1 through 11 of this Indictment are realleged. 13. From in or about 2012 through 2015, the exact dates being unknown to the Grand Jury, in the District of Connecticut and elsewhere, the defendants RANKIN and SULLIVAN, did unlawfully, knowingly and intentionally conspire, combine, confederate and agree with one another and with others, known and unknown to the Grand Jury, to commit an offense against the United States, that is, being agents of CMEEC, an agency of a local government receiving in a one year period benefits in excess of $10,000 under grants and federal assistance awarded by the United States Department of Energy, and SULLIVAN being an agent of CMEEC Member the City of Norwich, Connecticut, a local government receiving in a one year period beginning, benefits in excess of $10,000 under grants and federal assistance from various federal agencies, including the United States Department of Housing and Urban Development, did embezzle, steal, obtain by fraud, and otherwise without authority knowingly convert to the use of any person other than the rightful owner and intentionally misapply property valued at $5,000 or more that was owned, and under the care, custody, and control of CMEEC and the CMEEC Member, the City of Norwich, in violation of Title 18, United States Code, Section 666(a)(1)(A). Purpose and Object of the Conspiracy 14. A purpose and object of the conspiracy was for the defendants RANKIN and SULLIVAN, and others known and unknown to the Grand Jury, to conduct the business and affairs of CMEEC for their personal, pecuniary and financial benefit. It was further a purpose and object of the conspiracy to conceal the conspiracy from others. Manner and Means of the Conspiracy 15. The manner and means by which the defendants RANKIN and SULLIVAN and others known and unknown to the Grand Jury sought to and did accomplish the objects of the conspiracy included, among others, the following: 16. It was part of the conspiracy that RANKIN and SULLIVAN paid for SULLIVAN's personal expenses with CMEEC Member funds and CMEEC funds. 17. It was further part of the conspiracy that RANKIN and SULLIVAN did not seek the approval of the CMEEC Board of Directors for SULLIVAN's personal expenses and did not include the expenses for the trips as budget expenses in the annual general administrative budgets proposed to and approved by the CMEEC Board of Directors. 18. It was further part of the conspiracy that SULLIVAN submitted his personal expenses on a regular basis via "expense reports" which RANKIN approved and directed to be paid out of CMEEC funds. SULLIVAN's personal expenses were charged as lobbying expenses under the A&G Board Committee/ CEO Administrative account, even though SULLVIAN was not a registered lobbyist for CMEEC. 19. It was further part of the conspiracy that SULLIVAN's personal expenses, including airfare and travel expenses, were charged to the CMEEC credit card assigned to RANKIN's assistant. Overt Acts 20. In furtherance of the conspiracy and to effect the objects of the conspiracy, the co-conspirators committed and caused to be committed the following overt acts, among others, in the District of Connecticut and elsewhere: 21. On or about the dates specified below, RANKIN authorized the payment of SULLIVAN's personal expenses from CMEEC funds for the following trips and items: Overt Act Date Description Amount A 1/17/2012 Flight from Baltimore/Washington Int'l Airport to T.F. Green Airport $198.80 B 1/17/2012 Flight from Bradley Int'l Airport to Baltimore/Washington Int'l Airport $202.80 C 3/2/2012 Flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $417.60 D 3/23/2012 Flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $417.60 E 9/11/2012 Flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $421.60 F 11/27/2012 Flight from Baltimore/Washington Int'l Airport to T.F. Green Airport $232.80 G 12/6/2012 Flight from Baltimore/Washington Int'l Airport to T.F. Green Airport $212.80 H 2/1/2013 Roundtrip flight from T.F. Green Airport to Baltimore/ Washington Int'l Airport $425.80 I 2/18/2013 Flight from Logan Int'l Airport to San Francisco Int'l Airport $247.90 J 2/18/2013 Flight from Los Angeles Int'l Airport to Bradley Int'l Airport $433.30 K 2/25/2013 Flight from Bradley Int'l Airport to Louisville Int'l Airport $359.80 L 4/2/2013 Flight from Louisville Int'l Airport to Ronald Reagan Nat'l Airport $478.90 M 4/5/2013 Flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $451.80 N 4/22/2013 Flight from Baltimore/Washington Int'l Airport to T.F. Green Airport $227.90 O 5/5/2013 2013 trip to the Kentucky Derby for SULLIVAN and his wife $12,498.28 P 5/15/2013 Flight from John Wayne Airport to Louisville Int'l Airport for SULLIVAN's wife $535.80 Q 5/15/2013 Flight from Louisville Int'l Airport to Ronald Regan Int'l Airport for SULLIVAN's wife $478.90 R 6/10/2013 Flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $227.90 S 7/8/2013 Roundtrip flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $471.80 T 7/29/2013 Flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $228.90 U 8/23/2013 Hotel room charge in Norwich, Connecticut $85.68 V 9/3/2013 Flight from Baltimore/Washington Int'l Airport to T.F. Green Airport $228.90 W 9/16/2013 Roundtrip flight from Bradley Int'l Airport to Baltimore/Washington Int'l Airport $437.80 X 9/30/2013 Roundtrip flight from Bradley Int'l Airport to Baltimore/Washington Int'l Airport $437.80 Y 10/15/2013 Flight from Bradley Int'l Airport to Baltimore/Washington Int'l Airport $218.90 Z 11/2/2013 Flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $228.90 AA 11/18/2013 Roundtrip flight from Bradley Int'l Airport to Baltimore/Washington Int'l Airport $437.80 BB 12/3/2013 Roundtrip flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $457.80 CC 12/12/2013 Roundtrip flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $457.80 DD 1/8/2014 Roundtrip flight from Bradley Int'l Airport to Baltimore/Washington Int'l Airport $438.00 EE 1/16/2014 Flight from Baltimore/Washington Int'l Airport to Bradley Int'l Airport $219.00 FF 2/5/2015 Flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $229.00 GG 2/14/2014 Roundtrip flight from Bradley Int'l Airport to Baltimore/Washington Int'l Airport $438.00 HH 3/3/2014 Flight from Louisville Int'l Airport to Ronald Reagan Nat'l Airport $380.00 II 3/3/2014 Roundtrip flight from Ronald Reagan Nat'l Airport to Louisville Int'l Airport for SULLIVAN's wife $760.00 JJ 3/19/2014 Flight from Baltimore/Washington Int'l Airport to Bradley Int'l Airport $230.00 KK 3/27/2014 Roundtrip flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $468.00 LL 4/2/2014 Flight from Bradley Int'l Airport to Louisville Int'l Airport $406.00 MM 5/4/2014 2014 trip to the Kentucky Derby for SULLIVAN and his wife $14,390.76 NN 5/19/2014 2014 trip to the Kentucky Derby for SULLIVAN and his wife: baggage, taxis and meals $277.03 OO 5/30/2014 Flight from Baltimore/Washington Int'l Airport to Bradley Int'l Airport $232.00 PP 6/12/2014 Roundtrip flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $482.00 QQ 9/3/2014 First-class flight from Ronald Reagan Nat'l Airport to T.F. Green Airport $302.09 RR 9/11/2014 Flight from Bradley Int'l Airport to Ronald Reagan Nat'l Airport $206.10 SS 9/11/2014 Train from Washington, D.C. to New York Penn Station $259.00 TT 9/25/2014 Flight from Bradley Int'l Airport to Ronald Reagan Nat'l Airport $192.10 UU 10/6/2014 Flight from Baltimore/Washington Int'l Airport to T.F. Green Airport $239.10 VV 10/8/2014 Roundtrip flight from T.F. Green Airport to Baltimore/Washington Int'l Airport $478.20 WW 10/17/2014 Flight from Ronald Reagan Nat'l Airport to T.F. Green Airport $598.10 XX 11/3/2014 Flight from Ronald Reagan Nat'l Airport to T.F. Green $205.10 YY 11/21/2014 Apple iPad $918.76 ZZ 12/1/2014 Roundtrip flight from Bradley Int'l Airport to Ronald Reagan Nat'l Airport $393.35 AAA 12/13/2014 Roundtrip flight from Ronald Reagan Nat'l Airport to Key West Int'l Airport for SULLIVAN's wife $712.00 BBB 12/15/2014 Roundtrip flight from Ronald Reagan Nat'l Airport to T.F. Green Airport $410.20 CCC 1/5/2015 Roundtrip flight from T.F. Green Airport to Ronald Reagan Nat'l Airport $390.20 DDD 3/18/2015 Flight from Ronald Reagan Nat'l Airport to T.F. Green Airport $248.10 EEE 4/9/2015 Flight from Ronald Reagan Nat'l Airport to T.F. Green Airport $249.10 FFF 5/3/2015 2015 trip to the Kentucky Derby for SULLIVAN and his son $19,180.12 GGG 5/6/2015 Flight from Baltimore/Washington Int'l Airport to T.F. Green Airport $242.00 HHH 7/17/2015 One-night deposit, West Virginia luxury golf resort $659.00 III 7/19/2015 Roundtrip flight from T.F. Green Airport to Roanoke Regional Airport $696.20 JJJ 8/7/2015 Flight from Ronald Reagan Nat'l Airport to Logan Int'l Airport $454.10 KKK 8/7/2015 2015 trip to West Virginia luxury golf resort $1063.80 22. On or about the dates specified below, RANKIN authorized the payment of SULLIVAN's personal expenses from CMEEC funds based upon reports submitted by SULLIVAN: Overt Act Date Description Amount A 1/13/2012 July to December 2011 expenses $447.70 B 3/14/2012 January, February 2012 expenses $497.80 C 4/4/2012 March 2012 expenses $1,463.52 D 6/19/2012 April 2012 expenses $108.00 E 9/27/2012 May, June, July, August 2012 expenses $467.00 F 12/12/2012 September, October, November 2012 expenses $1,078.59 G 3/7/2013 November and December 2012, January and February 2013 expenses $616.80 H 6/17/2013 April, May 2013 expenses $660.68 I 8/5/2013 June, July 2013 expenses $622.75 J 10/21/2013 August, September 2013 expenses $449.01 K 12/2/2013 October, November 2013 expenses $1136.03 L 1/20/2014 December 2013 expenses $488.34 M 3/10/2014 January, February 2014 expenses $1028.32 N 6/6/2014 March, April 2014 expenses $1267.39 O 8/11/2014 May, June, July 2014 expenses $1801.48 P 10/1/2014 August, September 2014 expenses $2308.33 Q 11/17/2014 September, October, November 2014 expenses $1477.64 R 12/29/2014 October, November, December 2014 expenses $1452.14 S 2/3/2015 January 2015 expenses $1200.56 T 4/7/2015 January, February, March 2015 expenses $2069.12 U 6/8/2015 April, May 2015 expenses $2787.71 V 7/23/2015 June 2015 expenses $1101.70 W 8/17/2015 July, August 2015 expenses $3470.81 COUNT TWO (Theft Concerning a Program Receiving Federal Funds) 23. Paragraphs 1 through 22 of this Indictment are realleged. 24. From on or about January 1, 2013, through December 31, 2013, in the District of Connecticut and elsewhere, the defendants RANKIN and SULLIVAN, being agents of CMEEC, an agency of a local government receiving in the one year period beginning on January 1, 2013, benefits in excess of $10,000 under grants and federal assistance awarded by the United States Department of Energy, and SULLIVAN being an agent of CMEEC Member the City of Norwich, a local government receiving in the one year period beginning on January 1, 2013, benefits in excess of $10,000 under grants and federal assistance awarded by various federal agencies, including the United States Department of Housing and Urban Development, did embezzle, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly convert, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly covert to each of their own use property and funds valued at $5,000 or more, which property and funds were owned by and under the care, custody and control of CMEEC. All in violation of 18 U.S.C. ?? 666(a)(1)(A) and 2. COUNT THREE (Theft Concerning a Program Receiving Federal Funds) 25. Paragraphs 1 through 22 of this Indictment are realleged. 26. From on or about January 1, 2014, through December 31, 2014, in the District of Connecticut and elsewhere, the defendants RANKIN and SULLIVAN, being agents of CMEEC, an agency of a local government receiving in the one year period beginning on January 1, 2014, benefits in excess of $10,000 under grants and federal assistance awarded by the United States Department of Energy, and SULLIVAN being an agent of CMEEC Member the City of Norwich, a local government receiving in the one year period beginning on January 1, 2014, benefits in excess of $10,000 under grants and federal assistance awarded by various federal agencies, including the United States Department of Housing and Urban Development, did embezzle, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly convert, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly covert to each of their own use property and funds valued at $5,000 or more, which property and funds were owned by and under the care, custody and control of CMEEC. COUNT FOUR (Theft Concerning a Program Receiving Federal Funds) 27. Paragraphs 1 through 22 of this Indictment are realleged. 28. From on or about January 1, 2015, through December 31, 2015, in the District of Connecticut and elsewhere, the defendants RANKIN and SULLIVAN, being agents of CMEEC, an agency of a local government receiving in the one year period beginning on January 1, 2015, benefits in excess of $10,000 under grants and federal assistance awarded by the United States Department of Energy, and SULLIVAN being an agent of CMEEC Member the City of Norwich, a local government receiving in the one year period beginning on January 1, 2015, benefits in excess of $10,000 under grants and federal assistance awarded by various federal agencies, including the United States Department of Housing and Urban Development, did embezzle, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly convert, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly covert to each of their own use property and funds valued at $5,000 or more, which property and funds were owned by and under the care, custody and control of CMEEC. A TRUE BILL ________________________________ FOREPERSON UNITED STATES OF AMERICA JOHN H. DURHAM UNITED STATES ATTORNEY _________________________________ DOUGLAS P. MORABITO ASSISTANT UNITED STATES ATTORNEY _________________________________ SARAH P. KARWAN ASSISTANT UNITED STATES ATTORNEY