Horse Races, Golf Outings And Threats To Fox News

Criminal convictions of former corporate officers and executives were upheld by the United States Court of Appeals for the Second Circuit

As charged in the Indictment, Defendants were officers and executives of the Connecticut Municipal Electric Energy Cooperative (“CMEEC”) who in 2015 misappropriated funds from CMEEC to pay for four personal vacations – to the Kentucky Derby in 2015 and 2016 and to the Greenbrier Resort in August 2015 and October 2015 –under the guise that those trips were for corporate “retreats.” In fact, the trips were primarily attended by guests with no business relationship to CMEEC, provided no legitimate benefit to CMEEC, and incurred lavish expenses wholly unrelated to CMEEC’s business, and Defendants largely hid those facts from CMEEC’s Board of Directors (the “Board”) while disguising the expenses in nondescript line items in CMEEC’s budget.

Appeal issues

Defendants raise four claims of error on appeal. First, Defendants challenge the sufficiency of the evidence to support the jury’s finding that CMEEC received “benefits in excess of $10,000” in the charged one-year period, as required by the jurisdictional element of that offense. See 18 U.S.C. § 666(b). Second, Defendants claim that the government offered a frivolous theory as to which entity owned or had control of the stolen funds in order to charge Defendants with misappropriations of funds during the 2016 calendar year as part of other counts, one of which was voluntarily dismissed and the other of which Defendants were acquitted of, and that the inclusion of those counts caused Defendants spillover prejudice during their trial. Third, Defendants argue that the conviction should be vacated and the Indictment dismissed because the government purportedly misled the grand jury to believe that the trips were not approved by CMEEC’s Board, despite the fact that three of the four trips were charged to a line item in CMEEC’s annual budget. Fourth, Defendants argue that the district court erred in ordering restitution for the expenses arising from those three trips, and that those expenses should be excised from their restitution obligation.

The court rejected each contention. 

For the reasons set forth below, we reject each of those challenges. First, in 2015, CMEEC received $864,154.20 as the primary awardee of a federal grant program, and those funds are “benefits” within the meaning of 18 U.S.C. § 666(b). Although CMEEC quickly disbursed all but $9,363.08 to its subgrantees, § 666(b) does not require the entity to have retained or have been the ultimate recipient of the benefits, nor does it require a valuation of how much the disbursed fees “benefit[ted]” the entity. It is sufficient that the funds were provided as benefits and the entity received them. Second, the challenged theory advanced by the government was not frivolous, nor did that theory cause any spillover prejudice. Finally, as to the third and fourth claims, we find no misconduct by the government before the grand jury or error by the district court in setting the restitution amount, as there was sufficient evidence at trial for a reasonable jury to conclude beyond a reasonable doubt that the budget allocation which contained the trips did not authorize Defendants’ misappropriation of funds to pay for what were, in fact and by design, personal vacations.

Nice work if you can get it

All told, Defendants spent $294,031.61 of CMEEC’s funds on the 2015 Derby trip, which in addition to the luxury ticket packages, included:
• More than $54,000 for a private jet to and from Kentucky. Gov. App’x 3155–65; see also id. 3145 (Rankin, writing to jet company that there was “[n]ot really a budget I am trying to hit, more of a number I can reconcile (if and when questioned :-))”).
• $10,827.51 on a group dinner at a restaurant.
• More than $2,300 for limousine services to drive trip attendees to a house party hosted by a friend of Sullivan’s.
• Separate flights for Rankin’s date and for Bilda’s and Sullivan’s family members.
• Nearly $200 to UPS so that Rankin’s date could separately ship her derby hat and glasses to Kentucky.

Greenbrier

Ultimately, the four-man group spent over $21,000 on the trip, including over $11,000 for hotel accommodations and golf fees, over $3,000 for plane fares, and over $2,000 for two dinners, all of which was charged to CMEEC. As Defendants concede on appeal, the trip was not approved by the Board in the annual budget, Def. Br. at 81 n.17, and there was no evidence that the Board otherwise approved the trip or was even aware that the trip had occurred.

Greenbrier redux

the trip participants spent over $109,000 for the October Greenbrier trip, all of which was charged to CMEEC from the Contra Margin account. Those costs included roughly $42,000 to charter a private jet, $2,200 to purchase scarves from the Greenbrier’s women’s store as gifts, and $58,000 in hotel fees, dining, and recreation expenses at the Greenbrier, including over $10,000 spent at various golf courses.

Let's do it again

One week after the 2015 Kentucky Derby Trip – months before CMEEC’s 2016 budget had been drafted, let alone approved – Rankin authorized a $101,820 expenditure from CMEEC to prepay for forty tickets to the 2016 Derby, which was followed by two additional prepayments, at $93,320 each, for those tickets later in 2015t...

And in another similarity to the 2015 Derby trip, the 2016 trip involved the same kind of lavish expenses for a private jet, limousines, high-end hotel accommodations, group dinner, and premium Derby tickets.

Party on dudes

Just days after the 2016 Derby trip, Rankin committed CMEEC to purchasing another forty-ticket package to the 2017 Derby for nearly $300,000. However, in the summer and fall of 2016, local reporters began gathering information about CMEEC’s lavish junkets...

Ultimately, news reports about the trips in late 2016 provoked a public outcry, leading CMEEC to cancel the planned trip to the 2017 Kentucky Derby. However, the tickets were not fully refundable, so CMEEC had to resell some of the tickets at a steep loss. Rankin himself purchased several of the tickets for his personal use.

After indictment

the Trial Defendants’ “core defense throughout the trial” was that they held a good-faith belief that the trip costs were “legitimate business” expenses. 

In an unrelated matter, the court affirmed a conviction that involved threats made to Greg Gutfield, Laura Ingraham, Senator Joe Manchin and Representative Lauren Boebert

Given the seriousness of the threats, Johnson was indicted on four counts. Counts One and Four charged Johnson with making threatening interstate communications in violation of 18 U.S.C. §§ 875(c) and 2; Counts Two and Three charged Johnson with threatening United States officials in violation of 18 U.S.C. §§ 115(a)(1)(B), (b)(4), and 2. During the five-day jury trial in February 2022, the district court dismissed three jurors: Alternate No. 2, Juror No. 7, and Juror No. 2. The district court dismissed Alternate No. 2 on the second day of the trial due to a medical emergency. It dismissed Juror No. 7 and Juror No. 2 on the final day of the trial—just hours before the jury retired to deliberate—due to a lack of childcare arrangements and a finding of bias, respectively. The three dismissals reduced the jury to eleven members.

Circuit Judge Chin dissented and would find structural error in a jury of less than twelve. (Mike Frisch)