United States v. Sullivan, Bilda, Rankin

• Court: Court of Appeals for the Second Circuit
• Decided: September 6, 2024
• Docket: 23-6559-cr(L)
• Status: Published

Opinion

23-6559-cr(L) United States v. Sullivan, Bilda, Rankin

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT ___________________________________

August Term, 2023

Argued: May 13, 2024 Decided: September 6, 2024

Docket Nos. 23-6559, 23-6608, 23-6609, 23-7875, 23-7882, 23-7887, 24-91 ___________________________________

UNITED STATES OF AMERICA

Appellee,

— v. —

JAMES SULLIVAN, JOHN BILDA, DREW RANKIN,

Defendants-Appellants,

EDWARD DEMUZZIO, EDWARD PRYOR,

Defendants. ___________________________________

In Re: CONNECTICUT MUNICIPAL ELECTRIC ENERGY COOPERATIVE,

Petitioner. ___________________________________ Before:

LYNCH, BIANCO, and KAHN, Circuit Judges. ___________________________________

Drew Rankin, James Sullivan, and John Bilda (“Defendants”) appeal from a judgment of conviction entered in the United States District Court for the District of Connecticut (Jeffrey A. Meyer, J.), following a trial at which the jury found Defendants guilty of one count of theft involving a program receiving federal funds, in violation of 18 U.S.C. § 666(a)(1)(A). That count charged that Defendants, officers and executives of the Connecticut Municipal Electric Energy Cooperative (“CMEEC”), misappropriated funds from CMEEC in 2015 to pay for four personal vacations under the guise that those trips were corporate “retreats.” 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. In addition, CMEEC petitions for mandamus pursuant to the Crime Victims’ Rights Act (“CVRA”), see 18 U.S.C. § 3771(a), seeking review of the district court’s restitution order under the Mandatory Victims Restitution Act (“MVRA”). CMEEC contends that the district court erred in concluding that no portion of the legal fees that CMEEC advanced to Defendants and their acquitted

2 co-defendants for their defense in the instant prosecution was compensable as a “loss . . . of property” under the MVRA. 18 U.S.C. § 3663A(b)(1). For the reasons set forth below, we reject each of these 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). That provision 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 government theory was not frivolous, nor did that theory cause any spillover prejudice. Third and fourth, 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 trips were unauthorized notwithstanding that the budget contained a line item to which the trips were charged. CMEEC’s petition fares no better. On this record, we cannot conclude that the district court erred in finding that CMEEC’s advancement of legal fees to Defendants lacked a sufficient causal relationship to their offense of conviction. Although we do not foreclose the possibility that a crime victim could recover advanced defense fees as part of a restitution award in an appropriate case, CMEEC is not entitled to them here. We accordingly AFFIRM the District Court’s judgment of conviction and its restitution order, and DENY CMEEC’s petition for mandamus. ___________________________________

TARA E. LEVENS (Conor M. Reardon, David E. Novick, on the brief), Assistant United States Attorneys, for Vanessa Roberts Avery, United States Attorney for the District of Connecticut, New Haven, CT.

DANIEL S. NOBLE, Krieger Lewin LLP, New York, NY (Matthew B. Danzer, Finn Dixon & Herling LLP, Stamford, CT; Craig A. Raabe, Christopher Barrett, Izard, Kindall & Raabe, LLP, West Hartford, CT; Thomas J. Murphy, James J. Healy, Cowdery, Murphy & Healy, LLC, Hartford, CT;

3 on the brief), for Defendants-Appellants James Sullivan, Drew Rankin, and John Bilda.

JOSEPH W. MARTINI (Leslie A. Cahill, on the brief), Spears Manning & Martini LLC, Southport, CT, for Petitioner CMEEC. ___________________________________

GERARD E. LYNCH, Circuit Judge:

Drew Rankin, James Sullivan, and John Bilda (“Defendants”) appeal from

a judgment of conviction entered in the United States District Court for the

District of Connecticut (Jeffrey A. Meyer, J.), following a trial at which the jury

found Defendants guilty of one count of theft involving a program receiving

federal funds, in violation of 18 U.S.C. § 666(a)(1)(A). 1 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

1 Under that statute, it is a federal offense for “an agent of an organization” that “receives, in any one year period, benefits in excess of $10,000 under a Federal program” to “embezzle[], steal[], obtain[] by fraud, or otherwise without authority knowingly convert[] . . . or intentionally misappl[y], property . . . valued at $5,000 or more” that “is owned by, or is under the care, custody, or control of such organization.” 18 U.S.C. §§ 666(a)(1)(A), (b). 4 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.

Defendants were indicted, along with Edward DeMuzzio and Edward

Pryor (together with Defendants, the “Trial Defendants”), 2 in a four-count

Indictment that charged each of them with one count of conspiracy to commit

theft from a program receiving federal funds during 2014-2017, in violation of 18

U.S.C. § 371 and 18 U.S.C. § 666(a)(1)(A) (Count One), and three counts that each

charged a violation of 18 U.S.C. § 666(a)(1)(A) for thefts during the calendar years

2014 (Count Two), 2015 (Count Three), and 2016 (Count Four). Def. App’x 35–54.

The government voluntarily dismissed Count Four at trial, and the jury returned

a mixed verdict on the remaining counts, acquitting Rankin, Sullivan, and Bilda

on Counts One and Two while convicting them on Count Three. The district

court then sentenced Rankin to twelve months’ imprisonment, while Sullivan

and Bilda were each sentenced to six months’ imprisonment. The district court

2 DeMuzzio and Pryor were acquitted on all counts submitted to the jury, and therefore are not parties to the present appeal. 5 also entered a restitution order, requiring Defendants to pay CMEEC $748,800.63,

which, among other items, included the costs expended by CMEEC in 2015 for

all four of the charged trips encompassed in Count Three. However, the district

court declined to award CMEEC any of the $9,564,026.53 in attorneys’ fees that it

had advanced to the five Trial Defendants for their defense.

Defendants now appeal, raising four claims of error. First, Defendants

contend that there was insufficient evidence to support the jury’s finding that

CMEEC had received “benefits in excess of $10,000” in the one-year period

charged in Count Three, 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 misappropriation of funds during the 2016

calendar year as part of Counts One and Four of the Indictment, leading to

spillover prejudice on Count Three 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, on the same basis,

6 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.

In addition, CMEEC has filed a petition for mandamus pursuant to the

Crime Victims’ Rights Act (“CVRA”), see 18 U.S.C. § 3771(a), seeking review of

the district court’s restitution order under the Mandatory Victims Restitution Act

(“MVRA”). CMEEC contends that the district court erred in denying restitution

for any portion of the $9,564,026.53 in legal fees that CMEEC advanced to the five

Trial Defendants for their defense in the instant prosecution. Specifically,

CMEEC asserts that those defense fees are a compensable “loss . . . of property”

that resulted from Defendants’ conduct underlying their convictions, 18 U.S.C.

§ 3663A(b)(1), and that the district court abused its discretion in concluding that

those fees lacked a sufficient causal connection to Defendants’ offense.

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

7 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.

CMEEC’s petition fares no better. Although we reject Defendants’ motion

to dismiss the petition on the ground that CMEEC failed to properly assert its

rights below, the petition fails on the merits. Based on the present record, we

cannot conclude that the district court erred in finding that CMEEC’s

advancement of the fees lacked a sufficient causal relationship to Defendants’

misappropriation of funds. Although we do not foreclose the possibility that a

crime victim could recover advanced defense fees as part of a restitution award

in an appropriate case, CMEEC is not entitled to them here.

8 We accordingly AFFIRM the District Court’s judgment of conviction and

its restitution order, and DENY CMEEC’s petition for mandamus.

BACKGROUND

I. CMEEC and Its Organization 3

CMEEC is a publicly owned “municipal electric energy cooperative,”

Conn. Gen. Stat. § 7-233b(7), created under a Connecticut law designed “to

permit municipal electric utilities in Connecticut to join together and form

cooperative public corporations . . . for the purpose of furnishing efficient, low

cost and reliable electric power in their areas of operation,” id. § 7-233a. 4 CMEEC

is wholly owned by its members. Although CMEEC’s Bylaws defined CMEEC’s

members “as the Municipal Electric Utilities” (the “MEUs”), the Bylaws further

provided that CMEEC’s members were the municipalities that owned and

operated the MEUs, “acting by and through their [MEUs] by authority of their

Boards of Public Utility Commissioners.” Def. App’x 1406. During the relevant

period, the MEUs were: Groton Utilities; Jewett City Department of Public

3 Because Defendants appeal their convictions following a jury trial, “we recite the facts from the trial evidence in the light most favorable to the prosecution.” United States v. Raniere, 55 F.4th 354, 358 n.3 (2d Cir. 2022) (quotation marks omitted). 4 CMEEC’s primary function was to “buy blocks of electric power [from the open

market] to furnish to municipal utilities,” achieving better prices for those utilities due to economies of scale. United States v. Rankin, 651 F. Supp. 3d 523, 531 (D. Conn. 2023). 9 Utilities; Norwich Public Utilities; South Norwalk Electric and Water; the Third

Taxing District of the City of Norwalk; and Bozrah Light & Power Company, 5

and the municipalities that operated those utilities were the City of Groton; the

Borough of Jewett City; the City of Norwich; the Second Taxing District of the

City of Norwalk; and the Third Taxing District of the City of Norwalk.

Pursuant to CMEEC’s “Membership Agreement,” which governed the

rights and obligations of CMEEC’s members, CMEEC’s expenses were “allocated

to the members according to their membership interest level.” Gov. App’x 350.

Likewise, the Membership Agreement directed CMEEC to distribute the entirety

of its profits, which CMEEC’s documents refer to as “Margin,” Def. App’x 1372

(defining “Margin” as “all revenues less incurred expenses”), on a monthly basis

to the members in proportion to their respective ownership interests, id. 1382.

The Membership Agreement also required CMEEC to establish and

maintain “Rate Stabilization Fund[s]” (“RSFs”) on behalf of each member “into

5 We note that Bozrah Light & Power Company is a wholly owned subsidiary of Groton Utilities, as permitted by Connecticut law. See Conn. Gen. Stat. § 7-233b(8) (permitting a municipal utility, defined as a “body of a municipality,” to serve the “inhabitants . . . thereof as well as others”). Although the record does not clarify the exact nature of the relationship between those entities and the towns of Groton and Bozrah, we need not decide whether Bozrah Light & Power Company was a body of Groton or of Bozrah, as that question is immaterial to the present appeal. 10 which such [m]ember may deposit and maintain resources,” id. 1376, and which

were designed to permit the members to offset month-to-month fluctuations in

energy prices, see id. 1385; see also Gov. App’x 510 (describing RSFs as “money

. . . used to make adjustments to future rates”). In addition to any member

contributions, CMEEC was required to deposit “all CMEEC Margin allocable to

any Margin-[e]ligible [m]ember into the [m]ember’s Rate Stabilization Fund

unless otherwise directed by the [m]ember.” Def. App’x 1385. As demonstrated

by the trial testimony and documentary evidence, the funds allocated to the RSFs

were owned by CMEEC’s members even though they were held and managed by

CMEEC. See Gov. App’x 118 (describing RSF funds as holding member money

“on deposit with CMEEC”); Def. App’x 1384 (describing RSFs as “[m]ember

[f]unds” and providing that “CMEEC shall manage or cause to be managed all

amounts held within the Rate Stabilization Funds . . . in the same manner that it

manages its own funds”) (emphasis added). Notwithstanding the language of the

Membership Agreement, the RSFs were not segregated from the Margin or in

distinct bank accounts, but rather were held in a single bank account that CMEEC

maintained in its name along with other CMEEC monies. The funds allocated to

11 the RSFs were distinguished solely by the use of accounting entries and

classifications in CMEEC’s records.

CMEEC was managed by two distinct bodies, the “Member Delegation”

and the “Board of Directors.” Def. App’x 1405. The Member Delegation was

comprised of one representative from each member and possessed the “primary

responsibility for managing all matters related to membership, equity

requirements, and the financial stability of CMEEC.” Id. 1405. Meanwhile, the

Board of Directors, which consisted of two representatives (and two alternates)

from each of CMEEC’s members, managed CMEEC’s “operational affairs and

business.” Id. 1412. Among other duties, the Board was responsible for approving

an annual budget “covering CMEEC’s operating expenses and CMEEC’s capital

expenses for the following calendar year.” Id. 1383. From 2010 to at least 2015,

CMEEC was party to a power supply contract with Wallingford Electric Division

(“Wallingford”), under which Wallingford, although not a member of CMEEC,

was represented on CMEEC’s Board. In turn, Wallingford was responsible for

paying a share of CMEEC’s “Administrative and General” (“A&G”) expenses, but

unlike CMEEC’s members, was not eligible to receive Margin.

12 During the relevant period from January 2014 to December 2016, the Trial

Defendants held the following officer, executive, or director positions at CMEEC:

• Drew Rankin was CMEEC’s chief executive officer. • James Sullivan was chairperson of CMEEC’s Board and a CMEEC Board member representing Norwich until his resignation in late 2015. • John Bilda was a CMEEC Board member representing Norwich. • Edward DeMuzzio was CMEEC’s Board secretary and a CMEEC Board member representing Groton. • Edward Pryor was CMEEC’s chief financial officer.

II. Federal Program Funds

From 2010 to 2015, CMEEC received federal funds under the ConnSMART

grant (the “Grant”), which was issued by the United States Department of

Energy (“DOE”) as part of the Smart Grid Investment Grant (“SGIG”) program.

The SGIG program was created pursuant to the American Recovery and

Reinvestment Act, and was intended to develop the nation’s electric grid system

by promoting investments in “smart grid” technologies. To that end, CMEEC’s

Grant proposal sought federal funding to develop “smart grid functions” for

both its own operations and those of its members, which would permit CMEEC

to monitor electricity use and “shift load out of critical peak periods, thereby

reducing power costs for customers.” Def. App’x 996.

13 In 2010, the DOE accepted the grant proposal and awarded the

ConnSMART grant to CMEEC as the “Primary Awardee,” while its members

participated under the grant as “Subawardees.” Id. 859–60. The funds would be

used by the municipal utility Subawardees to install “smart meters” to track

customers’ power usage, while CMEEC itself would use the data from the meters

to inform its power purchases on behalf of its members. See United States v.

Rankin, 651 F. Supp. 3d 523, 541 (D. Conn. 2023). Thus, the members’ purchase of

meters would allow CMEEC to compute “real time wholesale costs” in a “highly

accurate manner” and at a “significantly reduced . . . short term forecast error

rate,” leading to cost savings for CMEEC itself. Def. App’x 1290–96.

As provided by the Grant agreement, the ConnSMART Grant used a

reimbursement structure – meaning that the grantees would first incur costs and

then be reimbursed by the DOE. Specifically, CMEEC and its members would

incur qualifying expenses under the Grant agreement, whereupon CMEEC

would consolidate and verify the documentation for all such expenses incurred

by both itself and its members. Then, CMEEC would submit a reimbursement

request to DOE, certifying that the information therein was correct. After

approving the request, the DOE would transfer the reimbursement funds into

14 the “CONNSMART” bank account, which was owned by CMEEC and held at

the Bank of America. CMEEC was then responsible for disbursing the funds to its

member-subawardees for their respective shares of the reimbursements. In

administrating the grant, the DOE interacted only with CMEEC as the lead

grantee, and did not retain any control over the funds after they were disbursed

to CMEEC nor send any funds to subawardees. See Gov. App’x 323, 342 (DOE

representative, testifying that DOE “d[idn’t] follow . . . money after it [was]

provided to the lead recipient” and “d[idn’t] send sums to subawardees or

vendors.”).

The final reimbursement request under the ConnSMART grant occurred in

early 2015. On February 17, 2015, CMEEC requested reimbursement for

$864,154.20. The request identified CMEEC as the “prime recipient” for the grant

and was signed by CMEEC’s Director of Finance and Accounting as the

“certifying official.” Def. App’x 1102–03. The reimbursement sought $9,363.08 for

expenditures made by CMEEC itself and $854,791.12 for those made by its

“subrecipient” members. Id. 1103. On March 31, 2015, the DOE approved the

request and sent the full sum of $864,154.20 to CMEEC’s CONNSMART bank

account. On April 1, 2015, CMEEC then transmitted $854,791.12 from that

15 account to the subrecipient members, according to the expenses provided in its

reimbursement request, and retained the remaining $9,363.08 for itself.

CMEEC did not receive any federal funds during the 2016 calendar year.

However, at least two of the municipalities that operated member MEUs, the

Cities of Groton and Norwich, received federal funds. Groton received $77,457.45

for snow removal from the Federal Emergency Management Agency, while

Norwich received $778,804 in a Community Development Block Grant from the

Department of Housing and Urban Development.

III. Offense Conduct

In January 2011, CMEEC hired Rankin as its new CEO. Def. App’x 1344–

67. For each year during his tenure as CEO, Rankin would prepare a budget for

the following calendar year in coordination with the Board’s Budget and Finance

Committee (the “Budget Committee”), as provided under CMEEC’s Bylaws.

Once that committee “got all of its questions answered” by a member of

management at a series of meetings and was satisfied with the proposed budget,

the budget would be submitted to the full Board for a vote. Id. 233. The full Board

reviewed the budget at “a higher level” and generally did not conduct a “line by

line” review. Id. During each of those meetings, Rankin or Pryor would prepare a

16 set of budget materials to be presented to the board members attending that

meeting.

In 2013, two years into his tenure, Rankin informally proposed a corporate

trip to the 2013 Kentucky Derby to several CMEEC Board members during a

meeting held at the Norwich Inn and Spa. After those members expressed their

interest, Rankin purchased twenty-four tickets to the Derby and charged the

costs to CMEEC’s A&G expenses account, without a Board budget, vote, or

resolution. As Rankin testified, “A&G” was an accounting entry that reflected

“overhead” – the “cost to run the company that’s not allocated to a specific

project.” Id. 520.

A. Trip Planning and Budgets

In 2013–14, Rankin organized a second outing to the 2014 Kentucky Derby.

Id. 532–33. During the budgeting process for the 2014 calendar year, Rankin

inserted the trip expenses into the budget and “came up with the . . . dollar

amount” to be spent on the trips, which would again be funded from CMEEC’s

A&G expense account. Id. 533. However, the budget did not contain the words

“Kentucky,” “Derby,” or “retreat,” or otherwise transparently account for the

expenditures. Instead, the trip expenses were included within several line items,

17 primarily ”Board Expenses” under the group heading “Misc._General_Exp.” Id.

731 (2014 Budget Materials); Gov. App’x 1048 (Bilda, testifying that “the

Kentucky Derby” was “under board expenses” in the 2014 budget).

Although the budget was ultimately approved by a Board vote in late

2013, one of Wallingford’s Board representatives, George Adair, objected to

increased A&G costs in CMEEC’s 2014 budget as compared to the 2013 budget.

Those protests continued throughout 2013–14 and included an exchange of pre-

litigation letters between Wallingford and CMEEC. Although at that time no

Wallingford official knew about the Derby trips or that they were included in the

budget, Adair testified at trial that Wallingford’s dispute with CMEEC centered

on its objection to paying for “expenses that were not for legitimate business

purposes,” and that it would have been of “great concern” if Wallingford was

“shelling out money to pay for” such trips. Gov. App’x 319; see also id. 944

(Rankin, testifying that Wallingford did not know about the junkets and that its

CMEEC Board members were not invited).

CMEEC’s budget process for the 2015 year began in 2014. At some point

prior to the Budget Committee’s approval of a draft budget to be proposed to the

Board, Rankin devised a new accounting mechanism for the trips in response to

18 Wallingford’s increasing scrutiny of the A&G costs. Instead of being accounted

for as a “board expense” to the A&G account, the trips would instead be

accounted under a “Contra Margin” account created specifically to pay for the

trips and used solely for trip expenses. Gov. App’x 319, 355, 2591. The Contra

Margin account was just that – rather than being an expense against revenue,

from which Margin would be calculated, the expenses were “applied against”

and paid from funds already designated as Margin – and was the only negative

accounting and budget entry for Margin. Id. 2591–92, cf. Def. App’x 1372

(defining “Margin” as “all revenues less incurred expenses”). By creating the

Contra Margin account, Rankin lowered the A&G expenses to which the trips

had previously been charged and in turn, lowered the costs to Wallingford,

which as a non-member was responsible for paying A&G expenses but ineligible

to receive Margin distributions (and therefore unaffected by expenses paid from

Margin).

Although the parties agreed at trial that the Contra Margin account was

created in response to Wallingford’s complaints about A&G expenses, they

presented competing explanations for the purpose of that account’s creation.

Rankin testified that the Contra Margin account was designed to avoid charging

19 trip expenses to Wallingford because its Board members were not invited to the

trips. In response, the government presented evidence that the account was

designed to disguise the expenses from Wallingford and the Board. For example,

Patricia Meek, CMEEC’s Director of Finance and Accounting, testified that she

could have simply “backed [the charges] out so that Wallingford wasn’t

responsible for those charges” while continuing to charge the trips as an A&G

expense. Gov. App’x 355. On cross-examination, Rankin conceded that CMEEC

could have continued to charge the trip expenses to A&G while issuing a credit

to Wallingford for those costs, but that doing so would have caused the trips to

appear in documents sent to Wallingford and might have alerted Wallingford

about the trips.

In addition to creating a new accounting mechanism for the trips, Rankin

altered the categorization of trip expenses within the budget. On October 8, 2014,

Meek sent certain employees and Board members a presentation on the proposed

A&G expense budget for 2015 ahead of a Budget Committee meeting.That

presentation contained a slide titled “CMEEC A&G Budget Assumptions” that

contained thirteen bullet points, one of which noted a “[c]hanged convention for

funding member strategic retreat,” Def. App’x 1541, consistent with Rankin’s and

20 Pryor’s plan to charge the 2015 Derby trip against CMEEC’s Margin. Just as the

accounting mechanism reduced the A&G expenses in CMEEC’s accounting

records by moving the trip expenses to a separate Margin account, the “changed

convention” reduced the A&G expenses in CMEEC’s budget. Among other line

items in the presentation, the “Other Miscellaneous,” Strategic Planning,” and

“Staff Travel, Lodging & Miscellaneous” categories respectively decreased by

$200,000, $85,000, and $83,273 between the 2014 approved and 2015 proposed

budgets. Id. 1545–47. Notably, the A&G expenses presentation did not contain a

corresponding allocation for the 2015 trips, as they were no longer classified as

an A&G expense.

Although a line item corresponding to the trip expenses ultimately

appeared, references to those expenses in budget materials also grew

increasingly vague. In an October 11, 2014 email to Pryor and Meek, Rankin

suggested to Pryor that “we may want to reverse those expenses for [the 2014

Derby] from 2014 from A&G and deduct it from margin,” Gov. App’x 2570, a

retroactive change that would remove discrepancies between funding levels in

the 2014 and 2015 A&G budgets caused by the reclassification of trip expenses. In

that same email, Rankin directed Meek to “modify the slide set materials on

21 A&G for the note regarding the board strategic retreat. Use the phrase, member

delegation expenses and retreats.” Id.

On October 29, 2014, Meek sent Rankin the “CMEEC Proposed Budget”

presentation for a Budget Committee meeting later that day. Def. App’x 1550.

That presentation contained a “CMEEC A&G Budget Assumptions” slide

identical to the one sent on October 9, 2014, except that Meek had followed

Rankin’s instruction to modify the note about the “changed [funding]

convention” to refer to “Member Delegation Expenses and Retreats” rather than

“member strategic retreat.” Id. 1557. Once again, the trips were not contained

within and did not appear as a line item in the “[c]omponent [c]osts” of

CMEEC’s A&G expenses budget. Id. 1570. Likewise, the trip expenses were not

identified in the “Budget Book” prepared for the Budget Committee, which was a

“very large Excel file” with over 1,200 entries that the committee could consult if

they had questions “about particular areas of revenues or expenses.” Gov. App’x

383–84, 393 (Meek, testifying that the Budget Book did not contain any references

to “Kentucky,” “Derby,” “Greenbrier,” the ticket broker, or the restaurant where

participants dined). Instead, the trip expenses were tucked within a chart titled

“CMEEC Margin,” which contained a single line item for “Member Delegation

22 Expenses and Retreats” in the amount of $350,000, with no further detail. Def.

App’x 1575.

However, even those vague references to trip expenses disappeared in the

final 2015 budget as submitted to and approved by the full Board. Once again,

the presentation included a “CMEEC A&G Budget Assumptions” slide, which

contained identical language as the previous presentations in 12 of 13 bullet

points – but this time the line regarding the “changed convention for funding”

the trips had disappeared. Compare Def. App’x 1557 with Gov. App’x 2574. Nor

did the presentation elsewhere reference that “changed convention.” Likewise,

the negative entry in the chart describing “CMEEC Margin” had changed from

“Member Delegation Expenses and Retreats” to simply “Expenses.” Compare Def.

App’x 1575, with Gov. App’x 2583.

At trial, several government witnesses 6 testified that the trips, their costs

and funding, and the creation of the Contra Margin accounting mechanism were

never approved or voted on by the Board of Directors during the Board budget

6 Those witnesses included Ellen Kachmar, Paul Yatcko, and Philip Sussler. Kachmar was Rankin’s executive assistant, and was responsible for attending and taking minutes at Board meetings in 2014, 2015, and 2016. Paul Yatcko was a CMEEC board member from 2008-20, in his position as Director of Groton Utilities (2008–15) and CEO of South Norwalk Electric (2015–20). Philip Sussler was, during the relevant period, CMEEC’s general counsel. 23 meeting or any other Board meeting. Indeed, those witnesses testified that the

Board did not even discuss the trips, much less their costs. See, e.g., Gov. App’x

128–30 (Yatcko, testifying that he did not know the details of the trips’ costs or

guest lists when he approved the budget). Nor were the trips, their funding, or

their costs discussed with CMEEC’s members. 7 Indeed, Rankin himself testified

that the Board had never voted on the annual Derby trips or any other trip, and

instead claimed that such a vote “wasn’t required” and that the trips had been

“approved” because they were budgeted. Id. 835. The government witnesses’

testimony was supported by documentary evidence, as the 2014–16 Board

minutes and votes did not contain any reference to the trips, their expenses, or

their funding.

On January 19, 2015, after the budget had been approved, Pryor emailed

one of CMEEC’s accountants and directed her to create a new account “for some

expenses to be applied against the member margin.” Gov. App’x 2592. Although

the accountant responded that she wanted to “vet this out” before adding

accounts that “may be treated differently in the financial statements,” Pryor

7 For example, Yatcko testified that there were no Board discussions about going to the Derby in 2014 or about wanting to go again in 2015; no discussions in 2015 about the planned trip to the Derby that year; and no discussions about details of the trips such as the expenses, the unaffiliated guests, or the business value of those trips. 24 dismissed her reservations and responded “let’s discuss.” Id. 2591. The

accountant would, a few days later, inform Kachmar that she had created, at

Pryor’s direction, “a new account needed for a Board Retreat purchase order that

will be excluded from the Administrative dashboard.” Id. 2594.

B. 2015 Trip Expenses

During the 2015 calendar year, Defendants used CMEEC funds to pay for

four lavish junkets on behalf of themselves, their family members, and

acquaintances. Three of those excursions occurred during 2015: a trip to the

Kentucky Derby in May 2015, a four-person trip to the Greenbrier Resort in

August 2015, and a larger trip back to the Greenbrier in October 2015. The fourth

trip occurred in 2016, when Defendants attended the 2016 Kentucky Derby, but

was partially funded by prepayments for tickets and related expenses during the

2015 calendar year. All of the above trip expenses were charged to the Contra

Margin account except for the August 2015 Greenbrier trip, which Defendants

billed to CMEEC as an A&G expense.

1. 2015 Kentucky Derby Trip

In June 2014, several months before CMEEC’s 2015 budget was approved

in November 2014, Rankin directed his assistant, Ellen Kachmar, to purchase 30

25 premium “Trophy Room” ticket packages to the 2015 Kentucky Derby. Def.

App’x 1607–08. CMEEC paid for the tickets, at a total cost of more than $200,000,

in a series of installments throughout the 2015 calendar year. 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.

Rankin’s invitation to the trip described it as a “strategic retreat” for Board

members, Def. App’x 1610, but as the district court noted, “[t]here was no

documentary evidence that the defendants did any work on this trip,” Rankin,

651 F. Supp. 3d at 533. “For example, the agenda for the trip had entries like

‘street festivals’ and ‘[e]at, drink, be merry, and watch races all day’—but not any

work meetings.” Id., quoting Def. App’x 1612–13 (2015 Derby itinerary).

26 Moreover, although Rankin, Sullivan, Bilda, and DeMuzzio attended the

Derby, “most of the guests had nothing or little to do with CMEEC’s business

activity,” as the district court found. Id. Including Defendants themselves, only

eleven of the thirty-two guests held any position with CMEEC. Def. App’x 1699.

Sullivan invited his son, brother, and sister-in-law, as well as his bartender and

the bartender’s friend – none of whom had any business affiliation with CMEEC.

Sullivan also gifted two seats on the private jet to personal acquaintances, who

also had no connection to CMEEC. Bilda invited not only his wife but also his

parents, Gov. App’x 1006 (Bilda, testifying that he invited his parents because it

was a “bucket-list kind of trip” for them), none of whom had any business

connection with CMEEC. Bilda also invited his friend and that friend’s wife,

purporting that the friend was a “key account customer” who could “spend

some quality time learning more about public power, our joint action agency and

wholesale energy costs.” Id. 3190–92. Rankin also invited at least one personal

“guest” with whom he shared a room at the Derby, id. 915, and personally

authorized an expense reimbursement for her separate travel to and from the

Kentucky Derby. Rankin’s guest also had no business relationship with CMEEC.

27 The costs for the attendance of all of those non-business guests were paid for

with CMEEC funds.

2. August 2015 Greenbrier Golf Trip

In August 2015, Rankin, Sullivan, Bilda, and DeMuzzio took a golf trip at

CMEEC’s expense to the Greenbrier Resort in West Virginia. Rankin first

proposed the idea in a July 2015 email to Sullivan, Bilda, and DeMuzzio, which

explained that he planned to hold a “board strategic retreat in October at The

Greenbrier in West Virginia,” and suggested to the group that they visit the

Greenbrier in August “to check it out and to craft the agenda” for that

subsequent trip. Def. App’x 1626. Although Rankin purported that he would

“layout and share” his “10 year strategic plan [for] an enhanced operating

system,” his tentative agenda for the trip consisted only of “evaluation[s]” of “the

hotel and [golf] [c]ourse[s].” Id. A week later, Rankin sent out another email

confirming the four-day trip to the Greenbrier, and included an itinerary that

consisted solely of rounds of golf at various courses and a tour of the bunkers

beneath the hotel, without any work sessions. In response to the itinerary,

Sullivan replied, “Is your name ‘I deserve a raise?’” Gov. App’x 3237. A few days

prior to the trip, Rankin again circulated an itinerary consisting solely of rounds

28 of golf and a tour of the bunkers, and added a dress code for the “recreational

activities” and the “main complex dining and some bars.” Id. 3261.

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.

Rankin’s assistant – whose job included making travel plans for CMEEC

executives and to classify for accounting purposes the charges made by Rankin

to the company’s credit card – was likewise unaware of the trip before it

occurred. When Rankin submitted his credit card charges from the trip for her

review, he claimed that the charges were expenses for the CMEEC Board’s

Compensation Committee, whose primary role was to determine Rankin’s

compensation and contract as CEO. Thus, unlike the other three trips taken that

year, the August 2015 trip was charged to CMEEC’s A&G account rather than the

Contra Margin account.

29 However, the evidence at trial demonstrated that the trip was unrelated to

the Compensation Committee, but was instead taken for the personal benefit of

Defendants so that they could play golf. Neither Rankin nor Sullivan were

members of the Compensation Committee, and Rankin did not invite two other

members of that committee – Paul Yatcko and James Smith – to attend the trip. At

trial, Yatcko testified that he was not aware of the trip when it occurred and that

it was never discussed in a Compensation Committee or Board meeting. Nor was

there any evidence that “compensation” was discussed at the trips or that any

“compensation” ideas arose from the trips. Indeed, both Rankin and Bilda

testified that compensation was not discussed during the trip, and Rankin

testified that he charged the trip to the Compensation Committee because he

thought of the idea of taking the trip during one of that Committee’s meetings.

The government presented other evidence that the trip had no relationship

to any legitimate CMEEC business purpose. Although Defendants purported

that the trip was designed so that Rankin could discuss his new “enhanced

operating system,” there was no evidence other than Defendants’ own

uncorroborated testimony that they actually held such discussions. None of the

emails or materials that Rankin sent in advance of the trip contained any details

30 regarding that system, and the documentary evidence and testimony contained

no indication that any ideas or discussion arose from the trip. Indeed, Rankin

testified that the system had already been implemented as early as March 2015,

five months before the trip. As for Defendants’ claim that they intended to “check

[the Greenbrier] out” for a subsequent Board outing, Def. App’x 1626, the trial

contained no documentary evidence of a discussion with the Board or post-trip

report that assessed the merits of hosting a Board outing to the Greenbrier.

Moreover, Rankin admitted that he had already visited the Greenbrier on

another occasion prior to the trip.

3. October 2015 Greenbrier Trip

In October 2015, Rankin organized another, larger trip to the Greenbrier,

which was attended by twenty-three guests, including Rankin, Bilda, Pryor, and

DeMuzzio. 8 As with the 2015 Derby trip, Rankin advertised the October

Greenbrier trip as a company “retreat,” yet, in another similarity to the Derby

Trip, “less than half [of the guests] were CMEEC employees or board members.”

Rankin, 651 F. Supp. 3d at 535; see also Def. App’x 1701. Although the itinerary for

the October Greenbrier trip contained two three-hour “work session[s],” Gov.

8 Sullivan did not attend, as he had left his employment with CMEEC prior to the October 2015 Greenbrier trip. 31 App’x 3316, the evidence demonstrated that only one work session was actually

held, and that Rankin instead scheduled a ninety-minute tour of the Greenbrier

bunker during the other of those sessions. Moreover, while Rankin testified that

the purpose of the trip was to “educate [the Board] about the [entrepreneurial

operating system] model” that he wanted to employ at CMEEC, id. 813, he also

testified—as discussed supra—that that model had already been implemented as

early as March 2015, seven months before the trip was taken. Moreover, none of

the invitations, agendas, or other materials sent in advance of the trip referenced

the model.

Meanwhile, 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. According to the testimony of two Board

members, the trip was not voted on or even discussed by the Board, nor did it

appear in any Board meeting minutes. Likewise, the documentary evidence

suggested that Rankin first came up with the idea to hold a second trip to the

32 Greenbrier in July 2015, long after the 2015 budget was approved in the fall of

2014.

4. Prepayment for the 2016 Kentucky Derby Trip

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 2015. Those prepayments would later be smuggled into a non-descriptive

line item in the 2016 budget. As in the 2015 budget, the trip expenses were not

included in the breakdown of A&G expenses for the 2016 budget, but were

instead a negative entry in the chart describing CMEEC Margin. And in another

similarity to the 2015 Budget, the line item covering trip costs grew less detailed

as the budget developed. Although that line item was titled “Delegation Related

Expenses” in the presentation to the Budget Committee, Def. App’x 845, that line

item in the presentation to the Board changed to simply read “Expenses,” even

though the “Delegation Related Expenses” – that is, the trips – were the only

such “Expense[],” id. 1598.

33 Just like the 2015 Derby trip, the itinerary for the 2016 Derby trip contained

no work meetings and was largely attended by guests with no business affiliation

with CMEEC. Of the forty-four guests, only twelve (including Rankin, Bilda,

DeMuzzio, and Pryor) were employees or board members of CMEEC, while

thirty-two of the guests held no position with CMEEC and had no evident

connection to CMEEC’s business. For example, the guests included “the wife and

mother-in-law of a board member who did not attend” the trip and a “CMEEC

vendor’s daughter and son-in-law who had no prior connection to CMEEC.”

Rankin, 651 F. Supp. 3d at 557 n.168. 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.

B. Investigation

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. In response to press inquiries,

Rankin provided lists of attendees to the 2015 Derby trip and the October 2015

34 Greenbrier trip, but each of those lists omitted the names of several attendees

unaffiliated with CMEEC. Meanwhile, on October 23, 2016, the mayor of Groton

requested that Rankin deliver, among other documents, all CMEEC Board

minutes in which the “trips and the associated funds were discussed, approved,

or reported.” Gov. App’x 3493. In response, Rankin supplied some requested

documents, but did not supply any Board minutes, asserting that “there was not

ever a Board action or vote required for the retreats, therefore no minutes[]

[exist] reflecting this type of event.” Id. 3492.

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.

IV. Procedural History

In November 2018, a federal grand jury returned an indictment against

Rankin, Sullivan, Bilda, DeMuzzio, and Pryor, charging all five of them with one

count of conspiracy to commit theft from a program receiving federal funds from

2014 through 2017, in violation of 18 U.S.C. § 371 (Count One), and three counts

35 of theft from a program receiving federal funds, in violation of 18 U.S.C.

§ 666(a)(1)(A), for the calendar years 2014 (Count Two), 2015 (Count Three), and

2016 (Count Four). Counts Two and Three of the Indictment charged that

CMEEC had received more than $10,000 in federal benefits in 2014 and 2015,

respectively, and that Defendants had in each year wrongfully obtained property

“owned by [or] under the care, custody [or] control of CMEEC” as its agents.

Def. App’x 51–52. Meanwhile, Count Four charged that CMEEC’s members had

received more than $10,000 in federal benefits in 2016, and that Defendants had

wrongfully obtained property “owned by [or] under the care, custody [or]

control of CMEEC” as agents of CMEEC’s members. Id. 53. Count One, the

conspiracy count, mixed the latter three counts together, and charged that

Defendants had conspired to wrongfully obtain property from CMEEC as its

agents in the calendar years 2014 and 2015, and from CMEEC’s members as their

agents in the calendar years 2014 to 2017.

As relevant here, the Indictment alleged that the Trial Defendants

organized trips at CMEEC’s expense that were unrelated to its business and were

instead intended to personally benefit Defendants and their associates.

Defendants “did not seek the approval of the CMEEC Board of Directors for

36 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. 41–42. Instead, Defendants directed the trips to be paid

“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.” Id. 42.

The Trial Defendants moved to dismiss the Indictment as legally

insufficient and due to purported government misconduct before the grand jury.

Among other issues, the Trial Defendants argued that Counts One and Four of

the Indictment should be dismissed to the extent that those counts alleged a

misappropriation of property owned by or under the care, custody, or control of

CMEEC’s members, as the funds used to pay for the trips were paid for using

funds that belonged to CMEEC. The Trial Defendants also argued that CMEEC’s

Board knew of and approved the trips, and that the use of CMEEC funds

therefore did not violate § 666(a)(1)(A). Moreover, the Trial Defendants claimed

that the Indictment falsely alleged that they had not sought board approval or

included the trip costs in the budget to the Board, and that the government must

therefore have knowingly presented false evidence as to those issues before the

37 grand jury. The district court denied the motion, concluding that those fact-based

arguments as to whose property was taken and board authorization were

improper invitations to review the sufficiency of the government’s evidence prior

to trial. United States v. Rankin, 422 F. Supp. 3d 564, 578–79, 585 (D. Conn. 2019).

Trial commenced in November 2021. The government presented the

evidence described above, and attempted to prove that the CMEEC Board had

not approved the trips and that the Trial Defendants had concealed the details of

the trips from board members and employees who did not attend. See Rankin, 651

F. Supp. 3d at 536–37. Meanwhile, the Trial Defendants’ “core defense

throughout the trial” was that they held a good-faith belief that the trip costs

were “legitimate business” expenses. Id. at 537.

Prior to the submission of the case to the jury, the government voluntarily

dismissed Count Four, which alleged a violation of § 666(a)(1)(A), due to a

pleading error in the Indictment not at issue here. Id. at 540. 9 Counts One, Two,

and Three were submitted to the jury. In addition to seeking general verdicts on

each of those counts, the verdict form contained special interrogatories that

As the government acknowledged, Count Four mistakenly alleged that 9

CMEEC’s members had received federal funds but “that the theft was from CMEEC.” Gov. App’x 916. 38 asked the jury to answer whether CMEEC had received more than $10,000 in

federal benefits in 2014 and 2015, whether CMEEC owned or had care, custody,

or control of the misappropriated property, and whether the cities of Groton or

Norwich owned or had care, custody, or control of the misappropriated

property.

The jury returned a mixed verdict, acquitting all five trial defendants on

Counts One and Two. On Count Three, the jury returned a guilty verdict against

Rankin, Bilda, and Sullivan, but acquitted DeMuzzio and Pryor. In the special

interrogatories, the jury found that CMEEC had received more than $10,000 in

federal benefits and that CMEEC owned or had care, custody, or control of the

misappropriated property, but that the cities of Norwich and Groton did not

have such a relationship to that property.

Defendants then filed Rule 29 motions for judgment of acquittal and Rule

33 motions for a new trial. Among other issues, Defendants argued that (1) there

was insufficient evidence to permit a finding beyond a reasonable doubt that

CMEEC received more than $10,000 in federal benefits, as required by § 666, (2)

the Board authorized the trips by approving a budget that contained a line item

encompassing the trips’ costs, and therefore there was insufficient evidence to

39 prove their criminal intent, and (3) they were entitled to a new trial due to

prejudicial spillover from Counts One and Four, which, with respect to

Defendants’ misappropriations in 2016 and 2017, were based on the

government’s assertedly frivolous theory that the misappropriated funds

belonged to CMEEC’s members and that those members included the towns. 10

Defendants also renewed their motions to dismiss the Indictment based on the

government’s alleged misleading of the grand jury as to the Board’s approval of

the trips and the ownership of the misappropriated property. The district court

rejected all of Defendants’ motions in a consolidated order. See Rankin, 651 F.

Supp. 3d at 572.

At sentencing, the parties engaged in a lengthy dispute over the

appropriate loss amount under U.S.S.G. § 2B1.1, which would determine the base

Guidelines offense level. Defendants argued that the loss amount should exclude

the expenses paid in 2015 for the 2015 Derby, October 2015 Greenbrier, and 2016

Derby trips, claiming that those junkets were not criminal misappropriations in

violation of 18 U.S.C. § 666(a)(1)(A) because they served a legitimate business

purpose and were budgeted and approved by the Board. The district court

10 Defendants properly raised and preserved those arguments at trial. See Rankin, 651 F. Supp. 3d at 541 n.107. 40 disagreed, concluding that the lack of business-related activities and the

inclusion of guests and expenses without any legitimate business connection to

CMEEC demonstrated that those trips were disguised as “retreat[s]” in service of

CMEEC when in fact they were intended as “purely personal corporate-financed

vacation trip[s].” Def. App’x 1950. The court further concluded that the trip

expenses were not approved by the Board, and that even if they were, CMEEC’s

officers and directors “d[id] not have a license to plunder corporate treasuries

acting individually or collectively.” Id., quoting United States v. Wallach, 935 F.2d

445, 469 (1991).

However, the court did not find Defendants equally culpable. Given that

Rankin organized all four trips charged in Count Three, the court found that the

expenses for all of those trips were attributable to him, and accordingly set his

Guidelines loss amount at $502,242.18. Meanwhile, Sullivan had left CMEEC’s

employ prior to the October 2015 Greenbrier trip and the prepayments for the

2016 Derby trip, and did not attend or plan those trips prior to leaving CMEEC.

Accordingly, the court excluded those trips from Sullivan’s Guidelines loss

amount and set that figure at $104,765, the sum of the expenses paid in 2015 for

the 2015 Derby trip and August 2015 Greenbrier trip. Finally, the court concluded

41 that there was insufficient evidence to show that Bilda knew of, or was involved

in, the prepayments for the 2016 Derby, and therefore excluded those costs from

his loss amount. However, the court concluded that Bilda was liable for the other

three trips, leading to a total loss amount of $213,782.18. Ultimately, Rankin was

sentenced to twelve months’ imprisonment, and Sullivan and Bilda were each

sentenced to six months’ imprisonment.

After announcing Defendants’ sentences, the district court received

submissions regarding the proper amount of restitution under the MVRA. The

government filed a memorandum seeking restitution on behalf of CMEEC, and

CMEEC filed a supplemental memorandum of law and affidavits in support of

both its own and the government’s memoranda. As relevant here, CMEEC

sought the expenses it had paid in 2015 for all four trips ($502,242.18) and the

funds it had advanced to all five Trial Defendants for their defense against the

government’s prosecution ($9,564,026.53).

During the government’s investigation but prior to the Indictment, the

Trial Defendants had requested that CMEEC advance their defense fees,

pursuant to the indemnification clause in its Bylaws. That clause provided that

CMEEC’s Board members and officers

42 shall be indemnified and held harmless by CMEEC against all costs and expenses, including reasonable attorneys fees and/or defense of suit, . . . in connection with the defense of any claim . . . or proceeding in which they may be involved . . . by reason of their being or having been [a CMEEC Board member or officer] . . . except in relation to matters as to which they shall be finally adjudged in such action . . . to be liable for . . . misconduct in the performance of duty.

Add. 219. CMEEC and the Trial Defendants then signed an “Affirmation and

Undertaking,” in which each Trial Defendant affirmed that he had “acted in

good faith . . . and that [he] had a reasonable belief that [his] conduct was

lawful,” and promised to repay CMEEC the advanced fees “if it were ultimately

determined in accordance with CMEEC’s bylaws, resolution of the CMEEC

board of directors, or applicable state law that [he] w[as] not entitled to

indemnification.” Id. 148. Pursuant to the Bylaws and those contracts, CMEEC

then advanced Trial Defendants the following sums for their defense throughout

the prosecution, trial, and sentencing proceedings of the present case: Rankin

($2,477,009.04), Bilda ($1,429,351.48), Sullivan ($1,477,237.03), Pryor

($3,227,541.78), and DeMuzzio ($902,887.20). CMEEC argued that all of those

costs were losses to it caused by the convicted Defendants’ criminally fraudulent

conduct.

43 After receiving Defendants’ papers in opposition, the district court entered

a written opinion and order. See United States v. Rankin, No. 3:18-CR-272 (JAM),

2023 WL 7403638 (D. Conn. Nov. 9, 2023) (“Rankin II”). As for the trip expenses,

the district court determined that the expenses qualified as a “loss” of property

under 18 U.S.C. § 3663A(b)(1), and adopted the loss amounts it had calculated at

sentencing, taking care to note that it had limited the Guidelines loss calculation

to “actual loss.” Id. at *3–4. Although Defendants again advanced their argument

that the expenses for the 2015 Derby, October 2015 Greenbrier, and 2016 Derby

trips were not a loss to CMEEC since its Board of Directors had approved and

budgeted those expenses, the district court rejected that argument for the same

reasons that it had done so in imposing its sentence. Id. at *4. Accordingly, the

district court ordered restitution for the full amount of those expenses. Id.

By contrast, the district court declined to award restitution for the

advanced defense fees. In the district court’s view, those fees were not “necessary

. . . other expenses incurred during participation in the investigation or

prosecution of the offense,” 18 U.S.C. § 3663A(b)(4), as the defense fees were not

advanced “in response to government requests for assistance” or “in order to

advance the investigation and prosecution of the offense of conviction,” Rankin II,

44 2023 WL 7403638, at *5 (quotation marks and emphasis omitted), citing United

States v. Afriyie, 27 F.4th 161, 169, 173 (2d Cir. 2022). The district court also

concluded that the advanced fees were not a “loss of property” resulting from

the offense recoverable under § 3663A(b)(1), as they lacked a sufficient causal

connection to the “conduct underlying [Defendants’] offense of conviction.” Id. at

*7.

After awarding CMEEC restitution for certain other expenses not at issue

here, the district court set the total restitution obligation for Defendants at

$748,800.63. The district court then apportioned liability, requiring Rankin to pay

fifty percent ($374,400.31), while Sullivan and Bilda were each held liable for

twenty-five percent of the total ($187,200.16).

DISCUSSION

Defendants raise four challenges to their convictions and restitution

orders. First, in their sole challenge to the sufficiency of the evidence, Defendants

claim that the government failed to prove that CMEEC received more than

$10,000 in federal benefits, as required to prove that their theft from CMEEC

violated 18 U.S.C. § 666(a)(1)(A). Although Defendants concede that CMEEC

obtained over $850,000 in federal grant funds, they contend that the funds

45 CMEEC disbursed to its members are not “receive[d] . . . benefits” under

§ 666(b), and that the statute limits the benefits received by CMEEC to the

$9,363.08 that CMEEC retained for itself. Second, Defendants argue that their

convictions should be vacated because the government relied on a frivolous

theory to expand the temporal scope of the charged criminal conduct, which led

to spillover prejudice before the grand jury and at trial. Finally, Defendants raise

two challenges centered on their contention that CMEEC’s Board authorized the

2015 Derby, October 2015 Greenbrier, and 2016 Derby trips by approving a

budget that contained a line item encompassing the expenses for those three

trips. First, Defendants claim that their convictions should be vacated because the

government purportedly misled the grand jury to falsely allege that Defendants

did not seek Board approval for the trips or include the trip costs in CMEEC’s

budgets, when in fact the government possessed evidence that the trips were

encompassed within a budget line item. Second, Defendants claim that the

budget line item demonstrates that CMEEC’s Board authorized the trips, and

therefore the district court erred in ordering them to pay restitution for those

trips’ expenses.

46 In addition, CMEEC filed a petition for mandamus under the CVRA,

seeking review of the district court’s restitution order under the MVRA. CMEEC

contends that the district court erred in denying restitution for any portion of the

$9,564,026.53 in legal fees that CMEEC advanced to the five Trial Defendants for

their defense against the charges. Specifically, CMEEC asserts that those defense

fees are a compensable “loss . . . of property” that resulted from Defendants’

conduct underlying their convictions. 18 U.S.C. § 3663A(b)(1).

We reject each of Defendants’ and CMEEC’s challenges, and find no error

in the district court’s thorough treatment of those questions.

I. Receipt of More Than $10,000 in Federal Benefits

As mentioned above, Defendants’ offense of conviction contains a

jurisdictional element that requires proof that the defendant misappropriated

property belonging to “an organization” that “receive[d], in any one year period,

benefits in excess of $10,000 under a Federal program involving a grant . . . or

other form of Federal assistance.” 18 U.S.C. § 666(b). On appeal, Defendants

renew their argument, advanced before the jury and the district court, and

rejected by both, that there was insufficient evidence to prove that CMEEC

47 received more than $10,000 in federal benefits during the 2015 calendar year, as

required to sustain their convictions on Count Three.

The Parties agree on the basic facts and a related issue of law. The

ConnSMART funds were “benefits . . . under a Federal program involving a

grant,” id., as the DOE issued the grant as part of a larger federal initiative to

modernize the nation’s electric grid, created pursuant to statute, see 42 U.S.C.

§ 17381 et seq. As we have held, “there is a ‘federal program’ for the purposes of

Section 666 whenever there is a specific statutory scheme that authorizes

payments thereunder for the purposes of promoting or achieving the policy

objectives of the United States.” United States v. Bahel, 662 F.3d 610, 626 (2d Cir.

2011). On February 17, 2015, CMEEC submitted a reimbursement request for

$864.154.20 to the DOE. As the “prime recipient” for the grant, CMEEC sought

reimbursement for $9,363.08 in expenses incurred by itself and $854,791.12

incurred by its “subrecipient” members. Def. App’x 1103 (reimbursement

request). On March 31, 2015, DOE approved the request and wired the full

amount of $864,154.20 to the ConnSMART bank account, which was owned and

operated by CMEEC. On April 1, 2015, CMEEC then disbursed $854,791.12 to its

members, retaining $9,363.08 for itself.

48 Defendants argue that CMEEC, despite having received $864,154.20 of

federal grant funds into a bank account under its custody and control, received

less than $10,000 in federal benefits. First, they claim that the benefits “received”

by CMEEC were limited to the $9,363.08 of DOE grant funds that CMEEC

retained for itself, whereas the remaining $854,791.12 in grant funds that CMEEC

received into its bank account and then disbursed to its members were not

benefits received by CMEEC, since it did not retain those funds. Second,

Defendants argue that, because the latter amounts of “DOE funds [were]

received by the MEUs” and not by CMEEC, the government could not rely on

proof that CMEEC “obtained a[] benefit” from the MEUs’ “third party” receipt of

those funds, or alternatively, that the government failed to present sufficient

proof that CMEEC obtained such benefits. Def. Br. at 31; Def. Rep. Br. at 6. In

other words, Defendants contend that the government was required (and failed)

to prove that “CMEEC actually benefitted from the DOE funds” disbursed to the

members in a dollar value that exceeded $636.93 ($10,000.01 less the $9,363.08

that CMEEC retained). Def. Br. at 32.

Neither argument finds any support in the statute or precedent, and we

reject both contentions.

49 A. Standard of Review – Do Defendants’ Contentions Present a Question of Fact or of Law?

We review a preserved challenge to the sufficiency of the evidence de novo.

United States v. Jimenez, 96 F.4th 317, 324 (2d Cir. 2024). Nonetheless, a defendant

bringing such a challenge “bears a heavy burden . . . as the standard of review is

exceedingly deferential” to the jury’s verdict. United States v. Coplan, 703 F.3d 46,

62 (2d Cir. 2012) (quotation marks omitted). We “view the evidence in the light

most favorable to the government,” and “must affirm if any rational trier of fact

could have found the essential elements of the crime beyond a reasonable

doubt.” Jimenez, 96 F.4th at 324 (quotation marks omitted).

However, despite the parties’ joint framing of the issue as one of factual

sufficiency, our precedents lead us to question that framing and the application

of its concomitant standard of review to the present appeal. Defendants do not

contest that the federal government disbursed $864,154.20 in federal funds to

CMEEC; rather, they argue that $854,791.12 of those federal funds do not

constitute “benefits” to CMEEC because CMEEC, in turn, disbursed that sum to

its member utilities. We have previously ruled that the “question of what

constitutes a benefit [under § 666(b) is] a legal question for the court,” as that

question “is a matter of statutory interpretation” that should not be resolved by

50 the jury. United States v. Insaidoo, 765 F. App’x 522, 524 (2d Cir. 2019); 11 see also

Bahel, 662 F.3d at 626–29 (2d Cir. 2011) (examining as a legal matter whether the

United Nations Participation Act, 22 U.S.C. § 287e, established a benefit program

for the purpose of § 666(b)). 12 Critically, we review such questions of statutory

interpretation de novo. See Jaen v. Sessions, 899 F.3d 182, 185 (2d Cir. 2018).

We need not decide whether the district court erred in submitting the

question to the jury, as Defendants do not challenge that decision on appeal, and,

in any event, Defendants invited any such error by seeking (and receiving) jury

instructions and a special jury interrogatory on the issue. Def. App’x 1712

(Verdict Sheet, asking jury to find whether “CMEEC received in excess of $10,000

in federal benefits”); Rankin, 651 F. Supp. 3d at 542 (noting that the jury was

instructed that the payments’ origination from a federal benefit program “is not

11 Although Insaidoo was decided by summary order, and therefore is not binding, “denying summary orders precedential effect does not mean that the court considers itself free to rule differently in similar cases.” See United States v. Payne, 591 F.3d 46, 58 (2d Cir. 2010) (internal quotation marks and brackets omitted). Moreover, at least three other circuits have determined that whether the funds received by an entity constitute “benefits” is a question of law. United States v. Briston, 192 F. App’x 84, 86 (3d Cir. 2006); United States v. Dubón–Otero, 292 F.3d 1, 9 (1st Cir. 2002); United States v. Peery, 977 F.2d 1230, 1233 n.2 (8th Cir. 1992). We agree with the reasoning of those courts, and of our own summary order. 12 Indeed, the district court itself acknowledged that it arguably “erred by even

instructing the jury to decide if any payments to CMEEC were ‘benefits.’” Rankin, 651 F. Supp. 3d at 544 n.131. 51 enough by itself to conclude that CMEEC received federal benefits,” and that the

jury “must consider whether the payments were a benefit to CMEEC as distinct

from any benefit derived by other recipients of federal funds.”) (quotation marks

omitted). Those actions clearly demonstrate that Defendants “deliberately

provoke[d] a procedural irregularity,” and therefore “cannot complain of an

error that [they themselves] invited.” United States v. Bastian, 770 F.3d 212, 218

(2d Cir. 2014) (quotation marks omitted). Accordingly, even if Defendants had

raised the issue on appeal, they could not seek to vacate their convictions or

receive a new trial based on the court’s submission of the question to the jury.

However, the invited error doctrine does not dictate what standard of

review – the deferential de novo standard owed to the jury’s verdict under a

sufficiency challenge or the de novo standard applicable to questions of statutory

interpretation – applies to Defendants’ challenge on appeal. Nor can we

necessarily conclude that Defendants have waived that question by arguing on

appeal that their challenge should be reviewed under the deferential sufficiency

standard, as several of our sister circuits have held that “‘[a] party cannot waive,

concede, or abandon the applicable standard of review.’” United States v. United

States Sugar Corp., 73 F.4th 197, 203 n.2 (3d Cir. 2023), quoting United States v.

52 Escobar, 866 F.3d 333, 339 n.13 (5th Cir. 2017); see also Worth v. Tyer, 276 F.3d 249,

262 n.4 (7th Cir. 2001) (“[T]he court, not the parties, must determine the standard

of review, and therefore, it cannot be waived.”). Fortunately, we need not decide

whether Defendants are capable of waiving the proper standard or which

standard should apply to the present appeal. Defendants’ challenge fails even

under the more favorable standard applicable to questions of law, and therefore

necessarily fails to meet the deferential standard applicable to factual sufficiency

questions.

B. An Entity “Receives . . . Benefits” even when It Acted Solely as a Conduit of those Benefits for Further Distribution, and Is Not Required to Retain, Administer, or Allocate the Benefits.

As with any question of statutory interpretation, we begin with the text.

New York Legal Assistance Grp. v. Bd. of Immigr. Appeals, 987 F.3d 207, 216 (2d Cir.

2021) (“Every exercise in statutory construction must begin with the words of the

text.”) (quotation marks omitted). Section 666(b) provides that the organization

must have “receive[d], in any one year period, benefits in excess of $10,000.” As

the district court correctly concluded, all that § 666(b) requires is receipt of federal

benefits; it does not require the organization to have retained those benefits.

Rankin, 651 F. Supp. 3d at 546; see also Insaidoo, 765 F. App’x at 524 (Once it is

established that the federal funds are benefits, “the government only ha[s] to

53 prove that [the entity] received more than $10,000 [of those] federal funds” to

sustain a conviction.). An entity “receives” benefits when it takes or comes into

possession of them, and a “receipt” of benefits is completed the moment that the

entity takes possession. Receive, BLACK’S LAW DICTIONARY (12th ed. 2024) (“[t]o

take . . . ; to come into possession of or get from some outside source”); Receipt,

BLACK’S LAW DICTIONARY (12th ed. 2024) (“[t]he act of receiving something”).

Accordingly, CMEEC received $864,154.20 of federal funds when the

government transferred that sum into the ConnSMART bank account,

notwithstanding that CMEEC’s possession of $854,791.12 of that sum was only

fleeting.

That plain-text understanding of § 666(b) is further supported by the

statute’s legislative history. In enacting § 666, Congress sought to “protect the

integrity of the vast sums of money distributed through Federal programs from

theft, fraud, and undue influence by bribery.” S. Rep. No. 98-225, at 370 (1983),

reprinted in 1984 U.S.C.C.A.N. 3182, 3511 (emphasis added). Likewise, Congress

cited three circuit cases as representing quintessential examples of entities that

§ 666 was intended to cover, id. at 370 nn. 2 & 3, all three of which involved

organizations that “received federal program funds as the intended recipient”

54 but was “charged with the responsibility” for “spending the federal grant monies

to benefit the intended beneficiaries,” United States v. LaHue, 170 F.3d 1026, 1030

(10th Cir. 1999), abrogated on other grounds by Fischer v. United States, 529 U.S.

667, 671 (2000).

In line with Congress’s clear directive, courts have uniformly rejected

Defendants’ position that an organization did not “receive” benefits merely

because the benefits passed through its control on the way to the ultimate

beneficiaries. It is well-settled that the identification of “one beneficiary of an

assistance program . . . does not foreclose the existence of others” and that the

reach of § 666 extends beyond the federal program’s “targeted or primary

beneficiaries.” Fischer, 529 U.S. at 677–78. Accordingly, the Supreme Court held

in Fischer that, even if qualifying patients are the “primary beneficiaries” of

Medicare, the healthcare providers that obtain Medicare reimbursements for

their treatment of those patients receive benefits within the meaning of § 666. Id.

And, as especially relevant here, the Court thought it beyond question that

“Medicare intermediar[ies] (such as Blue Cross and Blue Shield),” which obtain

Medicare funds from the government and in turn disburse those funds to

55 treating hospitals, receive benefits under § 666 despite their obligation to transfer

those funds. Id. at 678.

Moreover, we have already answered the present question in favor of the

government. See United States v. Zyskind, 118 F.3d 113, 116 (2d Cir. 1997). In

Zyskind, we were confronted with the theft of funds from a care facility housing

disabled adults, nearly all of whom “received federal benefits from the Social

Security Administration or the Department of Veterans Affairs.” Id. at 114. Some

of those benefits were made in the form of checks payable to the facility, which

were then applied by the facility to the room and board costs of each resident or

distributed to those residents as “personal allowance.” Id. (quotation marks

omitted). In a similar fashion to Defendants here, the Zyskind defendant argued

that § 666(b) does not apply to entities that are “not direct beneficiaries of federal

government benefits,” id. at 115, and that receive federal funds merely as

“custodian[s] for the individual beneficiaries,” id. at 117. We decisively rejected

that argument, concluding that the text and legislative history of § 666 made

clear that the statute prohibits “diversions of federal funds not only by agents of

organizations that are direct beneficiaries of federal benefits funds, but [also] by

56 agents of organizations to whom such funds are ‘disbursed’ for further

‘distribut[ion]’ to or for the benefit of the individual beneficiaries.” Id. at 116.

Admittedly, the funds received by the facility and applied to the residents’

room and board, which compensated the facility for its own costs, are unlike the

funds transferred by CMEEC to the MEUs, which compensated the MEUs for

their expenditures. But the same is not true of the facility’s receipt of its

residents’ personal allowance, which is precisely analogous to CMEEC’s receipt

of grant funds on behalf of the MEUs. Both entities received the funds on behalf

of, and were required to disburse them to, the ultimate beneficiaries. Critically,

we did not differentiate in Zyskind between the funds that the facility applied to

room and board and those that it disbursed to the residents; the government was

free to rely on both sums, in combination, to prove that the facility had received

“more than $10,000 in federal benefits.” Id. at 117. The present case therefore falls

squarely within Zyskind, and we accordingly conclude that CMEEC received

$864,154.20 in benefits – the full amount of funds transferred to its bank account

– notwithstanding that it acted as a conduit for further disbursement with

respect to $854,791.12 of those benefits.

57 Defendants attempt to distinguish Zyskind on the basis that “CMEEC[,]

unlike the organization in Zyskind . . . [,] did not . . . administer[] or otherwise

have discretion to use the reimbursement funds” transferred to its members. Def.

Rep. Br. at 5. In Defendants’ view, the entity in Zyskind “administered” the

benefits in that it “‘applied the benefits payments it received towards the

[facility’s] cost of room and board,’ with remaining money held by the facility

and designated to each resident’s ‘personal allowance’ funds.” Id. at 9, quoting

Zyskind, 118 F.3d at 114. However, Zyskind itself makes clear that the care facility

did not have discretionary authority to determine how much money was to be

distributed to the residents as allowance, nor did the facility have any authority

to dictate how the residents would use those funds. In fact, the New York State

Department of Social Services “designated” the amount of “’personal allowance’

money to which each resident was entitled,” and the facility was required to

place those funds in “[a] separate account . . . for each beneficiary.” Zyskind, 118

F.3d at 114, 116 (quotation marks omitted). To the extent that the facility had any

role at all in administering those funds, it was limited to “maintain[ing] a record”

of the allowance. Id. at 114. Zyskind therefore cannot be read to impose an

“administration” or “discretionary authority” requirement.

58 More fundamentally, § 666(b) does not use the term “administer,”

“discretion,” or any other analogous language; it only requires that the entity

have “receive[d] . . . benefits.” Indeed, Defendants’ interpretation of the statute

would lead to an absurdity – had Defendants stolen the entirety of the grant

funds from CMEEC’s ConnSMART bank account, their interpretation of § 666

would place that theft of federal funds beyond the scope of the statute simply

because CMEEC was required to transfer the funds to their ultimate recipients.

We decline to adopt such a reading at odds with Congress’s “expansive,

unambiguous intent to ensure the integrity of organizations participating in

federal assistance programs.” Fischer, 529 U.S. at 678. In enacting § 666, Congress

surely intended to – and did – ensure that the ultimate recipients of federal

benefits actually obtain those benefits, and that intermediaries which pass along

federal benefits would be prevented from diverting those funds to their own use.

We therefore hold that, so long as the victim entity “receives” federal

funds that are benefits in its hands, § 666(b), it is irrelevant whether or not the

entity administered those funds or that the entity’s custody over those funds was

merely fleeting. 13 Accordingly, we reject Defendants’ contention that the

13 Regardless, even if § 666(b) required CMEEC to have “administered” the benefits to have “received” those benefits – a reading belied by the plain meaning of 59 jurisdictional amount for Count Three rested on proof that CMEEC “benefitted

indirectly from federal benefits received by a third party (here, the MEUs),” Def.

Rep. Br. at 6 (emphasis omitted), as CMEEC received $864,154.20 from the

ConnSMART Grant in the first instance. CMEEC not only owned and operated

the bank account into which the funds were disbursed, but the Grant Agreement

described those funds sent to CMEEC for further disbursement as “funds . . .

from the Grant Award received by [CMEEC] from DOE.” Def. App’x 861 (emphasis

added); see also id. 859 (Grant Agreement, providing that CMEEC “accept[ed]

responsibility for receipt[] and disbursement of the Grant Award”).

C. Section 666 Requires Only that the Funds Received by the Organization are “[B]enefits” in Its Hands, and Does Not Require Proof that the Organization “Benefit[ted]” in Excess of $10,000 from those Funds.

those terms – CMEEC’s role as the administrator and “primary awardee” of the Grant would undoubtedly satisfy any such requirement. Def. App’x 861 (DOE Grant Agreement). The ConnSMART grant obligated CMEEC to “act on behalf of all of the Parties as the Primary Awardee under the Grant Agreement”; to “be responsible for reporting to DOE on behalf of itself and each and all of the Subawardees”; to “be responsible for filing and [] make all filings with DOE for reimbursement of expenses and payment of the Grant Award” based on information provided by the Subawardees; and to “disburse funds received from the Grant Award received by it from DOE to the Subawardees as information and verification is provided by each of the Subawardees justifying the disbursement of funds.” Id. 861–62. In short, to receive the Grant funds, CMEEC had to comply with the Grant’s administrative requirements. We fail to understand how those acts are anything but “administration” of the benefits, nor do we think it relevant that such administration occurred prior to, rather than after, CMEEC’s receipt of the benefits. 60 Defendants further argue that the $854,791.12 that CMEEC forwarded to

its members cannot be counted toward the jurisdictional amount because there

was insufficient proof that CMEEC indirectly benefitted from the federal benefits

that the MEUs received. Def. Rep. Br. at 6.

However, Defendants again mischaracterize the present case and the

statute. As we have just explained, an entity “receives benefits” at the moment

that it obtains federal funds that are benefits, regardless of whether that entity is

the “targeted or primary beneficiar[y],” Fischer, 529 U.S. at 678, or those funds are

earmarked for further disbursement. Moreover, § 666(b) requires the entity to

have “receive[d] . . . benefits in excess of $10,000”; it does not require the entity to

have “benefit[ted] in excess of $10,000.” Thus, where an entity received in excess

of $10,000 in funds traceable to federal coffers, § 666(b) is satisfied if those funds

qualify as “benefits” when obtained by the entity, regardless of how much those

funds “benefitted” it. 14

14 We therefore need not decide whether CMEEC “receive[d] benefits” within the meaning of § 666(b) through proof that it benefitted from a third party’s receipt of federal funds, as would be the case had the DOE directly sent the ConnSMART Grant funds to CMEEC’s members without CMEEC’s involvement, since CMEEC unequivocally received federal funds. In any event, Defendants are incorrect in their blanket assertion that § 666(b)’s jurisdictional requirement cannot be met by such proof. Fischer itself makes clear that, in appropriate cases, an entity may “receive benefits” through a third party’s receipt of 61 By way of illustration, the Supreme Court held in Fischer that “[t]he funds

health care organizations receive for participating in the Medicare program,”

including reimbursements to those entities for treating qualifying patients, are

“benefits” when received by those entities. 529 U.S. at 681. The payments

themselves were the “benefits,” and whether the entity had received in excess of

the jurisdictional amount turned on whether those payments exceeded $10,000,

not on whether the healthcare entities benefitted from those payments in excess

of $10,000. Fischer did not, for example, direct courts to deduct from those

Medicare reimbursements the providers’ purchase prices for drugs that they

administered to patients as part of their treatment. The providers’ reimbursed

expenditures in buying those drugs did not “benefit” those providers – they

were ultimately sent to drug manufacturers or retailers, and the drugs

themselves were taken by patients – but those reimbursements were nonetheless

benefits received by the providers. See also Zyskind, 118 F.3d at 116 (drawing no

federal funds, as the Court thought it beyond question that “qualifying patients receive benefits under the Medicare program.” 529 U.S. at 677. That was true regardless of the fact that patients do not receive any federal funds from Medicare reimbursements, which are disbursed to healthcare providers, and instead only receive treatment from the providers that is paid for by Medicare reimbursements. Thus, in at least some cases, an entity may receive benefits, without having itself received any federal funds, by receiving an item or service from a third party that is in turn paid by the government rather than by the receiving entity. 62 distinction between funds disbursed by entity to ultimate recipients as

“allowance,” from which the entity derived no benefit, and those retained by

entity as payment for recipients’ “room and board,” in finding that entity

received more than $10,000 in benefits).

Nor do we find compelling Defendants’ implication that, where multiple

entities are beneficiaries of a federal benefit, courts must allocate pro rata shares

of that benefit to each entity. Just as the existence of “one beneficiary of an

assistance program . . . does not foreclose the existence of others,” Fischer, 529

U.S. at 677, the existence of one beneficiary of a federal dollar does not foreclose

the existence of other beneficiaries of that same dollar. Notably, the Fischer Court,

after establishing that Medicare payments provided to healthcare providers in

exchange for patient care constitute benefits, did not require quantification or

apportionment of how much of those payments were “benefits” to patients as

opposed to the providers (by, for example, requiring deduction of the value of

the treatment obtained by the patients from the sums paid to the providers). Id.

at 681 (“The funds health care organizations receive for participating in the

Medicare program constitute ‘benefits.’”).

63 Instead, Fischer instructs courts to examine the “structure, operation, and

purpose” of the federal program to determine whether the entity’s receipt of

“federal funds disbursed under [that] . . . program” can “be characterized as a

benefit,” id., an inquiry that primarily “turns on the attributes of the federal

program,” United States v. Paixao, 885 F.3d 1203, 1206 (9th Cir. 2018) (“Fischer

teaches that § 666 embodies a distinction between transactions that occur ‘in the

usual course of business’ and those that do not.”). We think it obvious that

ConnSMART Grant funds are “[f]ederal assistance within a specific statutory

scheme intended to promote public policy objectives and not payments by the

government as a commercial entity,” United States v. Rooney, 986 F.2d 31, 35 (2d

Cir. 1993), in that they fulfill “significant purposes beyond performance of an

immediate transaction,” Fischer, at 529 U.S. at 680. 15

The Grant funds here were not made to reimburse the DOE for some good

or service provided to it, and indeed, the DOE appears to have received nothing

at all from CMEEC in return for the Grant funds. Instead, the government

15 Consider, for example, the analogy of an organization or local government agency that supports local art galleries, and which applies for a grant from the National Endowment for the Arts and in its application details the galleries to which the entity intends to provide the funds. It is difficult to understand how it can be concluded that such an applicant does not receive “benefits” when its application is approved, even if it promptly disburses the money to the institutions listed in the application. 64 provided the Grant to improve the nation’s electric grid system “in the interest of

both the [funding recipient] and the greater community,” and envisioned that

CMEEC would “play a vital role and maintain a high level of responsibility in

carrying out the program’s purposes.” Id. at 680–81. The Energy Independence

and Security Act (“EISA”), under which the Grant was issued, was enacted with

the policy objective “to support the modernization of the Nation’s electricity

transmission and distribution system,” 42 U.S.C. § 17381, and CMEEC’s “own

operations” as an electric utility “are one of the reasons for maintaining the

program,” Fischer, 529 U.S. at 681.

Likewise, the Grant was “subject to several conditions designed in part to

promote broader objectives . . . while ensuring that any money contributed . . . is

responsibly expended and accounted for.” Bahel, 662 F.3d at 627. For example,

EISA defined the purchases which would and would not qualify for

reimbursement grants, see 42 U.S.C. § 17386(b)–(d), and instructed the DOE to

“require as a condition of receiving funding under this subsection that [grant]

projects utilize open protocols and standards,” id. § 17386(e)(1)(B), to “establish

procedures to ensure that there is no duplication or multiple payment for the

same investment or costs,” id. § 17386(e)(1)(C), and to “establish procedures to

65 ensure there will be public records of grants made, recipients, and qualifying

Smart Grid investments which have received grants,” id. § 17386(e)(1)(D).

That the ConnSMART Grant funds were “benefits” is only made further

evident by the Grant proposal, in which CMEEC described that the funds would

be used to purchase equipment that would “enhance ongoing wholesale power

purchasing and forecasting.” Def. App’x 1050 (ConnSMART Project Execution

Plan). Likewise, in the Grant Agreement, CMEEC covenanted that it “shall

undertake the responsibilities under the Grant Agreement on its behalf and on

behalf of the Subawardees and shall be responsible for reporting to DOE on

behalf of itself and each and all of the Subawardees.” Id. 861 (Grant Agreement).

CMEEC also promised that it would “be responsible for filing . . . with DOE for

reimbursement of expenses and payment of the Grant Award,” and that it would

oversee the “design, selection, installation and interoperability” of the equipment

purchased by its members using Grant Funds, id. 861, 863. As those duties make

clear, CMEEC was not a “mere passive recipient or disinterested conduit” for the

benefit payments. Rankin, 651 F. Supp. 3d at 545.

66 D. The Government Presented Sufficient Evidence to Prove that CMEEC Met the Jurisdictional Amount.

The present case is quite simple, despite Defendants’ overwrought

attempts to complicate the issue. It is irrelevant whether or not CMEEC retained

or administered the $854,791.12 in benefits that it disbursed to its members;

CMEEC received them nonetheless as a participant in the Grant program. Nor

we do need to place a dollar value on how much CMEEC “benefitted” from its

receipt of grant funds – such as the value of the improvements to CMEEC’s

power monitoring that resulted from its members’ purchase of equipment under

the grant – because the Grant funds are themselves the “benefits” received. 16

CMEEC received $864,154.20 in federal funds when DOE transferred that

sum into CMEEC’s bank account. All of those funds were “benefits . . . under a

Federal program” when CMEEC received them as a participant in that program.

18 U.S.C. § 666(b). Thus, CMEEC received $864,154.20 in benefits. See Fischer, 529

16 If we did need to do so, however, it would seem clear that the efficiency benefits and good will obtained by CMEEC from receiving and disbursing the funds to its members would surpass the paltry amount of $636.93 that, when added to the $9,363.08 retained by CMEEC itself, would bring the amount by which CMEEC “benefitted” over the jurisdictional threshold. See, e.g., Def. App’x 1055 (Grant Project Execution Plan, in which CMEEC described that the smart meter technologies purchased under the Grant would permit it to “lower the cost of power through a) reduced peak capacity and peak transmission wholesale charges and b) improved bulk power purchasing, enabled by improved load forecasting”). 67 U.S. at 677 (“Medicare payments are ‘benefits’” received by healthcare

providers.).

II. Prosecutorial Misconduct

In their second challenge to their conviction, Defendants appeal the district

court’s denial of their Rule 33 motion for a new trial due to the government’s

purported misconduct in advancing a frivolous theory of prosecution, which we

review for abuse of discretion. United States v. Forbes, 790 F.3d 403, 406 (2d Cir.

2015). Defendants also appeal the district court’s denial of their motion to

dismiss the indictment on the same basis, which we review de novo. See United

States v. Walters, 910 F.3d 11, 22 (2d Cir. 2018) (motion to dismiss an indictment

for “outrageous governmental conduct is a question of law” that is reviewed de

novo) (quotation marks omitted).

As set forth above, CMEEC did not receive any federal funds, from a

benefits program or otherwise, in the calendar year 2016. To assert a substantive

§ 666 violation based on acts that occurred in 2016, as charged in Count Four,

and to expand the temporal scope of the conspiracy to violate § 666, charged in

Count One, to encompass that calendar year, the government advanced a two-

part “Member Towns” theory in the Indictment and at trial. First, the

68 government argued that CMEEC’s members included not only the municipal

electricity utility companies, but also the towns that owned and operated those

companies. Second, the government argued that the funds diverted to pay for the

trip expenses belonged to CMEEC’s members, rather than CMEEC itself. In

combination, these two arguments permitted the government to claim that the

funds stolen by Defendants from CMEEC were in its “care, custody, or control”

but nonetheless “owned” by the towns. 18 U.S.C. § 666(a)(1)(A)(ii). Since at least

two of the towns had received more than $10,000 under various federal benefits

programs in 2016, the government could thus charge a § 666 violation for that

calendar year based on Defendants’ diversion of CMEEC funds, notwithstanding

that CMEEC itself had not received any federal funds during that year.

Defendants argue that the “Member Towns” theory was frivolous, and

that the government’s improper use of that theory to bring Count Four and

expand the temporal scope of Count One, thereby expanding the scope of the

Indictment to cover their misappropriation of funds that occurred in 2016,

permitted it to introduce otherwise inadmissible evidence that created spillover

prejudice affecting their conviction on Count Three, which charged solely

misappropriations that occurred during the 2015 calendar year. We disagree on

69 both points – the government’s theory was not frivolous, nor did the use of that

theory have a prejudicial spillover effect.

A. The Government’s Position was Not Frivolous.

1. Legal Standard

To demonstrate that the government’s theory in favor of prosecution was

“frivolous,” a defendant must show more than that the theory was invalid and

was rejected by a court or jury. See United States v. Bove, 888 F.3d 606, 611 (2d Cir.

2018) (holding that arguable theory of prosecution ultimately rejected by district

court was not frivolous, nor was prosecution frivolous because it relied on the

testimony of a witness who was arguably not credible). The theory or claim must

be “[m]anifestly insufficient or futile – in other words, obviously lacking a basis

in law or fact.” Id. at 608 (quotation marks and footnote omitted). As we have

explained in the civil context, that inquiry is objective, and does not turn on the

quality of the party’s advocacy in advancing its theory. Caisse Nationale de Credit

Agricole-CNCA, New York Branch v. Valcorp, Inc., 28 F.3d 259, 264 (2d Cir. 1994)

(Whether “[a]n argument constitutes a frivolous legal position for purposes of

Rule 11 sanctions” is determined “under an ‘objective standard of

70 reasonableness.’”), quoting Derechin v. State University of New York, 963 F.2d 513,

516 (2d Cir. 1992).

In making that determination, we review questions of law de novo, see

United States v. Al Kassar, 660 F.3d 108, 124 (2d Cir. 2011), and questions of fact for

clear error, see Walters, 910 F.3d at 22. “The question of who owns a given item of

. . . property is a mixed question of law and fact,” New Windsor Volunteer

Ambulance Corps, Inc. v. Meyers, 442 F.3d 101, 111 (2d Cir. 2006), which we review

de novo, see Man Ferrostaal, Inc. v. M/V Akili, 704 F.3d 77, 82 (2d Cir. 2012).

2. Membership

At trial, the government offered extensive evidence to demonstrate that the

municipalities as well as the utility companies were members of CMEEC. For

example, CMEEC’s founding Membership Agreement described the

municipalities as “Parties” to the Agreement, provided that “the Parties are the

members of CMEEC,” and was executed by the municipalities as “Members of

CMEEC.” Def. App’x at 1370, 1396.

In response to that evidence, Defendants contended that even if CMEEC,

in practice, treated the towns as if they were its members, the towns could not

have been members under Connecticut law. In support, they cite the provisions

71 authorizing the creation of Municipal Electric Energy Cooperatives (“MEECs”)

such as CMEEC, which define a “Member” of such cooperatives as “any

municipal electric utility within the state . . . whose governing body authorizes

membership in, and which becomes a member of, a municipal electric energy

cooperative.” Conn. Gen. Stat. § 7-233b(6). Because the statute does not define

“Member” to include towns, Defendants claim that CMEEC’s membership is

clearly limited to electric utility companies and cannot lawfully include the

municipalities that operate those utilities.

But Defendants’ selective invocation of the statute is unavailing, and we

need not consider too deeply whether the government had a non-frivolous basis

to argue that CMEEC’s members included the municipalities in addition to or

instead of the utilities that they operated, because Connecticut law resolves a

closely related point. CMEEC’s authorizing statute, after defining the

“Member[s]” of a MEEC, defines “[m]unicipal electric utility” as “an electric

department, agency or other body of a municipality . . . [that] has been

established in accordance with applicable provisions of law.” Id. § 7-233b(8); see

also id. §§ 7-213, 7-216 (permitting “municipalit[ies]” to operate and maintain

72 electric plants by appointing boards of commissioners). Thus, a “member” of a

MEEC is a “body of a municipality.”

As the Supreme Court of Connecticut has made clear, “it is axiomatic that

municipal boards and agencies are extensions of the towns they serve, created for

the purpose of performing those functions that towns are statutorily required or

permitted to perform. . . . They are, in effect, alter egos of the towns.” Rettig v.

Town of Woodbridge, 304 Conn. 462, 482 (2012) (animal control board was alter ego

of towns that jointly operated it). Although the Connecticut courts have not

addressed whether municipal utility boards specifically fall under that rule, at a

minimum, it is at least arguable that each of the utility companies that

constituted CMEEC’s members is simply an arm or alter ego of the town that

operates it. See Conn. Gen. Stat. § 7-233b(8) (defining “Municipal electric utility”

as “an electric department, agency or other body of a municipality,” and not as a

separate corporate entity).

In sum, CMEEC’s members are the municipal utility companies, but those

utility companies are “bod[ies] of a municipality,” id., and therefore are plausibly

considered “alter egos of the” municipalities, Rettig, 304 Conn. at 482. We need

not decide whether municipalities are, by and through their respective utility

73 companies, members of CMEEC. It is sufficient to resolve the issue before us to

conclude that the government’s position was plausibly supported and was not

frivolous. We therefore cannot conclude that the government “misled” the grand

jury by advancing the theory that the towns were members of CMEEC; indeed,

that theory may well be correct as a matter of law.

3. Ownership

We also reject Defendants’ contention that the government advanced a

frivolous theory in claiming that the funds stolen by Defendants were owned by

CMEEC’s members.

True, CMEEC is a corporate entity distinct from its member electric

utilities, and possesses the power to “acquire, own, hire, use, operate and dispose

of personal property” in its own right. Conn. Gen. Stat. § 7-233e(b)(10).

Moreover, Connecticut adheres to the basic rule that a corporation’s property

belongs to the corporation and not to its shareholders. See Success, Inc. v. Curcio,

160 Conn. App. 153, 176 (Conn. App. Ct. 2015).

Nonetheless, while the government may not have had a sound basis to

argue that CMEEC’s members had a property interest in all of the funds owned

by CMEEC or in its “care, custody, or control,” 18 U.S.C. § 666(a)(1)(A)(ii), we

74 agree with the district court that the government had a colorable argument that

the specific moneys diverted to pay for the trip expenses belonged to CMEEC’s

members. See Rankin, 651 F. Supp. 3d at 566–68.

CMEEC’s Membership Agreement required CMEEC, on a monthly basis,

to “allocate[] and/or disburse[]” the entirety of “CMEEC Margin,” defined as “all

revenues less incurred expenses received by CMEEC,” to its eligible members

into each of those members’ “Rate Stabilization Fund.” Def. App’x 1372, 1382.

Thus, CMEEC’s members were contractually entitled to receive their share of

CMEEC’s Margin – i.e., profits – on a monthly basis. Although the Rate

Stabilization Funds were maintained by CMEEC in its bank account, not

segregated from its other funds, and tracked solely “by means of . . .

classifications in its books and records,” we agree with the district court that

“[t]here is little doubt from the plain language of the Membership Agreement

and the trial evidence that the monies allocated to the rate stabilization fund

were indeed the property of and owned by CMEEC’s members even though kept

in the care and custody of CMEEC. Rankin, 651 F. Supp. 3d at 567; see also Def.

App’x 1382–85 (Membership Agreement); Gov. App’x 511 (testimony of outside

auditor that funds in the Rate Stabilization Funds were treated as liabilities to

75 CMEEC instead of assets and were “held by CMEEC, but CMEEC does not have

rights to it. It’s money belonging to the members.”).

Meanwhile, Rankin and Pryor orchestrated a budget accounting

mechanism by which payment for certain trip expenses in 2015, 2016, and 2017

were credited from the Contra Margin account rather than as an “administrative-

and-general” expense. Thus, the trip expenses were allocated against and

deducted from the Margin that CMEEC’s Membership Agreement required it to

distribute to the members, rather than categorized as expenses that reduced the

available Margin in the first instance. Indeed, at trial the government presented

contemporaneous CMEEC business records reflecting that trip expenses (referred

to in the record as “board expenses”) were not only deducted from the Margin

allocation as a whole, but also that each of CMEEC’s members were assigned a

pro-rata share of the trip expenses to be deducted from their allocated Margin.

Gov. App’x 2597–2623.

We agree with the district court that the government had a non-frivolous

basis to argue that CMEEC’s members owned a property interest in the moneys

allocated to Margin prior to the disbursement of those moneys into the members’

Rate Stabilization Funds. To begin, § 666 does not define the terms “owned” or

76 “property,” nor have we or the Supreme Court defined the scope of those terms

for purposes of that statute. Congress has, however, used similar terms

throughout the Federal Criminal Code, and the cases interpreting those statutes

provide a more than reasonable basis for the government’s position that

CMEEC’s members owned a property interest in the Margin money.

It is well settled that “property,” in the context of the mail and wire fraud

statutes, 18 U.S.C. §§ 1341, 1343, includes both tangible and intangible property

rights, see, e.g., Carpenter v. United States, 484 U.S. 19, 25 (1987) (holding that the

“intangible nature” of certain property rights or interests “does not make it any

less ‘property’ protected by the mail and wire fraud statutes”). We have little

doubt that that principle also extends to § 666(a)(1)(A). In Kelly v. United States,

the Supreme Court not only treated the term “property” as indistinguishable

between § 666(a)(1)(A) and § 1343, but also noted that “[a] government’s right to

its employees’ time and labor” is a property interest that “can undergird a

property fraud prosecution” under both statutes. 590 U.S. 391, 401 (2020); see also

United States v. Sanderson, 966 F.2d 184, 188–89 (6th Cir. 1992) (concluding that

§ 666 “applies where both intangible and tangible property has been stolen”).

77 Of course, not all intangible interests constitute “property,” and the

Supreme Court has repeatedly cautioned that such interests must be connected

to a “traditionally recognized property interest.” Ciminelli v. United States, 598

U.S. 306, 314 (2023). The members’ interest in money designated as Margin was

an enforceable right to payment created by contract, as the Membership

Agreement guaranteed that the members would receive monthly distributions of

the entirety of CMEEC Margin. Unlike the “right-to-control” property interest

that the Court rejected in Ciminelli, such contractual rights to payment have long

been recognized as valuable property, even if the payment has not yet occurred.

Krafick v. Krafick, 234 Conn. 783, 795 (1995) (concluding that the right to payment

of vested pension benefits is “contractual in nature,” and that “contractual rights

. . . are a ‘type of intangible property,’ and, as such, are encompassed in [the]

definition of ‘property’”) (emphasis omitted), quoting 3 E. Farnsworth, Contracts

(1991) § 11.1. Moreover, courts interpreting the mail and wire fraud statutes have

repeatedly concluded that enforceable rights to payment are “property” that,

when wrongfully thwarted by a defendant, may underlie a criminal prosecution.

See Pasquantino v. United States, 544 U.S. 349, 355–56 (2005) (“Canada’s right to

uncollected excise taxes . . . is ‘property’ in its hands,” because “[t]his right is an

78 entitlement to collect money from petitioners” and “[v]aluable entitlements like

these are ‘property’ as that term ordinarily is employed.”); United States v. Ali,

620 F.3d 1062, 1067–68 & n.3 (9th Cir. 2010) (“A right to payment is ‘money or

property’ under 18 U.S.C. §§ 1341 and 1343.”).

Once again, we need not decide whether the government’s theory was

legally correct, or whether that theory would have supported a valid conviction

under Count One or Count Four of the Indictment. There was no such

conviction, as Count Four was dismissed on the government’s motion for other

reasons, the jury acquitted Defendants on the broad-ranging conspiracy charged

in Count One, and the jury’s answers to the court’s special interrogatories made

clear that it based its guilty verdict on the theory – unchallenged by Defendants

on appeal – that the theft was of money that belonged to CMEEC, and not to the

member towns. In short, Defendants’ attack on the theory underlying Counts

One and Four is an attack on charges of which they were acquitted. Defendants’

argument is thus a roundabout claim that the presentation of the unsuccessful

theory was misconduct, because that theory was so frivolous that no reasonable

lawyer could have adopted it. It is sufficient to reject Defendants’ position to

79 conclude that the government’s position was plausible, and we need not decide

whether it was correct. We have no trouble concluding that it cleared that bar.

Accordingly, the government had a non-frivolous basis to argue that

CMEEC’s members had an ownership interest in the money designated as

Margin, and that Defendants’ theft of that money constituted theft of “property”

that belonged to the members.

4. Conclusion

In sum, we agree with the district court’s well-reasoned opinion that it was

not “frivolous” for the government to claim that the funds used to pay for the

trips belonged to the members and that those members were the municipalities.

The jury’s ultimate disagreement with the government’s theory, 17 and acquittal

on the count that relied on that theory, does not demonstrate that the

government engaged in misconduct by advancing that theory. Defendants

therefore are not entitled to a new trial or dismissal of the Indictment. See United

States v. Hamilton, 334 F.3d 170, 183 (2d Cir. 2003) (“[N]o case has held that a

defendant was entitled . . . to a new trial on the counts of conviction simply

because the jury found the government’s proof on other counts unpersuasive.”).

The jury received a special interrogatory that tasked it with determining the 17

ownership of the Margin money, and it found that those funds were owned by CMEEC. 80 B. Even if the Spillover Analysis Is Applicable, Defendants Fail To Demonstrate Spillover.

However, even if the government’s theories had been frivolous, we would

nevertheless affirm the district court’s refusal to grant a new trial or dismiss the

Indictment, as Defendants have not shown that they suffered prejudice from the

presentation of those theories.

1. Indictment

To obtain the dismissal of an indictment for prosecutorial misconduct

before the grand jury, the defendant must show that he was prejudiced by such

misconduct. See Bank of Nova Scotia, 487 U.S. 250, 263 (1988) (A court may not

“dismiss the indictment on the basis of prosecutorial misconduct absent a finding

that petitioners were prejudiced by such misconduct.”). Defendants cannot make

that showing here. Count Three, the sole count of conviction, was not premised

on the “Member Towns” theory, and therefore any misconduct in advancing that

theory could not have “substantially influenced the grand jury’s decision to

indict” on that count. Id. at 256 (quotation marks omitted).

Moreover, the question of CMEEC’s membership and of the ownership of

the stolen funds was exhaustively argued at trial, and the jury nevertheless

convicted Defendants on Count Three. “It is well settled that a guilty verdict at

81 trial remedies any possible defects in the grand jury indictment.” United States v.

Lombardozzi, 491 F.3d 61, 80 (2d Cir. 2007) (quotation marks omitted). Thus “even

if we were to find that the grand jury indictment was defective” because the

government “knowingly or recklessly misled the grand jury” as to an “essential

fact,” we will not overturn a conviction where, as here, the evidence was

“submitted to the petit jury which found [the defendant] guilty beyond a

reasonable doubt.” Id. at 79–80 (quotation marks omitted). 18

2. New Trial

As discussed above, Defendants argue that the government’s use at trial of

the “Member Towns” theory, on which Counts One and Four relied to charge

thefts occurring during the 2016 calendar year, caused Defendants to suffer

spillover prejudice on their conviction for Count Three, which charged thefts

occurring during the 2015 calendar year. Prejudicial spillover occurs where “the

18 We reject Defendants’ attempt to subvert the bar posed by their conviction on Count Three to their challenge to the indictment. According to Defendants, the government’s use of the “Member Towns” theory both was essential to securing an indictment that charged conduct occurring in 2016–17 and influenced the grand jury’s decision to indict Defendants for their 2015 thefts in Count Three, which in turn permitted the government to create spillover prejudice before the petit jury on Count Three by introducing otherwise inadmissible evidence in support of the Counts based on that theory. That claim is necessarily premised on Defendants having suffered spillover prejudice before the petit jury, which we reject below. 82 jury, in considering one particular count or defendant, was affected by evidence

that was relevant only to a different count or defendant.” Hamilton, 334 F.3d at

182.

In assessing spillover prejudice, we look to three factors. First, we consider

“whether the evidence introduced in connection with the dismissed count was so

inflammatory that it would have tended to incite or arouse the jury into

convicting the defendant on the remaining counts,” United States v. Henry, 325

F.3d 93, 109 (2d Cir. 2003) (quotation marks omitted), a standard that is not met

where that evidence was “no more inflammatory than the evidence . . . on the

remaining counts,” United States v. Morales, 185 F.3d 74, 83 (2d Cir. 1999). Second,

we look to “whether the dismissed count and the remaining counts of the

indictment arise from similar facts and whether the evidence introduced on the

dismissed counts would have been admissible on the remaining counts.” Henry,

325 F.3d at 109 (citation omitted). Third, we then “make[] a general assessment of

the strength of the government’s case on the remaining counts.” Id. (quotation

marks omitted). In short, we will grant a new trial only “in those cases in which

evidence is introduced on the invalidated count that would otherwise be

inadmissible on the remaining counts, and this evidence is presented in such a

83 manner that tends to indicate that the jury probably utilized this evidence in

reaching a verdict on the remaining counts.” United States v. Rooney, 37 F.3d 847,

855–56 (2d Cir. 1994); see also Henry, 325 F.3d at 110 (2d Cir. 2003) (“[T]here is no

prejudicial spillover when the evidence would have been admissible on the

remaining counts of the indictment.”), citing Rooney, 37 F.3d at 855.

Our analysis of these factors leads us the same conclusion reached by the

district court – that even assuming that the “Member Towns” theory was

frivolous, no spillover prejudice resulted. As to the first factor, the evidence

relating to Defendants’ acts in 2016 and 2017 was no more inflammatory than the

evidence bearing directly on Count Three. The evidence that Defendants planned

and took trips to the Derby in 2016 and 2017 was “just more of the same”

evidence offered to prove that the 2015 Derby trip was improper: “high-priced

premium Derby tickets, a charter jet, extravagant expenses, and the inclusion of

people with no business relationship with CMEEC.” Rankin, 651 F. Supp. 3d at

558. We find it unlikely that the jury was inflamed to convict Defendants of theft

in 2015 due to evidence that, in subsequent years, Defendants stole money from

the same entity, to attend the same event, and to make the same purchases.

84 Morales, 185 F.3d at 83 (evidence was “no more inflammatory” where evidence to

support vacated and surviving counts all “related to violent armed robberies.”).

Although Defendants point to scattered pieces of evidence to claim that the

evidence of the trips in 2016 and 2017 was more sensational than the evidence

properly before jury as to the trips in 2015, we fail to see how that is the case. For

example, Defendants cite the testimony of Rankin’s assistant, Ellen Kachmar,

who testified about the costs of the chartered jet ($42,355.28) and a group dinner

at the Rivue restaurant ($3,730) that were charged to CMEEC during the 2016

Derby trip. But of course, the jury was informed that, during the 2015 Derby

Trip, Defendants spent CMEEC Funds on an even more expensive chartered jet

(in excess of $54,000) and a more expensive group dinner at that same restaurant

($10,827.51). Likewise, Defendants claim that they were prejudiced by the

testimony of Amy Demicco and Donna Colonni, the spouse and the mother-in-

law, respectively, of a CMEEC Board member, who attended the 2016 Derby trip

even though that Board member himself did not attend. But their testimony was

hardly more inflammatory than the evidence that Sullivan invited his bartender

and her friend to the 2015 Derby, especially given that the bartender also testified

85 at trial and had an even more attenuated connection to CMEEC than did

Demicco and Colonni.

The only evidence offered in support of the 2016–17 period distinguishable

from that offered for the 2015 period was the evidence in support of the

“Member Towns” theory itself – i.e., that the money used to pay for trip expenses

belonged to CMEEC’s members and that the towns of Groton and Norwich

received federal housing and snow removal benefits. But despite Defendants’

strenuous efforts to show the contrary, that evidence was “dull and dry,” Rankin,

651 F. Supp. 3d at 557, and is precisely the sort of evidence that we have found is

not inflammatory or likely to have influenced the jury to convict. See United States

v. Wapnick, 60 F.3d 948, 953 (2d Cir. 1995) (holding that evidence of structuring

transactions to avoid currency transaction reporting requirements was not “of

the sort to arouse a jury”) (quotation marks omitted); Henry, 325 F.3d at 109 (2d

Cir. 2003) (evidence that defendant conspired to launder monetary instruments

and “clean up . . . drug money” was unlikely to influence the jury to convict on

other counts) (quotation marks omitted).

Although Defendants claim that the government unfairly argued to the

jury that Defendants’ thefts harmed “ratepayers in the towns, people who live

86 and work there,” Def. App’x 655, that statement was true, and could have been

made regardless of the validity of the “Member Towns” theory. The trip

expenses were paid using CMEEC’s Margin, which CMEEC’s Membership

Agreement required to be distributed to the members in their rate stabilization

funds, which those members would use to stabilize electricity rates for their

customers. Nor do we think it likely that the jury improperly sought to punish

Defendants based on the notion that the stolen funds belonged to the towns

rather than to CMEEC – in either case, Defendants stole public money belonging

to a public company operating for the public benefit, and that was true

regardless of the validity of the government’s technical argument that the towns

were “members” of CMEEC who “owned” the money. Indeed, in the present

case we have unusually strong evidence that the jury was not influenced by the

“Member Towns” evidence, because the jury rejected the “Member Towns”

theory to which that evidence was directed in a special interrogatory.

The second factor also favors the government. As discussed above, the

evidence and factual circumstances regarding the 2015 Derby trips were highly

similar to those regarding the 2016 and 2017 Derby trips, and “prejudicial

spillover is unlikely if the dismissed count and the remaining counts were . . .

87 quite similar.” Hamilton, 334 F.3d at 182. Furthermore, we agree with the district

court that nearly all of the evidence relating to the 2016 and 2017 trips would

have been independently admissible to prove Defendants’ thefts in 2015, even if

their conduct relating to the former trips had not been charged under other

counts. See Rankin, 651 F. Supp. 3d at 556–59 (“[T]here is very little evidence from

2016 and 2017 that I would not have allowed in support of Count Three.”).

Most notably, we fail to see how any evidence related to the 2016 Derby

Trip was inadmissible in support of Count Three. Most of the payments for that

trip were made during 2015 when, at Rankin’s direction, CMEEC prepaid the

cost of the ticket packages. Those ticket payments were therefore attributable to

Count Three, as they were misapplications of CMEEC funds that occurred in

2015, id. at 556, and indeed, the district court instructed the jury to that effect at

Defendants’ request, see Gov. App’x 1089, 1118. Thus, evidence relating to the 2016

Derby Trip was substantively relevant to and admissible concerning Count

Three. Among other issues, the jury was entitled to learn (1) whether the Board

later authorized those payments and whether Defendants attempted to hide

them from the Board, (2) how Defendants used the tickets purchased in 2015, (3)

who attended the Derby using those tickets, and (4) whether the trip actually had

88 a legitimate business purpose. Defendants, despite knowing that twenty-one of

the thirty-two guests at the 2015 Derby trip had no business affiliation with

CMEEC, proceeded to purchase in 2015 even more tickets for the 2016 Derby,

which was ultimately attended by thirty-two (out of forty-four) guests with no

business affiliation to CMEEC. Thus, who attended and what occurred at the

2016 Derby trip were highly probative as to whether Defendants both intended

to and did convert the 2015 prepayments, which purchased the tickets for the

2016 trip, to their personal use. 19

Moreover, much of the remaining evidence as to the 2016 and 2017 period

would have been, at minimum, admissible as other acts evidence under Fed. R.

Evid. 404(b) to prove Defendants’ wrongful intent. United States v. Goffer, 721

F.3d 113, 124 (2d Cir. 2013) (“Subsequent acts are frequently probative as to

intent.”). For example, Rankin’s efforts to prevent the press from uncovering that

many of the guests during the 2015 Derby trip and the October 2015 Greenbrier

19 For example, Defendants complain that the government prejudicially cross- examined Rankin on whether he had conducted a “consensual intimate relationship” with a guest on the 2016 Derby trip, claiming that that line of inquiry was irrelevant. Def. Rep. Br. at 31 (quotation marks omitted). But of course, evidence that Rankin invited a romantic partner who lacked any affiliation to CMEEC other than her relationship with him is probative on the issue of whether Rankin converted the funds used to purchase the tickets to his personal use in an unauthorized manner. 89 trip lacked any affiliation to CMEEC demonstrate that he was well aware that the

inclusion of such guests was improper. See Rankin, 651 F. Supp. 3d at 557.

Although Defendants object that such other act evidence would have been

subject to a limiting instruction absent the government’s use of the “Member

Towns” theory, the absence of such an instruction does not demonstrate spillover

prejudice here. Defendants’ “core defense throughout the trial” was that they

had made the trip expenditures in good faith, Rankin, 651 F. Supp. 3d at 537, and

an instruction limiting the jury’s consideration of 2016 and 2017 conduct to

Defendants’ motive, intent, or knowledge, see Fed. R. Evid. 404(b)(2), would have

directed the jury to consider that evidence for that exact purpose – negating

Defendants’ claim of good faith. Moreover, we have repeatedly rejected claims of

spillover prejudice based on evidence admitted without a limiting instruction as

substantive proof of a vacated or misjoined count where that evidence “would, in

the absence of [that] count, have been admissible under Fed. R. Evid 404(b).”

Hamilton, 334 F.3d at 185 (evidence of other drug dealing incidents offered in

support of another count was admissible under Rule 404(b) as to remaining

counts and therefore did not create spillover prejudice).

90 Defendants are therefore wholly mistaken that evidence of events in 2016

and 2017 was inadmissible simply because it “colored the jury’s view of the

earlier” junkets. Def. Br. at 64. The evidence of those events was admissible for

precisely that purpose.

As for the third factor, the government’s evidence as to Count Three was

strong, especially with respect to the August 2015 Greenbrier golf trip, which

Defendants concede was never included in CMEEC’s budget. See Rankin, 651 F.

Supp. 3d at 559. Defendants resist that conclusion by pointing to their acquittals

on other counts, but the spillover analysis looks to the strength of the “remaining

counts” of conviction, Hamilton, 334 F.3d at 182, and it is well-settled that a

defendant cannot attack his conviction because it was inconsistent with an

acquittal on another count, United States v. Powell, 469 U.S. 57, 58 (1984). Indeed,

the principle that a partial acquittal cannot undermine a conviction applies with

even more force in the spillover context, as we have repeatedly held that such a

verdict “indicates that the jury was able to distinguish between counts or

between defendants, and to assess separately the evidence pertinent to each.”

Hamilton, 334 F.3d at 183 (“The absence of [prejudicial] spillover is most readily

inferable where the jury has convicted a defendant on some counts but not on

91 others.”); United States v. Stewart, 433 F.3d 273, 310 (2d Cir. 2006) (“It is clear from

the partial verdict of acquittal that the jury carefully evaluated the evidence and

rendered a discriminating verdict and not one that was based on uncharged acts

or bad character.”) (quotation marks and brackets omitted).

In conclusion, even if the “Member Towns” theory were frivolous,

Defendants did not suffer spillover prejudice from its use at trial. That conclusion

is bolstered by the district court’s determination that much of the evidence

brought using that theory was independently admissible in support of

Defendants’ convictions on Count Three, and that the remaining inadmissible

evidence was unlikely to have inflamed the jury. See United States v. Sam Goody,

Inc., 675 F.2d 17, 26 n.9 (2d Cir. 1982) (recognizing that a “trial judge is better

situated than” an appellate court to assess the “presence and effect” of factors

leading to spillover prejudice), superseded by statute on other grounds as

recognized in United States v. Hundley, 858 F.2d 58, 64 (2d Cir. 1988).

III. Authorization

In their third challenge to their convictions, Defendants again argue that

their convictions should be vacated with instructions to dismiss the indictment

based on the government’s purported misconduct before the grand jury, this

92 time on the basis that the government “knowingly or recklessly misled the grand

jury” as to whether CMEEC’s board “budgeted or approved” the 2015 Derby,

October 2015 Greenbrier, and 2016 Derby trips. Def. Br. at 66. To do so,

Defendants cite various pieces of evidence possessed by the government at the

time of the grand jury presentation which they assert prove that the Indictment

falsely alleged 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 . . . approved by the

CMEEC Board of Directors.” Def. App’x 41–42 (Indictment).

However, the evidence as to the Board’s purported approval of the trips

was presented at trial and argued before the jury, which returned a guilty verdict

against Defendants on Count Three. Lombardozzi, 491 F.3d at 80 (“[A] guilty

verdict at trial remedies any possible defects in the grand jury indictment.”)

(quotation marks omitted). At Defendants’ request, the district court instructed

the jury that the government bore the burden of proving, beyond a reasonable

doubt, that Defendants lacked “a good faith belief that the expense[s] served a

legitimate corporate purpose.” Gov. App’x 1118. 20 Defendants were then

20 Defendants did not object to the phrasing of that instruction before the district court, nor do they do so on appeal. 93 permitted to argue, without objection, that they believed the expenses were

“legitimate” because they had been approved by the Board.

Notably, Defendants conspicuously fail to argue that the trial evidence was

insufficient to permit the jury to conclude beyond a reasonable doubt that their

thefts were unauthorized by the Board. Indeed, Defendants could not

successfully make that challenge, because, as they concede, there was no

evidence that the Board approved, budgeted, or even knew of the August 2015

golfing trip to the Greenbrier taken by Rankin, Sullivan, Bilda, and DeMuzzio,

and there was sufficient evidence to convict Defendants on Count Three based on

that trip alone. 21 See Rankin, 651 F. Supp. 3d at 548. Rather, they choose to

reframe their authorization argument through the lens of a claim that the

government misled the grand jury about the Board’s purported authorization of

the remaining three trips.

However, even if the August 2015 Greenbrier trip had never occurred or

had never been charged in the Indictment, the evidence at trial amply supports

the jury’s apparent rejection of Defendants’ authorization defense beyond a

21 Unlike the 2015 Derby, October 2015 Greenbrier, and 2016 Derby trips, the August 2015 Greenbrier trip was not encompassed in a specific line item allocation created for the trips within CMEEC’s annual budget. 94 reasonable doubt as to the other three trips attributable to Count Three. 22

Accordingly, the government cannot be found to have misled the grand jury. See

United States v. Mechanik, 475 U.S. 66, 70 (1986) (A guilty verdict demonstrates

“not only that there was probable cause to believe that the defendants were

guilty as charged, but also that they are in fact guilty as charged beyond a

reasonable doubt.”). At best, Defendants’ claim boils down to speculation that

the government withheld exculpatory evidence before the Grand Jury that was

ultimately presented at trial. But even assuming that the government did so, the

Supreme Court has made clear that the government has no obligation to present

exculpatory evidence before the grand jury, “substantial” or otherwise, nor do

courts have “authority to prescribe such a duty.” United States v. Williams, 504

U.S. 36, 53–55 (1992).

22 We note that, in the ordinary course, a defendant cannot seek to vacate his conviction on the basis that there was insufficient evidence to support one or more alternative factual theories underlying that conviction, nor can he do so by reframing his insufficiency challenge as one directed to the indictment. It is well settled that “no new trial is required by factual insufficiencies in certain prosecution theories [where] the jury’s general verdict of guilty was supported by sufficient proof on alternative theories.” United States v. Salmonese, 352 F.3d 608, 625 (2d Cir. 2003); see Griffin v. United States, 502 U.S. 46, 56–59 (1991). We address the partial authorization defense here only because Defendants challenge the restitution amount on a near-identical basis. See infra Part IV. 95 A. Whether an Agent Held a Good-Faith Belief that His Actions Were Authorized by the Principal Is a Matter of Fact for the Jury.

As provided by 18 U.S.C. § 666(a)(1)(A), an agent of an organization may

not “embezzle[], steal[], obtain[] by fraud, or otherwise without authority

knowingly convert[] to the use of any person other than the rightful owner or

intentionally misappl[y], property” belonging to that organization. As we have

explained, “[t]he first four prohibitions cover any possible taking of money for

one’s own use or benefit,” while the last prohibits “intentional misapplication for

otherwise legitimate purposes.” United States v. Urlacher, 979 F.2d 935, 938 (2d

Cir. 1992). Because the district court instructed the jury that the first four

prohibitions were the exclusive “ways” in which an intentional misappropriation

may occur, Gov. App’x 1117, we limit our analysis below to those four

prohibitions.

The evidence was more than sufficient for the jury to conclude that

Defendants expended CMEEC’s funds for their own benefit and that Defendants

lacked a good-faith belief that the trips provided a legitimate benefit to CMEEC.

We acknowledge, of course, that many corporations hold retreats containing

substantial recreational activities, and we do not think Congress intended to

make it a federal crime for a corporate officer to make a good-faith misjudgment

96 that such a retreat would provide some team-building or other benefit to the

corporation when that benefit in fact turns out not to justify the cost. 23 However,

the jury had a reasonable basis here to conclude that Defendants viewed the trips

as personal vacations and that the corporate purposes they advanced to justify

their conduct were mere window-dressing to disguise that personal purpose.

To start, the trips were wildly out of proportion with the rest of CMEEC’s

budget. In 2015, Defendants spent $502,242.18 on the four trips, a sum: larger

than the entire amount budgeted for all “Office_Expenses” ($470,093); seven

times that for “Staff Travel, Lodging & Miscellaneous” ($72,496); nearly twice

that for the Board’s compensation ($275,500); forty times that for “Company

Celebrations & Events” ($12,500); and six-and-a-half times that for “Staff

Training, Seminars & Conferences” ($77,000). Def. App’x 1545–47 (2015 A&G

Budget details). Of course, “lavish-but-legitimate corporate retreats” are not

criminal, Rankin, 651 F. Supp. 3d at 551, but the sheer scale of the trip costs in

23 The jury was instructed to that effect. Gov. App’x 1118 (“Even if authorizing or incurring an expense was unwise and did not ultimately benefit CMEEC, a defendant [cannot be found guilty] . . . if he authorizes or incurs an expense because of a good faith mistake about whether the expense would serve [a] legitimate corporate purpose.”). 97 relation to other budget items is powerful evidence that Defendants did not

intend the junkets to be legitimate.

The purchases made by Defendants further demonstrate Defendants’ lack

of good faith. Among other items, Defendants spent $2,200 for women’s scarves,

thousands of dollars for separate Derby flights for Bilda’s parents and Sullivan’s

brother, and $2,300 on a limousine to attend a private party hosted by Sullivan’s

friend. We fail to see how those expenses bore any relation to CMEEC’s business,

or how Defendants could have believed that they did. Defendants’ treatment of

those purchases as simply another trip expense demonstrates, in turn, that

Defendants were well aware that the trips were not for the benefit of the

company.

Most importantly, each of the three “board retreats” was attended by eight

or fewer (including Defendants themselves) of CMEEC’s nineteen Board

members, and all of those attending members were representatives of three (of

five) CMEEC members. By contrast, the majority of the attendees at all three

trips, such as Sullivan’s son, brother, sister-in-law, bartender, and the bartender’s

friend, and Bilda’s parents, friend, and that friend’s wife, had no relationship to

CMEEC. See Rankin, 651 F. Supp. 3d at 534, 536 (noting that 21 of 32 guests to the

98 2015 Derby and 32 of 44 guests to the 2016 Derby were not CMEEC officers or

employees). Defendants’ diversion of CMEEC funds to pay for such guests is

precisely a conversion “to the use of any person other than the rightful owner.”

18 U.S.C. § 666(a)(1)(A). Nor was there any “evidence to suggest that the board

was presented with and approved the inclusion and financing for [such]

persons.” Rankin, 651 F. Supp. 3d at 548. 24 A jury could readily infer that

Defendants understood that the trips were not legitimate retreats in service of the

company, as “team-building” or otherwise, based on the guest lists alone. 25

Finally, the events during the trips belie any notion that Defendants could

have believed in good faith that they served the company. Only one of the trips

contained any work events, and even during that trip one of the two scheduled

24 Although Rankin sent invitations to the Derby trips to all members of the Board, only the attendees received the guest lists, and therefore the Board members who did not attend the trips were largely unaware of who attended them. 25 Although Defendants argue that many of the most egregiously unrelated

guests, such as Sullivan’s bartender, were last minute “seat filler[s],” Def. Rep. Br. at 31, that fact does not undermine their lack of good faith. Defendants still invited those guests rather than extending invitations to other CMEEC Board members or employees, demonstrating that they viewed the trips as personal vacations that did not benefit the company. See United States v. Sampson, 898 F.3d 270, 278 (2d Cir. 2018) (“[For] fiduciary embezzlement, the requisite [fraudulent] intent need not coincide with the accused’s actual taking of the property.”) (quotation marks omitted). Moreover, even though a large proportion of the 2015 Derby tickets went to guests lacking any relationship with CMEEC, Rankin immediately purchased even more tickets to the 2016 Derby, showing that he knew that many of those tickets would likewise go to unaffiliated guests. 99 work-related events was canceled in favor of a recreational tour of the facility,

demonstrating that Defendants did not believe that the trip was a legitimate

work event. Nor were there any events designed to enhance “team-building.” 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.” Def. App’x

1612–13. A reasonable jury could conclude that Defendants did not believe that

the trips served a corporate purpose, given that the attendees were, with the

exception of a single group dinner, largely left to their own devices.

Thus, the jury could reasonably have concluded that Defendants took the

trips intending to gratify their personal desires and not to benefit the company,

which would ordinarily be sufficient mens rea for theft or conversion. See United

States v. Sampson, 898 F.3d 270, 277 n.5 (2d Cir. 2018) (“A conversion requires

solely an intent to exercise a dominion or control over the goods, in a manner

that is in fact inconsistent with [another’s] rights.”) (quotation marks omitted).

However, § 666(a)(1)(A) requires the conversion to have been “knowing,” and

“[t]here can, of course, be no interference with the owner’s rights to the property

100 if the owner has given permission to the act in question.” Bascuñán v. Elsaca, 927

F.3d 108, 119 (2d Cir. 2019) (quotation marks omitted). We therefore agree with

Defendants that the government was required to prove that “the defendant

act[ed] . . . without a good-faith belief that [his appropriation of property] has

been authorized.” United States v. Stockton, 788 F.2d 210, 217 (4th Cir. 1986)

(holding that good-faith belief that appropriation is authorized is a defense to 29

U.S.C. § 501(c), which makes it an offense for a union official to “embezzle[],

steal[], or unlawfully and willfully abstract[] or convert[]” property belonging to

his union).

As evidenced by the text of § 666(a)(1)(A), which refers to conversions

“without authority” and requires the defendant to have been an “agent” of the

victimized entity, we think it clear that Congress intended to incorporate, where

appropriate, general principles of agency into the statute. Under those principles,

an agent’s authority is limited to acts which are “reasonable for him to infer that

the principal desires him to do,” Restatement (Second) of Agency § 33 (1958), as

interpreted “in light of all accompanying circumstances,” id. § 34. 26 We further

26 “Such authority may be express or implied, but in either case it exists only where the agent may reasonably infer from the words or conduct of the principal that the principal has consented to the agent’s performance of a particular act.” Minskoff v. Am. Exp. Travel Related Servs. Co., 98 F.3d 703, 708 (2d Cir. 1996). However, an agent’s 101 emphasize that “the issue is not whether the Defendants were anywhere

explicitly prohibited” from making the expenditure; “rather, the issue is whether

they lacked the authority to do so.” United States v. García-Pastrana, 584 F.3d 351,

375 (1st Cir. 2009); see also United States v. Hammond, 201 F.3d 346, 349 (5th Cir.

1999) (although union president did not “break any law or union rule” in

spending political funds, a “rational juror” could conclude that an individual

with the defendant’s experience would have recognized that the expenditure was

unauthorized).

Nonetheless, acceptance of those basic principles does not answer the

underlying question – what constitutes corporate “authorization” of an act? “A

corporation can only act through its directors and officers,” In re Trib. Co.

Fraudulent Conv. Litig., 10 F.4th 147, 160 (2d Cir. 2021), and therefore a

corporation can manifest its desires only through the acts of its agents.

Defendants’ argument rests on the assumption that approval by CMEEC’s Board

is equivalent to authorization by CMEEC, but a corporate board’s power to make

decisions on behalf of the corporation is not unlimited, as directors owe fiduciary

authority is “entirely distinct” from apparent authority, as the latter concept refers to an agent’s power to bind her principal to a transaction with third parties even where the agent lacks actual authority vis-à-vis her principal. Id. (quotation marks omitted). 102 duties to the corporation. See Conn. Gen. Stat. § 33-756(a) (board of directors

must act “in good faith” and “in the best interests of the corporation.”); Joy v.

North, 692 F.2d 880, 886 (2d Cir. 1982) (noting that, as a general principle of

corporate law, directors are liable “in cases, e.g., in which the corporate decision

lacks a business purpose, is tainted by a conflict of interest, is so egregious as to

amount to a no-win decision, or results from an obvious and prolonged failure to

exercise oversight or supervision”) (citations omitted)

Accordingly, several of our sister circuits have concluded that even an

explicit approval of a criminal misappropriation by an entity’s board of directors

is not an absolute defense to property embezzlement, theft, and conversion

offenses, reasoning that such boards do not have the power to sanction a crime

upon the corporation and thereby create a “license to steal.” See, e.g., United States

v. Unruh, 855 F.2d 1363, 1368 (9th Cir. 1987) (analyzing 18 U.S.C. § 656, which

prohibits misapplication of bank funds). According to those circuits, the board’s

“knowledge, ratification, and consent are not per se defenses,” but rather are

“evidentiary matters that may be considered as part of the defense” that the

defendant lacked the requisite criminal intent. Id., quoting United States v. Cauble,

706 F.2d 1322, 1353 (5th Cir. 1983); see also United States v. De La Cruz, 469 F.3d

103 1064, 1068 (7th Cir. 2006) (“[A] municipality’s ratification, or authorization, of an

expenditure is [not] a complete defense to . . . misapplication of public funds

under 18 U.S.C. § 666(a)(1)(A),” and “so long as the proper intent exists, a . . .

board’s authorization does not bar criminal prosecution.”); United States v. Lore,

430 F.3d 190, 202 (3d Cir. 2005) (holding that, for embezzlement or conversion of

union funds under 29 U.S.C. § 501(c), “authorization and benefit [to the union]

are merely factors that may be considered as bearing on intent,” and therefore “it

does not matter whether the union went through the form of authorization”)

(quotation marks omitted). Indeed, we ourselves have reached a similar

conclusion as to mail fraud, and held that it does not “cleanse[] fraud if the

fraudster manages to get a corporate endorsement” where the defendant “knew

that his . . . practices . . . were fraudulent.” United States v. Moses, 109 F. 4th 107,

116 (2d Cir. 2024) (holding that it was “irrelevant” that defendant believed his

conduct was approved by corporation’s executive director “in good faith because

[defendant] was the mastermind behind the fraud scheme”).

We need not go so far here. 27 The district court properly instructed the jury

that the government bore the burden of proving that Defendants did not hold a

27 Our own cases have, admittedly, muddied the waters on this question. Compare United States v. Butler, 954 F.2d 114, 118–19 (2d Cir. 1992) (holding that “a union official 104 good-faith belief that the expenses were “legitimate,” Gov. App’x 1118, and

Defendants both did not challenge that instruction and were permitted to argue

that they held such a belief because the trips were approved by the Board.

Whether a defendant held a good-faith belief that his or her “use of the funds

was authorized or would be authorized” is a question of fact, see United States v.

Nolan, 136 F.3d 265, 270 (2d Cir. 1998) (approving jury instruction to that effect);

see also United States v. McCarthy, 271 F.3d 387, 396–97 (2d Cir. 2001) (same), and

the jury evidently concluded that Defendants did not believe that CMEEC’s

Board approved their misappropriation. The evidence amply supported that

verdict.

charged with embezzling union funds, pursuant to 29 U.S.C. § 501(c), lacks the requisite criminal intent when the evidence establishes that he had a good-faith belief both that the funds were expended for the union’s benefit and that the expenditures were authorized,” and therefore “authorization by the union . . . will not absolve a union official . . . where that individual, acting with the intent to deprive the union of its property, lacks a good-faith belief that the expenditure is for the benefit of the union”) (emphases added); United States v. McCarthy, 271 F.3d 387, 396 (2d Cir. 2001) (approving disjunctive prongs of good faith as applied to embezzlement of funds from an employee benefit or pension plan under 18 U.S.C. § 664), abrogated on other grounds by Eberhart v. United States, 546 U.S. 12 (2005); with United States v. Nolan, 136 F.3d 265, 270 (2d Cir. 1998) (holding that government must prove that defendant lacked good-faith belief as to both authorization by pension plan’s representatives and benefit to its participants). 105 B. The Evidence Was Sufficient to Permit the Jury to Find that CMEEC’s Board Did Not Authorize the Trips.

As numerous witnesses testified at trial, CMEEC’s Board never voted to

approve, or even discussed, the 2015 Derby trip, the October 2015 Greenbrier

trip, or the 2016 Derby trip. Moreover, the Board was never informed about the

details of the trips, such as the costs and the component expenses. Their

testimony was supported by documentary evidence, as those trips never

appeared in Board meeting minutes or votes. See García-Pastrana, 584 F.3d at 376

(holding that, although bylaws permitted board members to receive

compensation, defendants could not claim that its provisions authorized their

receipt of funds as compensation for their work as board members, as “there was

no evidence, such as a formal resolution, meeting minutes, or any other

documentation that showed that the [d]efendants exercised those provisions”).

Indeed, Rankin himself acknowledged, in a 2016 email, that the Board never

voted on the trips, instead arguing that such a vote or other Board action was not

required to hold the trips.

1. Board Approval of the Budget

In the face of that overwhelming proof as to a lack of Board approval,

Defendants’ blithely assert that the Board approved their junkets by approving a

106 budget containing a line item for retreats. However, the Board did no such thing

– it approved a “$350,000” line item for “expenses.” Gov. App’x 2583. We find it

difficult to credit Defendants’ contention that they sincerely believed that

permission to spend money on “expenses” authorized them to divert funds to

personal vacations to the Kentucky Derby and Greenbrier that provided no

benefit whatsoever to the corporation. Although such trips are, literally, an

“expense,” Defendants’ self-serving interpretation contains no limitation, as any

expenditure of CMEEC funds is an “expense.” See EXPENSE, Black’s Law

Dictionary (12th ed. 2024) (“An expenditure of money, time, labor, or resources to

accomplish a result.”). Accepting Defendants’ view, the “expenses” line item

authorized them to purchase private vacation homes, jewelry for their spouses,

or even illegal narcotics, so long as CMEEC paid for it. That result is plainly

inconsistent with the “broad substantive prohibitions” of § 666 and Congress’s

“expansive, unambiguous intent to ensure the integrity of organizations

participating in federal assistance programs.” Fischer, 529 U.S. at 678.

Defendants fail to cite a single case in support of their assumption that a

nondescript line item in a budget generally adopted by a corporate board

constitutes board approval of a misappropriation of funds for personal purposes.

107 Indeed, the vast weight of authority is to the contrary. As the Eleventh Circuit

has succinctly described, “unauthorized personal expenditures do not become

proper just because they are susceptible of classification within budgetary

limits.” United States v. Tampas, 493 F.3d 1291, 1299 (11th Cir. 2007) (holding that

personal charges were improper even where they had been classified and

approved under various categories of the organization’s budget). Thus, the

inclusion of a separate line item for “expenses” did not authorize Defendants’

misappropriation of funds for the trips any more than had they simply charged

the trips to a pre-existing line item, such as “Office Expenses” or “Misc. and

General Expenses,” Gov. App’x 2578 (2015 budget), as Defendants did with the

August 2015 Greenbrier trip.

Defendants’ claim that they believed in good faith that the budget

authorized their misappropriation is further undercut by the evidence that,

although Defendants intended from the start to spend the entirety of the

“expenses” line item on the trips, they never informed the Board as to the

significance of that line item. Several witnesses testified that neither the trips nor

the expenses line item were discussed during the budget approval meeting or

any other Board meeting, which was corroborated by the absence of any

108 references to “retreats,” “Derby,” “Greenbrier,” or similar terms in the Board

minutes. See Gov. App’x 132–33 (Board Member Yatcko); 170 (Kachmar,

responsible for taking Board minutes); 608 (CMEEC General Counsel Sussler).

Thus, Defendants not only hid from the Board that the $350,000 line item for

expenses was entirely allocated to the trips, as opposed to some combination of

the trips and other “expenses,” but also hid that the trips were “expenses” and

included in the budget at all. “An authorization obtained without disclosure of

such material information is obviously a nullity.” United States v. Butler, 954 F.2d

114, 119 (2d Cir. 1992), citing United States v. Lavergne, 805 F.2d 517, 523 (5th Cir.

1986). A jury could therefore easily discredit Defendants’ claims that they

believed the Board approved the trips given that Defendants left the Board to

intuit that the trips were in the budget.

We reject Defendants’ implication that their non-disclosure is irrelevant to

whether they possessed a good-faith belief in the Board’s approval simply

because CMEEC’s Bylaws, Membership Agreement, and policies did not contain

a provision requiring that they disclose the trips or their costs to the Board. Even

assuming that they had no duty to disclose, a tenuous premise given the

109 fiduciary duties that they owed to CMEEC as its officers and executives, 28

Defendants misunderstand the nature of the good-faith element. The absence of

an explicit company policy on point does not demonstrate that a defendant

believed that the expenditures “were or would have been properly approved,”

Butler, 954 F.2d at 119, as that question, of course, turns on what the defendant

believed the board understood itself to have authorized. When a defendant

knows that the board is unaware of material information regarding his

misappropriation, and thus knows that the board, in effect, approved a different

transaction entirely, he cannot claim that he believed that the board authorized

his conduct simply because he secretly understood the true nature of his

misappropriation. See Restatement (Second) of Torts § 892B(2) (1979) (“If the person

consenting to the conduct of another is induced to consent by a substantial

mistake . . . and the mistake is known to the other . . . , the consent is not effective

for the unexpected invasion or harm.”). Accordingly, Defendants’ undisclosed

scheme to spend the “expenses” referenced in the budget on the trips does not

demonstrate that they believed that the Board authorized them to do so. That is

28As we have recently explained, “a duty to disclose may arise from a fiduciary or similar relationship,” such that a “failure to disclose material information constitute[s] fraud by omission.” Moses, 109 F.4th at 114–15. Where such a duty to disclose exists, no “affirmative disclosure policy is required to prove fraud.” Id. at 115. 110 true whether or not CMEEC’s policies expressly required them to disclose the

relevant facts.

A defendant remains free to argue to the jury that he believed that the

board was aware of the undisclosed information or that it would have approved

his conduct regardless, and Defendants did in fact make that argument,

unsuccessfully, in this case. However, that argument is particularly strained on

the record here. The Board was unaware that the budget contained funds that

would be used for the trips (in other words, that the line item for “expenses” was

for “retreats”); how much the budget allocated to the trips (that the entirety of

the line item was allocated to the trips); or what was being purchased using those

funds (that Defendants would invite dozens of guests without any business

affiliation to CMEEC and purchase items with no relation to CMEEC’s business).

Thus, given that the evidence persuasively demonstrated that the Board was

unaware of the basic fundamentals of the trips when approving the budget –

what would be purchased, how much was being allocated, and even that the

budget authorized an expenditure for the trips at all – the jury had ample

evidence to support its conclusion that Defendants lacked a good-faith belief that

the budget authorized their misappropriations.

111 2. Budgeting Process and Intent to Defraud in Obtaining Approval

Indeed, given that Defendants were responsible for the creation of budget

materials and inserted the “expenses” line item within the budget, the jury could

reasonably infer that Defendants not only knew that the budget did not

authorize the trips, but also sought to mislead the Board to believe that the line

item appropriation for “expenses” would be used for legitimate business

expenses, when in fact that line item meant “junkets to the Kentucky Derby” for

select executives and their friends. “Consent to possession of a chattel obtained

by fraud . . . is not effective” as a defense to “trespass to the chattel or for

conversion,” Restatement (Second) of Torts § 252A (1965), and a defendant who

fraudulently obtains corporate authorization obviously cannot claim a good-faith

reliance on that authorization, see Tampas, 493 F.3d at 1299 (affirming § 666

conviction, because “[a] reasonable juror could have concluded that

[defendant’s] position of control over the [organization’s] finances allowed him

to disguise personal charges as business expenditures within the [organization’s]

budget”); see also United States v. Tadios, 650 F. App’x 394, 397 (9th Cir. 2016)

(affirming § 666 conviction, despite defendant’s argument that her use of entity’s

funds for personal travel was authorized, as the jury could find a lack of

112 authorization “[i]n light of the evidence that [defendant] misrepresented the

purposes of her travel to her supervisors”). Defendants’ misrepresentation of

their thefts within the budget process amply demonstrates that Defendants acted

with “intent to defraud” when obtaining the Board’s approval, see United States v.

Rutigliano, 887 F.3d 98, 109 (2d Cir. 2018) (“[T]he essence of fraud is

misrepresentation, made with the intent to induce another person to take action

without the relevant facts necessary to make an informed . . . decision.”)

(quotation marks omitted), which, although unnecessary to state a violation of

§ 666(a)(1)(A), 29 conclusively negates Defendants’ purported belief that the Board

approved the trips.

Although Defendants argue that certain materials presented to the Budget

Committee made clearer references to the trips, consistent with their claim of

good faith, the evidence regarding the earlier stages in the budgeting process

was far more consistent with the government’s theory of criminal intent. And

even if the issue were closer, the question of which inference to draw was for the

jury. “The possibility that inferences consistent with innocence as well as with

29 See Sampson, 898 F.3d at 277 n.5 (2d Cir. 2018) (“[T]he ‘intent’ required for . . . an act to qualify as a ‘conversion’ is not the same as an ‘intent to defraud.’”); United States v. Karron, 348 F. App’x 632, 633 (2d Cir. 2009) (holding that “intent to defraud” is not a necessary element of § 666). 113 guilt might be drawn . . . is of no matter to sufficiency analysis because it is the

task of the jury, not the court, to choose among competing inferences.” United

States v. MacPherson, 424 F.3d 183, 190 (2d Cir. 2005) (quotation marks omitted).

As a preliminary matter, the jury was presented with strong evidence that

Defendants disguised the trips and their costs even from the Budget Committee.

At Rankin’s direction, the reference to and line item for “board strategic retreat”

was changed to “member delegation expenses and retreats,” Gov. App’x 2570,

thereby misleading the Budget Committee as to how much money had been

allocated to the trips. Although Defendants intended to spend the entire $350,000

line item on board “retreats,” the change implied that less than $350,000 was

being allocated to the trips, as some unspecified portion of that sum would fund

“member delegation expenses.”

Nor were the trip expenses explained elsewhere in the materials presented

to the Committee. The extensive “Budget Book” presented to the Committee

contained “over 1,200 lines of budget detail” regarding various expenses, Gov.

App’x 383–84, but contained no references to any of the trips or their component

costs, see id. 393 (Budget Book lacked references to “Kentucky,” “Derby,”

“Greenbrier,” the ticket broker, or similar terms). Thus, the Budget Committee

114 was unable to view the details of what items had been or would be purchased

under the “expenses and retreats” allocation.

Although a corporate budget need not identify every expense in an

allocation, the jury had sufficient evidence to draw a reasonable inference that

Defendants intentionally omitted material information as part of an effort to

obscure the trips within the budget, rather than as an innocent and natural part

of the budget process. For example, the 2014 budget had included the 2014 Derby

costs as part of various “A&G expenses” line items, Def. App’x 1545–47, whereas

the 2015 budget prepared by Defendants charged the trip costs to a negative

“expenses” line item against Margin that was excluded from the budget’s

accounting of “A&G expenses,” Gov. App’x 2583. As a result, various categories

of A&G expenses to which the trips had been charged fell precipitously between

the 2014 and 2015 budgets. Meanwhile, shortly after a meeting in which the

Budget Committee was presented with materials setting forth a detailed

allocation of A&G expenses for 2014 as compared to 2015, see Def. App’x 1539–48,

Rankin suggested to Pryor that “we may want to reverse those expenses for [the

2014 Derby] from 2014 from A&G and deduct it from margin,” Gov. App’x 2570.

In short, Rankin suggested a retroactive alteration of the 2014 A&G budget that

115 would disguise discrepancies between funding levels in the 2014 and 2015

budgets caused by the reallocation of trip expenses.

Most importantly, references to the junkets grew increasingly vague – and

ultimately disappeared – as the budget developed. As described above, the two

references to the trip contained in the Committee budgets changed from

“strategic retreats” to “member delegation expenses and retreats.” However,

even that oblique and misleading description of the trips had been scrubbed

from the 2015 budget by the time that it reached the full Board. Both the budget

presented to the Committee and that presented to the Board included an

“Assumptions” slide containing near-identical language – except that the one

sent to the Board omitted the line regarding the “[c]hanged convention for

funding” the trips. Compare Def. App’x 1541 with Gov. App’x 2574. Likewise, the

line item for the trips changed from “Member Delegation Expenses and Retreats”

to simply “Expenses.” Compare Def. App’x 1575, with Gov. App’x 2583. In light of

witness testimony that the full Board’s review of the budget was “high level” and

less detailed than that of the Budget Committee, Def. App’x 266–67, the jury

could reasonably have inferred that the removal of any description of the trips

from the budget was by design, to capitalize on the lessened oversight exercised

116 by the Board, rather than a natural result of the budgeting process. A jury

therefore could have easily drawn the inference that Defendants intended to

defraud the Board and did not believe in good faith that the budget “approved”

their misappropriation. See Sampson, 898 F.3d at 277 n.5. (“An intent to defraud

. . . involves a specific intent to deceive or cheat.”) (quotation marks omitted).

Thus, even if the Budget Committee was fully aware that the budget

allocated $350,000 to the trips, the jury was not required to accept that

Defendants held a good-faith belief that the trips were a permitted use of

CMEEC’s funds. CMEEC’s Bylaws and Membership Agreement made

abundantly clear that its budgets were approved by a vote of the Board – not the

Budget Committee. See Def. App’x 1426 (Bylaws, providing that CMEEC’s CEO

shall “prepare[] . . . a general administrative budget for each year, in

coordination with the appropriate CMEEC Board . . . Committee, and submit the

same to the . . . CMEEC Board of Directors for approval by the Board”) (emphases

added); id. 1383 (Membership Agreement, providing that “the Board shall vote in

accordance with . . . the Bylaws to approve a budget”). Defendants’ repeated

argument that the $350,000 allocation to the Derby and Greenbrier trips was

“approv[ed] by the [Budget] Committee” and “unanimously ratified” by the

117 Board, Def. Rep. Br. at 35, therefore mischaracterizes the question at hand. The

Committee had no authority to approve the trips or the budget, nor did the

Board “ratif[y]” the Committee’s approval – the Board approved the budget in

the first instance. A defendant cannot claim authorization based on an “approval

from a superior who, [defendant knows], in the first place was not authorized to

give it.” Stockton, 788 F.2d at 217 (“[C]onversion . . . must be without the

permission of the owner, and contrary to the wishes of the owner. . . . An

appropriation or expenditure of [an entity’s] funds is therefore unauthorized if it

is done without the permission of the [entity], even if it is approved by a superior

. . . official.”) (emphases in original).

Accordingly, Defendants cannot rely on the Committee’s knowledge of

and failure to object to the trip expenses to demonstrate their good-faith belief in

corporate authorization; what matters is their belief in the Board’s approval. 30

30 Although, in an appropriate case, a defendant may argue that he believed that a board committee or other superior official had authority to approve his action, Defendants lacked a factual basis to make that argument here. The language of the Bylaws and Membership Agreement was unambiguous that the Budget Committee lacked such authority, and the evidence clearly demonstrated that Defendants were familiar with their provisions. See, e.g., Gov. App’x 3492 (Rankin, in response to a 2016 email inquiring into the trips, citing the Bylaws and Membership Agreement and attaching “relevant” provisions to defend the trips); Def. App’x 507 (Rankin, testifying that he was part of an effort in 2013 to revise CMEEC’s Bylaws and Membership Agreement). Nor was there any evidence to demonstrate that Defendants sincerely believed that the Committee, rather than the Board, “approved” CMEEC’s budgets. 118 That is not to say that the Committee’s conduct is irrelevant – its members were

also Board members who later voted to approve the budget. But those members

were only a small fraction of the Board, and given the evidence that neither the

trips nor the line item allocation were discussed with the full Board, the jury was

entitled to draw the reasonable inference that Defendants were well aware that

the majority of the Board did not understand the significance of the line item or

otherwise approve the trips’ inclusion in the budget.

3. Other Evidence

Defendants also cite statements made by Kenneth Sullivan, a CMEEC

Board member at the time of the charged conduct, in an October 31, 2016 pre-

indictment interview with the FBI. See Exhibit D, Memorandum in Support of

Def. Rankin’s Motion to Dismiss, United States v. Rankin, No. 3:18-cr-272 (D.

Conn. May 17, 2019), ECF No. 87-4. 31 Kenneth Sullivan informed the agents that

he “disputed some of the media reports that indicated the Kentucky Derby trips

were not discussed during CMEEC [B]oard meetings” and stated that “the Board

voted on the trips as an expenditure listed in their budget.” Id. at 2. However,

31 Despite sharing surnames, Kenneth Sullivan and Defendant James Sullivan have no familial relationship. 119 similar evidence was presented at trial, 32 and the jury nonetheless rejected

Defendants’ interpretation of events. As discussed above, other witnesses

testified that the trip expenditures were not approved, budgeted, or discussed by

the Board. Consistent with that testimony, the board minutes contained no

reference to the trips, and Rankin himself wrote in an email that “there was not

ever a Board action or vote required for the retreats, therefore no minutes,

reflecting this type of event or other types of engagement.” Gov. App’x 3475.

Moreover, Kenneth Sullivan had obvious motives to distort his views of the trips,

not only to protect CMEEC from the growing storm of controversy, but also to

protect himself, given that he had attended the 2015 Derby and October 2015

Greenbrier trips, and was therefore himself a potential target of internal

disciplinary action by CMEEC or the government’s investigation.

By returning a conviction on Count Three, the jury evidently decided the

contest between Kenneth Sullivan’s representations and the government’s

evidence as to the Board’s approval in favor of the government. And in

32 Although Kenneth Sullivan’s statements were not before the jury and he did not testify at trial, the jury considered similar evidence in the form of “talking points” provided by Kenneth Sullivan near the time of his interview with the FBI for Rankin’s use in response to media inquiries. In those talking points, Kenneth Sullivan suggested Rankin state that the Board had “reviewed, discussed and approved” the trips. Def. App’x 1697. 120 presenting its case before the grand jury, the government, like the trial jury, was

not required to blindly accept Kenneth Sullivan’s views as true. Given the

countervailing evidence, Defendants’ argument boils down to the contention that

the government purportedly failed to present exculpatory evidence to the grand

jury, which it has no obligation to do. See Williams, 504 U.S. at 55.

C. Even If the Board Had Approved a Budget Line Item for Retreats, the Jury Could Have Reasonably Concluded that Defendants Were Aware that Their Conduct Fell Outside the Scope of that Authorization.

Further sinking Defendants’ claims, a jury could reasonably have found

Defendants guilty even assuming that they believed in good faith that the Board

had approved a budget allocation for retreats. Since there was no evidence that

the Board reviewed or approved individual trips, Defendants must rely on their

purported belief that the Board’s approval of a line item for retreats was approval

of Defendants’ junkets as they unfolded in practice. See Restatement (Second) of

Agency § 402 (1958) (“An agent is . . . liab[le] . . . for the value of a chattel . . . or

money which he holds for the principal . . . if the agent . . . intentionally and

substantially deviates from his authority.”). However, Board authorization to

spend a certain sum on corporate retreats would have been just that –

121 authorization for legitimate corporate retreats in service of the company – and

not an authorization to spend that money however Defendants wished.

Defendants did not transparently account for the trip expenses, and left the

Board unaware as to who was attending those trips (that 52% to 73% of guests on

each trip did not hold positions with CMEEC), what was being purchased on

those trips (that the expenses included thousands of dollars for items unrelated

to CMEEC’s business, such as women’s scarves, limousines to private parties,

and fast-access passes to the Derby), and the costs of those items. Moreover, the

government presented evidence that Defendants intentionally kept those facts

hidden from the Board and CMEEC’s members. See, e.g., Gov. App’x 425 (Mayor

of Norwich, testifying that, when Bilda invited her to the 2016 Derby, he

instructed her to “be cautious about who [she] spoke to about the trip”). Finally,

Defendants spent a total of $502,242.18 in 2015 on the trips, $150,000 more than

provided by the $350,000 “expenses” line item, 33 despite the Membership

33 We note that there is some imprecision in this figure, as the district court included prepayments made in 2015 for the 2016 Derby as losses incurred in 2015, whereas CMEEC’s budget treated prepayments as “booked” when the expense is “realized.” Def. App’x 377. Thus, the 2016 Derby prepayments were charged in 2015 but allocated to the 2016 budget, whereas the 2015 Derby prepayments incurred in 2014 were charged to the 2015 budget. Regardless, even under a date-budgeted rather than a date-expended calculation, Defendants exceeded the approved budget by more than ten 122 Agreement’s clear requirement that they obtain additional Board approval for

expenditures that would “exceed the Approved Budget by more than ten

percent.” Def. App’x 1384. Defendants’ blatant disregard for the approved limits

on the “expense” line item itself demonstrates that they understood that their

actions were unauthorized. See Butler, 954 F.2d at 119 (finding actions were not

“properly approved” where defendant increased payments “from the Board

‘authorized’ amount of $50, first to $75, and later to $100 – all without Board

approval”).

Thus, even assuming that the Board had approved a line item for retreats,

the jury could have reasonably concluded that Defendants understood that the

trips exceeded the scope of that authorization. Moreover, the jury could reach

that conclusion on a micro level – that particular expenses were unrelated to

CMEEC’s business and unauthorized – or a macro level – that the entire trip was

unrelated to CMEEC’s business and that the Board had not authorized personal

vacations attended by family, friends, and most egregiously, the friend of

Sullivan’s bartender. There was no “evidence [at trial] to suggest that the board

was presented with and approved the inclusion and financing for [such]

percent, as the combined cost of the 2015 Derby and October 2015 Greenbrier trips exceeded $400,000. 123 persons,” Rankin, 651 F. Supp. 3d at 548, and the jury could easily discredit

Defendants’ claims that they believed that authorization to hold board retreats

permitted them to host junkets primarily attended by guests with no business

affiliation to CMEEC whatsoever. In other words, the jury was not required to

take Defendants at their word and accept that their personal vacations were in

fact “retreats” approved by the Board simply because Defendants referred to the

trips as “retreats.” See Tampas, 493 F.3d at 1299 (“[U]nauthorized personal

expenditures do not become proper just because they are susceptible of

classification within budgetary limits.”).

IV. Defendant’s Restitution Challenge

Finally, Defendants challenge in part the district court’s restitution order,

which we review for abuse of discretion. United States v. Zangari, 677 F.3d 86, 91

(2d Cir. 2012). As relevant here, Defendants were ordered to pay a total of

$748,800.63 to CMEEC, $480,794.79 of which represented the funds that CMEEC

expended in 2015 for the 2015 Derby, October 2015 Greenbrier, and 2016 Derby

trips.

Although Defendants concede that the MVRA applies to the case and that

CMEEC is a victim entitled to restitution, Defendants argue that the district court

erred in calculating the amount of restitution. Specifically, Defendants again 124 argue that the Board approved and budgeted the 2015 Derby, October 2015

Greenbrier, and 2016 Derby trips, and therefore claim that those expenses were

not losses to CMEEC “resulting” from Defendants’ conduct. 34 See 18 U.S.C.

§ 3663A(b)(1); Zangari, 677 F.3d at 91 (“Restitution is authorized only for losses

that were directly caused by the conduct composing the offense of conviction

and only for the victim’s actual loss.”) (quotation marks omitted and alterations

adopted).

We disagree. As discussed above, Defendants’ efforts to smuggle the costs

of the retreat into the budget, hide the expenses through vague accounting

entries, and mislead the Board demonstrate that the Board did not “approve” or

authorize their diversion of CMEEC funds to pay for personal vacations. The

government presented sufficient evidence for the jury to reach that conclusion

beyond a reasonable doubt. It necessarily follows that the district court did not

abuse its discretion in reaching that same conclusion under a preponderance

standard. 35 See 18 U.S.C. § 3664(e) (“Any dispute as to the proper amount . . . of

34 Defendants concede that the expenses for the August 2015 Greenbrier trip were not contained in a line item in CMEEC’s budget, and that the expenses for that trip were therefore properly included in the restitution amount. See Def. Br. at 81 n.17. 35 In determining restitution, the district court explicitly adopted the loss amount

it found for purposes of calculating the applicable Sentencing Guidelines. Rankin II, 2023 WL 7403638, at *4. Although the “amount-of-loss calculation for purposes of 125 restitution shall be resolved by the court by the preponderance of the

evidence.”). Accordingly, the district court did not err in finding that the entirety

of the 2015 trip expenses was a loss of property resulting from Defendants’

offense.

Defendants’ remaining arguments fail to move the needle. True enough,

several CMEEC board members attended the three trips and were presumably on

notice that the trips were wildly extravagant, had no apparent business purpose,

and included a host of guests who bore no relationship with CMEEC. However,

the failure of those Board members to exercise proper diligence to uncover the

trips’ true nature and put an end to them (or present them to the full Board for

approval), does not demonstrate that those Board members, let alone the

majority of the Board, consented to Defendants’ theft. Simply put, the “victim’s

negligence in permitting a crime to take place does not excuse the defendant

sentencing does not always equal such a calculation for restitution,” as the Guidelines, unlike the MVRA, permit the court to consider “intended loss” in addition to actual loss, “the quantity and quality of evidence the district court may rely upon to determine the amount of loss is the same in both contexts.” United States v. Germosen, 139 F.3d 120, 130 (2d Cir. 1998) (quotation marks omitted). Where, as here, the district court’s Guidelines loss calculation was “supported by the evidence and was [limited to] actual losses to the victims,” and thus was equivalent to the losses subject to restitution, a defendant’s challenge to the restitution order “must fail.” Id. 126 from culpability for [his] substantive offense.” United States v. Allen, 201 F.3d 163,

167 (2d Cir. 2000). 36

Indeed, even if certain Board members who attended the trips had tacitly

understood that the trips were improper and chosen not to press the issue so that

they could continue attending such trips, Defendants would not be absolved of

their theft, nor would the causal connection between their theft and CMEEC’s

loss be broken. See United States v. Lindsey, 850 F.3d 1009, 1014 (9th Cir. 2017)

(“Two wrongs do not make a right, and [a] lender[’s] negligence, or even

intentional disregard, cannot excuse another’s criminal fraud.”). CMEEC’s

budgets were approved by the full Board, not its individual members.

Defendants cannot rely on authorization by individual board members who

themselves lacked the power to authorize their misappropriation of funds. See

Stockton, 788 F.2d at 217. The fact remains that Defendants paid for the trips by

converting CMEEC funds to their own use without the Board authorization, all

the while taking actions calculated to disguise that theft from the Board. That

36 Contrary to Defendants’ assertions, the district court was not required to subpoena further witnesses and hold a factual hearing. As we have explained, “[n]othing in the detailed provisions of the statute contemplates that a defendant guilty of criminal fraud can escape mandatory restitution by requiring district courts to conduct mini-trials on the possible contributory negligence of the very persons victimized by the defendant.” United States v. Zafar, 291 F. App’x 425, 429 (2d Cir. 2008). 127 some Board members might have turned a blind eye and shared in the rewards

of Defendants’ misconduct does not mean that Defendants did not cause

CMEEC’s loss.

Nor does CMEEC’s failure to recover trip expenses from attendees other

than Defendants, such as Board members who attended the trips and continued

to serve on CMEEC’s Board after Defendants’ conviction, justify a reduction of

the award. The MVRA does not require victims to engage in self-help or mitigate

their damages to receive restitution. See United States v. Rice, 38 F.3d 1536, 1542

(9th Cir. 1994) (“[W]hether or not [the victim] might have been able to mitigate

its damages . . . affords the criminal perpetrator no excuse. A crime victim is not

required to mitigate damages.”). Although 18 U.S.C. § 3664(j)(2) requires courts

to reduce a restitution order “by any amount later recovered as compensatory

damages for the same loss by the victim,” it does not require the victim to

proactively seek that recovery.

Accordingly, we conclude that the district court did not clearly err in

determining that the Board did not approve or budget the trips, and that the

expenses for those trips resulted from Defendants’ criminal conduct. See United

States v. Goodrich, 12 F.4th 219, 227–28 (2d Cir. 2021) (“Where [a defendant]

128 challenges the district court’s finding of facts, we review for clear error.”). We

therefore do not need to reach the district court’s alternative conclusion that

board approval would not have immunized Defendants from liability.

V. CMEEC’s Restitution Challenge

Ordinarily, having resolved all of Defendants’ challenges and being

presented with no cross-appeal by the government, our analysis would end here.

However, those parties are not the only participants in the present appeal.

CMEEC petitions for a writ of mandamus directing the district court to revise its

restitution order. According to CMEEC, the district court erred in concluding

that the attorneys’ fees advanced by CMEEC to Defendants for their defense

were unavailable as a “loss . . . of property” under 18 U.S.C. § 3663A(b)(1). In

response, Defendants contend that, although CMEEC is a crime “victim,” it lacks

statutory authorization to seek mandamus under the CVRA because it failed to

properly assert its rights before the district court, and therefore its petition

should be dismissed. Defendants further argue that the district court did not err

in denying restitution for their criminal defense fees. Meanwhile, the government

agrees with Defendants’ latter argument, but not the former.

129 A. CMEEC Properly Asserted Its Rights Before the District Court, and Is a Party Authorized to Seek Mandamus Before This Court.

Under the CVRA, a crime victim is entitled to certain rights, including the

“right to . . . restitution,” see 18 U.S.C. § 3771(a)(6), which the “crime victim or . . .

the Government may assert . . . in the district court in which a defendant is being

prosecuted for the crime,” id. § 3771(d)(1), (3). Once those rights are asserted, the

“district court shall take up and decide any motion asserting a victim’s right,”

and “[i]f the district court denies the relief sought, the movant may petition the

court of appeals for a writ of mandamus.” Id. § 3771(d)(3). 37 Thus, the CVRA not

only permits a victim to vindicate its entitlement to restitution under the MVRA,

but is also “a crime victim’s only recourse for challenging a restitution order.”

Federal Insurance Co. v. United States, 882 F.3d 348, 359 (2d Cir. 2018) (quotation

marks omitted). 38

37 Congress exempted victims “using the CVRA’s mandamus procedures to seek appellate review of . . . restitution [orders] from the limitations on reopening a sentence contained in § 3771(d)(5).” Fed. Ins. Co. v. United States, 882 F.3d 348, 365 (2d Cir. 2018). We therefore do not consider those provisions here. 38 As we have previously explained, the CVRA’s right to restitution is “purely

procedural,” and “does not expand any substantive rights to restitution provided by the MVRA or other statutes.” Id. at 358. The CVRA merely provides the “procedural mechanism” to vindicate the MVRA’s substantive rights. Id. at 357. 130 Defendants contend that CMEEC lacks statutory authorization to seek

mandamus because CMEEC did not independently “assert [its] rights” before the

district court, as required by the CVRA. 18 U.S.C. § 3771(d)(1). Defendants

further contend that even if CMEEC independently asserted its rights as a victim,

the CVRA only permits mandamus by a “movant,” and therefore CMEEC’s

failure to file a document styled as a “motion” before the district court renders it

ineligible to seek mandamus. We disagree on both counts.

Contrary to Defendants’ characterization of CMEEC as a passive bystander

during the restitution proceeding, CMEEC was an active participant on its own

behalf. For example, CMEEC not only filed an affidavit and supporting exhibits

in support of the government’s memorandum seeking restitution on behalf of

CMEEC, see Add. 155–65, but it also independently filed a supplemental

memorandum of law, affidavit, and documentation in support of its claims, see

id. 240–63 (“Memorandum of [CMEEC] in Support of Its Claim for Restitution”).

Thus, it is beyond question that CMEEC “assert[ed its] rights,” 18 U.S.C.

§ 3771(d)(1), to restitution under 18 U.S.C. § 3771(a)(6).

Nor do we accept Defendants’ contention that CMEEC cannot pursue

mandamus relief because it did not title its submissions to the district court as a

131 “motion.” Although § 3771(d)(3) provides the court shall decide “any motion

asserting a victim’s right” and that a “movant” may petition for mandamus, the

CVRA does not turn on a formalistic rule governed by the victim’s choice of

caption. Section 3771(d)(3) begins by stating that “[t]he [victim’s] rights . . . shall

be asserted in the district court in which a defendant is being prosecuted,”

whereupon the court shall “decide any motion asserting [those] right[s].” In

other words, the victim’s assertion of its right is a “motion,” regardless of

whether it is styled as a “memorandum,” “petition,” or “application.” After all, a

motion is simply “[a] written or oral application requesting a court to make a

specified ruling or order.” Motion, BLACK’S LAW DICTIONARY (12th ed. 2024); 56

Am. Jur. 2d Motions, Rules, and Orders § 1 (2020) (“The term ‘motion’ generally

means an application made to a court or judge to obtain a rule or order directing

some act to be done in the applicant’s favor in a pending case.”) (footnotes

omitted). Here, CMEEC requested that the district court order restitution in its

favor as to Defendants’ attorneys’ fees. That is a motion, and CMEEC is therefore

a movant. See United States v. Monzel, 641 F.3d 528, 530 (D.C. Cir. 2011)

(permitting mandamus where victim did not file a formal “motion” for

132 restitution and instead only “filed a victim impact statement seeking . . .

restitution”).

Accordingly, we conclude that we may hear CMEEC’s petition, and deny

Defendants’ motion to dismiss.

B. The District Court Did Not Err in Declining to Order Restitution to CMEEC for Defendants’ Defense Fees.

Restitution under the MVRA poses “two distinct questions: (1) does the

MVRA apply in the case at hand; and, if so, (2) what is compensable as

restitution?” United States v. Avenatti, 81 F.4th 171, 207 (2d Cir. 2023) (citation

omitted), cert. denied, --- S. Ct. ---, 2024 WL 2709455 (2024). The parties all agree

that the MVRA applies to Defendants’ convictions and that CMEEC is a victim

that suffered a “pecuniary loss as a direct and proximate result” of Defendants’

offense. Id. at 208. Therefore all that must be determined here is whether the

defense fees were “compensable as restitution.” Id. at 207. Our review of that

question is for abuse of discretion, but where the award rests on an error of law,

our review is de novo. Id. at 203.

133 The MVRA provides for four categories of compensable restitution, two of

which are relevant here. 39 “[I]n any case” to which the MVRA applies, the court

must order the defendant to “reimburse the victim for lost income and necessary

. . . other expenses incurred during participation in the investigation or

prosecution of the offense or attendance at proceedings related to the offense.” 18

U.S.C. § 3663A(b)(4). Under this Circuit’s precedents, a victim’s attorneys’ fees

are compensable as an “other expense[]” under § 3663A(b)(4), but only if those

fees were “incur[red] to advance the [government’s criminal] investigation or

prosecution of the offense” and “‘necessary to [the victim’s] participation” in

those or related proceedings. Afriyie, 27 F.4th at 173 (quotation marks omitted).

The district court determined that the defense fees were not “necessary” for

CMEEC’s participation in the proceedings, nor did they “advance” the

government’s investigation and prosecution, and thus declined to award the

defense fees under § 3663A(b)(4).

In its mandamus petition, CMEEC has abandoned its claim that the

defense fees are available under § 3663A(b)(4), and instead relies on

39 The two remaining categories of restitution apply “in the case of an offense resulting in bodily injury,” a circumstance that is not present here. 18 U.S.C. §§ 3663A(b)(2)–(3). 134 § 3663A(b)(1). Under that provision, if the district court determines that the

defendant’s “offense result[ed] in damage to or loss or destruction of property of

a victim of the offense,” then the court must order the defendant to “return the

property” or “pay an amount equal to . . . the value of the property.” 18 U.S.C.

§ 3663A(b)(1). The district court rejected that argument below, reasoning that the

“loss of property” subject to restitution is limited to “the loss caused by the

conduct underlying the offense of conviction,” and that Defendants’

misappropriation did not “cause[] CMEEC to pay for the [D]efendants’ legal

defense.” Rankin II, 2023 WL 7403638, at *7 (quotation marks and emphasis

omitted).

1. Applicable Law

Causation under the MVRA proceeds under a two-step analysis. Because

“restitution is permitted only for an amount of loss caused by the specific

conduct forming the basis for the offense of conviction,” United States v. Gushlak,

728 F.3d 184, 195 n.7 (2d Cir. 2013) (quotation marks omitted), “[w]e must turn

first to identifying the nature and scope of the ‘offense’ on which restitution is

based.” Goodrich, 12 F.4th at 228. Inherent in that analysis is that the court may

not order restitution for “loss[es] caused by relevant conduct” under the

135 Guidelines, as opposed to “the specific conduct that is the basis of the offense of

conviction.” United States v. Vilar, 729 F.3d 62, 97 (2d Cir. 2013) (quotation marks

Once that question is decided, we must determine whether the conduct

underlying that offense “directly and proximately” caused the claimed loss to the

victim. Goodrich, 12 F.4th at 229. (quotation marks omitted). Thus, the criminal

“conduct must have been a necessary factor in bringing about the [claimed]

harm,” that is, it must be a “cause in fact.” Id. In addition, it must also be a

proximate cause, a principle that requires the harm to have a “sufficiently close

connection to the conduct, which we evaluate based on whether that harm was

foreseeable to a defendant.” Id. (quotation marks omitted).

2. Causation

Applying that analysis here, we conclude that the district court did not

abuse its discretion in finding a lack of causation on the record before it.

Defendants’ convictions were based on their theft of funds in 2015 to pay for

their various junkets, as charged in Count Three. Although the conduct

underlying Defendants’ convictions is not limited to amounts expended in

136 2015, 40 “CMEEC decided on its own initiative to pay the defendants’ legal fees in

accordance with its bylaws” and a contract that it willingly executed. Rankin II,

2023 WL 7403638, at *7. Under those documents, CMEEC advanced the money

voluntarily, and Defendants were lawfully entitled to it. Moreover, CMEEC’s

Bylaws contained a preexisting clause requiring CMEEC to indemnify its officers

and directors that was adopted before Defendants stole money to pay for trips,

and that clause obligated CMEEC to defend them regardless of whether they had

in fact stolen the funds. See United States v. Calderon 944 F.3d 72, 97 (2d. Cir. 2019)

(finding that restitution was inappropriate because the charged fraud occurred

“after [the domestic banks] had already decided to offer loans to the relevant

foreign banks,” and therefore could not have “influenced” the banks’ decision).

Given that Defendants’ conduct did not influence CMEEC’s decision to advance

defense fees, the advanced funds were not a “loss . . . of property” resulting from

the offense. 18 U.S.C. § 3663A(b)(1).

Instead, what CMEEC seeks is repayment of the advanced fees, as

Defendants promised to return their defense fees to CMEEC should they be

40 It would, for example, include Defendants’ conduct during the 2016 Derby, as whether the prepayments for that trip were unlawful turns, in part, on whether that trip was converted “to the use of any person other than [CMEEC].” 18 U.S.C. § 666(a)(1)(A). 137 “finally adjudged . . . to be liable for . . . misconduct.” Add. 219 (CMEEC Bylaws);

see also id. 148 (referring to advancement of fees contract, in which each

Defendant affirmed that he “acted in good faith,” and promised to repay the

advanced fees should it be “ultimately determined . . . that they were not entitled

to indemnification”). However, CMEEC’s entitlement to repayment does not

result from Defendants’ offenses – their theft of money to pay for trips – but from

an independent obligation arising under the terms of CMEEC’s agreements with

Defendants. To whatever extent Defendants made false representations in their

contracts with CMEEC to secure such fees, that conduct was not within the scope

of their convictions and is, at most, “relevant conduct” that cannot give rise to

restitution. Vilar, 729 F.3d at 97 (quotation marks omitted). Whether CMEEC may

collect, and how much it may collect, is controlled by the terms of the contracts

and its Bylaws. Thus, we agree with the district court that CMEEC has failed to

“adduce[] sufficient evidence that [Defendants’] offense[s] . . . had a sufficiently

close connection to the losses sustained.” Goodrich, 12 F.4th at 231 (quotation

marks omitted).

We do not foreclose the availability of defense fees under the MVRA under

any and all circumstances; all we decide here is that the district court did not err

138 in finding a lack of causation in the circumstances before it. As we have

previously explained, attorneys’ fees are recoverable “pecuniary losses at the

core of the MVRA” where those expenses were “accrued in the course of

[defendant’s] actual . . . crimes against [the victim].” Avenatti, 81 F.4th at 211

(holding that attorneys’ fees paid by company in preparation for meeting that

was part of defendant’s extortionate scheme against company was a pecuniary

loss). 41 We can easily imagine circumstances where an advance of defense fees is

sufficiently related to a defendant’s criminal conduct such that they might be

recoverable as a loss of property caused by that conduct. 42 But that is not the case

here. CMEEC decided to advance the fees in a manner that was uninfluenced by

Defendants’ misappropriation of funds, betting that it was worthwhile to

41 Although we did not explicitly hold in Avenatti that the fees at issue were compensable under § 3663A(b)(1), that conclusion necessarily follows from its holding that the fees did not fall within § 3663A(b)(4), nor were they “unrecoverable ‘costs of a private investigation that the victim chooses on its own to conduct.’” 81 F.4th at 210, quoting Lagos v. United States, 584 U.S. 577, 585 (2018). Because §§ 3663A(b)(2) and (3) concern restitution for losses due to “bodily injury,” and are therefore inapplicable to the fees at issue in Avenatti, by process of elimination those fees must have been recoverable under § 3663A(b)(1). 42 For example, we agree with the district court that such fees might be available

where the offense conduct involved a “fraudulent[] induc[ement] . . . to pay . . . legal defense fees.” Rankin II, 2023 WL 7403638, at *7. They might also be available where a defendant obtained his position with the victim company, and thus coverage under its indemnification provisions, due to the offense conduct. We express no view on the proper resolution of such issues; we note only that our holding in this case does not dictate a result in those situations. 139 indemnify its officers and later seek reimbursement from them should they be

found guilty. It must live with that decision. See Calderon, 944 F.3d at 97 (“[I]f a

person gives the defendant his money to bet, knowing that the bet might lose, his

later loss, for purposes of restitution, is . . . caused not by the defendant accepting

his money but by the outcome of the bet.”) (quotation marks omitted).

CONCLUSION

As set forth above, we see no reversible error in the district court’s

handling of the present case. We therefore AFFIRM the judgment of the district

court, and DENY CMEEC’s petition for mandamus.