The Connecticut "Sopranos"
WILLIAM DIBELLA, former state Senate majority leader, outside the federal courthouse in New Haven Wednesday, the first day of his civil trial in connection with a state bribery scandal.
May. 9, 2007
Copyright 2007, Hartford Courant
A Strategic DisclosureAttorney Says DiBella Had Faced Indictment
May 18, 2007
By EDMUND H. MAHONY, Courant Staff Writer
The surprising disclosure occurred when DiBella's lawyer in the civil case took the unusual step of calling DiBella's criminal defense lawyer as a witness. The purpose of defense lawyer Hugh Keefe's testimony was to tell jurors that it was he - not DiBella - who decided that DiBella should assert his constitutional protection against self-incrimination rather than answer questions by the U.S. Securities and Exchange Commission more than six years ago.
Asked why DiBella needed to assert the privilege, Keefe testified that federal prosecutor Nora Dannehy and agents of the FBI had told him that DiBella would be charged criminally and faced a substantial prison sentence in the investment scandal that sent former state Treasurer Paul Silvester to prison.
"In Mr. DiBella's case, they made no bones about it," Keefe testified. "They told me Mr. DiBella was a target. She told me he was going to be indicted. Not only was he a target, he was going to be indicted."
The U.S. attorney's office, Keefe said, even listed the charges they would bring against DiBella: aiding and abetting in the collection of corrupt payments, soliciting corrupt payments, mail fraud and theft of government services.
Keefe's explanation Thursday of how DiBella evaded indictment for the $374,500 fee he collected on a Silvester investment lifts the curtain, at least a bit, on the mystique that has developed around DiBella's Houdini-like ability to avoid federal prosecution.
Over two decades, DiBella has emerged unscathed from three federal grand jury investigations - including the Silvester investment case - and another by the State Ethics Commission.
The allegations against DiBella in the SEC's civil suit mirror those that, ultimately, were not pursued by the U.S. attorney's office. He is accused of taking a fraudulent commission on a politically motivated state pension-fund deal. The SEC claims in its suit that the investment and resulting fee were Silvester's way of rewarding DiBella for political and business favors.
DiBella says he had no idea Silvester's investment was politically motivated and testified in the civil suit - even if he was hard-pressed to support the contention - that he worked for his fee.
Before beginning deliberations late Thursday afternoon, jurors in the civil suit heard six days of evidence about the fee generated by Silvester's $75 million investment in a private equity fund run by Thayer Capital Partners in Washington. The SEC suit seeks to forfeit DiBella's fee and fine him an unspecified sum.
Keefe was the final trial witness. In civil trials, jurors are permitted to make an "adverse inference" when defendants assert their right against self-incrimination rather than answer questions pertinent to the case before the trial begins. Keefe hoped to minimize that inference by explaining that DiBella asserted the privilege on the advice of counsel. DiBella eventually agreed to answer SEC questions last fall.
Keefe testified that he learned DiBella's indictment was a near certainty in one or more meetings over the spring and summer of 2000. About 18 months earlier, the FBI had begun investigating allegations that Silvester steered millions of dollars in questionable investment commissions to friends and political associates after he lost the 1998 election. Despite the election loss, Silvester remained in office as a lame duck for two months.
At about the same time he learned DiBella was in legal jeopardy, Keefe said federal prosecutors conferred immunity from prosecution on DiBella's son and forced him to appear before a federal grand jury investigating the investment scandal. DiBella's wife was called before the same grand jury three times.
Keefe said it wasn't until three years later, on Nov. 13, 2003, that he learned that DiBella was going to slip what had appeared to be an ever-tightening criminal noose. During another meeting with Dannehy and FBI agents, Keefe said, he learned the U.S. attorney's office was dropping its plan to indict DiBella. The reason, Keefe said, was difficulty federal prosecutors were having with their key witness - Silvester.
Silvester was the prime target when the FBI and IRS opened the pension fund investigation. But by May or June of 1999, six months after leaving the treasurer's office, Silvester became remorseful and notified the U.S. attorney's office that he was willing to become a cooperating witness.
Silvester pleaded guilty to a racketeering charge on Sept. 23, 1999, and agreed to testify against those to whom he had steered what he admitted were illegal commissions generated by investments he made from the state employee pension fund. One of those Silvester agreed to testify against was DiBella, an old friend and influential state Democrat.
Despite his agreement to cooperate, Silvester was always a volatile and reluctant witness who prosecutors and investigators feared might some day crack emotionally. By the time Keefe learned that DiBella would beat indictment, yet again, Silvester had testified or provided information that resulted in the convictions of a number of close friends. From conversation during the November 2003 meeting with Dannehy and the FBI, Keefe said he deduced that the U.S. attorney's office had concluded that Silvester was unraveling.
Last week, when a reluctant Silvester was forced to testify against DiBella during the civil trial, he acknowledged - in a burst of anger - that he had been seeing a therapist while cooperating with the U.S. attorney's office during the criminal trials.
Keefe testified on Thursday that he was told at the 2003 meeting with Dannehy that "there is only so much we can get out of Mr. Silvester" and "Paul Silvester hates the government and can't be trusted."
"We were talking, reflecting about Mr. DiBella and his history and how much they wanted to indict Mr. DiBella," Keefe said during his testimony Thursday. "The feds never give you a clean bill of health so you can go out and get a drink. There is always the threat of some sort of continuing investigation. But they said at that time that `We have no present intention to indict Mr. DiBella,' or something to that effect."
Sources familiar with the treasury investigations said, outside of court on Thursday, that they do not dispute Keefe's account and interpretation of his meetings with Dannehy. But they said there were other prosecutorial considerations in the decision not to pursue a criminal case against DiBella. Notable among them was a decision to divert federal law enforcement resources to an investigation that later resulted in the conviction and imprisonment of former Gov. John G. Rowland and his co-chief of staff Peter N. Ellef Sr.
After Keefe testified Thursday, James Wade, DiBella's defense lawyer in the civil case, and SEC lawyer Luke T. Cadigan made closing arguments to jurors in the civil suit, summarizing contentions they made throughout the trial.
Cadigan said DiBella knowingly helped Silvester violate federal security laws by accepting a sham commission that he did nothing to earn.
"What has been revealed is conduct motivated by greed and touched by arrogance," Cadigan argued to jurors.
Wade argued that DiBella had no idea Silvester was breaking the law with the Thayer investment. And he said DiBella was doing nothing more or less than a lot of Wall Street high-rollers when he collected a huge fee in return for what amounted to a 60-second telephone conversation.
Contact Edmund H. Mahony at email@example.com.
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