SEC: DiBella transferred asset to wife and
won’t pay up
By Don Michak
Journal Inquirer
Published: Wednesday, July 1, 2009 9:37 AM EDT
Metropolitan District Commission Chairman
William A. DiBella has yet to pay any of the $791,500
in fines imposed by a federal judge 15 months ago after the longtime Democratic
powerbroker lost a civil fraud lawsuit filed by federal regulators, court
records show.
Moreover, the documents reveal that lawyers for the Securities and Exchange
Commission have charged that after losing the lawsuit, DiBella
transferred his interest in “at least one asset” to his wife, Donna DiBella.
They say Donna DiBella
has claimed that she was due a $352,698 payment from her husband in connection
with a loan she had made in 1999 to a company in which he held a 19.6 percent
stake, but in which they say she never owned an interest.
The maneuver in dispute involved two wire transfers into Donna DiBella’s Guilford Savings Bank account from the
Hartford-based company, 1000 Main Parking LLC, which, according to records kept
by the secretary of the state’s office, was dissolved in December.
The company’s manager was listed as Paul R. Barry, who
reportedly is the son-in-law of a DiBella business
partner, Anthony Autorino, and its business address
was listed as in care of CMD Ventures, which has included DiBella,
Autorino, and Barry.
In a motion requesting an order to enforce a subpoena for Donna DiBella’s bank records, the SEC lawyers cite an affidavit
from Donna DiBella in which they say she “alleges ‘loans’
to her husband for which she provides no documentation.”
“As a bona fide creditor of her husband, the SEC is entitled to investigate the
validity of Ms. DiBella’s allegations and whether she
received assets from her husband that should be used to satisfy the SEC’s
judgment,” they wrote.
DiBella, a former state Senate majority
leader-turned-lobbyist, was ordered in March 2008 to “disgorge” a $374,500
“finder’s fee” he was paid in a 1998 state pension fund deal, as well as to pay
another $307,000 in interest and a civil penalty of $110,000.
Judge Ellen Bree Burns’ directive came after a jury
in U.S. District Court in New Haven found that DiBella
had aided and abetted violations of federal securities law by former state
Treasurer Paul J. Silvester; a Washington-based
investment firm, Thayer Capital; and that firm’s founder, Frederick Malek.
Silvester, a longtime friend of the DiBella family, was convicted on federal racketeering and
money-laundering charges but suffered striking memory lapses when testifying at
DiBella’s civil trial.
Malek, a former business partner of President George
W. Bush and national finance co-chairman for the 2008 Republican presidential
campaign of Arizona Sen. John McCain, consented to an SEC order censuring him
in the deal involving DiBella. He and his company
also paid fines of $100,000 and $150,000, respectively.
DiBella, meanwhile, never was charged with a criminal
violation in connection with his involvement with Silvester.
But a lawyer who worked for DiBella until the day his
civil trail began, Hugh F. Keefe, dropped a bombshell while testifying during
that proceeding when he revealed that his former client had narrowly escaped
criminal indictment in 2000 because of the Thayer deal.
Federal prosecutors, Keefe said, didn’t pursue the indictment because they had
come to doubt the reliability of Silvester, who would
have been their key witness against DiBella.
The civil trial was held over eight days in 2007. Five months later, Burns
refused to overturn that finding or grant DiBella a
new trial. DiBella subsequently appealed to the 2nd
U.S. Circuit Court of Appeals, which held a one-day hearing on his bid two
months ago.
That court’s decision is still pending, and SEC officials say privately that
they suspect DiBella has put off paying the fines Bree imposed last March in hopes of winning his appeal.
DiBella couldn’t be reached for comment early today,
and his lawyer, James Wade of Hartford, was said by an aide to be traveling and
unavailable for comment today.
The court records show that within weeks of the judge’s order imposing the
fines on DiBella, his lawyers sought “relief from the
final judgment” in the case, arguing that the SEC had an “official policy and
position” that made the federal statute that tripped up their client
“inapplicable to state pension funds.”
The DiBella lawyers said they learned of that
development in a report the SEC published only a few days before the judgment.
The SEC lawyers responded that the court had made no error of law and that
their opponents’ bid was “yet another attempt to avoid the judgment against
them.”
The defendants, they added, “have seized upon an unremarkable and irrelevant
report” and “recklessly mischaracterized” it. The SEC, they said, had “simply
noted that state pension funds are not subject to the restrictions” placed on
other money managers.