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.