EASTON - A jury could return a verdict today in the case of two Lackawanna County businessmen accused of stealing $832,460 from a Lehigh Valley town arising from a failed business deal.
The prosecution and defense presented closing arguments on Thursday, rehashing much of the testimony from the four-day trial of P.J. McLaine and Robert J. Kearns in Northampton County Court.
The former owners of the now defunct Municipal Energy Managers were charged in Northampton County with theft, conspiracy and the misapplication of entrusted government property.
Bethlehem Twp. officials paid MEM in 2007 to acquire the town's streetlights from PPL in a deal the company said would save the municipality money.
But they failed to buy the lights from the utility, never paid the money back and, in the months after inking the deal, cashed out nearly $1.4 million in bonuses, Northampton County District Attorney John Morganelli said.
"These guys are crooks in suits," Mr. Morganelli said during his 45-minute closing argument. "Do they get a free pass because they wear suits?"
If convicted, Mr. McLaine, 66, of Elmhurst, and Mr. Kearns, 49, of Scranton, face a maximum 16 sentence years in state prison.
Their attorneys - Paul Walker and Matt Comerford of Scranton and Jim Swetz of Stroudsburg - contend the men tried to finish the deal for the town.
They argued PPL used its corporate might to quash the up-and-coming enterprise, creating tougher rules and setting up roadblocks to force delays because of the utility's fear of losing revenue through handing over their lucrative streetlight business to the towns.
"If you try to buck them, they send you to bankruptcy with their 35 lawyers and wholly owned subsidiaries," Mr. Walker said, noting MEM had successfully acquired streetlights for 11 municipalities, including Carbondale, Dunmore, Scranton and Wilkes-Barre, well before they declared bankruptcy.
Their attorneys spent Thursday trying to convince the jury, who is expected to begin deliberations today, the loss of Bethlehem's money should be litigated in civil court. Mr. McLaine and Mr. Kearns did not steal the town's money like the district attorney contends, they argue. Their business collapsed instead.
Several municipalities have sued MEM for breach in contract, claiming they forked over hundreds of thousands of cash to the company to acquire their streetlights from PPL, yet MEM failed to deliver on the agreements.
The company promised it could cut municipalities' overall bills to PPL, including power, through buying back their streetlights from the utility and maintaining them. The move would lower electric rates and provide other cost savings, the company claimed.
Bethlehem Twp. also has litigation pending.
Two years after Bethlehem Twp. officials signed the contract with MEM in July 2007, the company still had not taken "any steps" to buy the town's streetlight network from the utility, a township solicitor testified this week.
This was well after the company's promise that the project would be finished in 12 to 18 months, Bethlehem Twp. solicitor John Harrison testified.
Mr. Morganelli said MEM signed agreements with 17 other municipalities promising they would buy their streetlights.
The deals were signed after its first successful batch of 11 town streetlight conversions as the company expanded its reach beyond Northeast Pennsylvania into the Lehigh Valley and the Williamsport and Harrisburg areas, according to court testimony.
They failed to make the acquisitions and kept an estimated $6 million in fees from the towns, money that was supposed to go toward buying the lights, the district attorney said.
For nearly every mention of the towns and the taxpayer money they forked over to MEM for a service that was never delivered, Mr. McLaine said, "I can't dispute it," during a testy cross-examination by the district attorney on Wednesday.
The towns have not been paid back, according to court testimony.
Mr. McLaine and Mr. Kearns are facing additional charges in a criminal case similar to Bethlehem involving Hampden Twp. in Cumberland County, near Harrisburg, Mr. Morganelli said.
Even though they had not completed the deals with the towns, the DA said Mr. McLaine and Mr. Kearns kept cashing out bonuses for themselves from the company's corporate bank account, a general operating fund that once held the towns' money.
"It's like a Ponzi scheme," Mr. Morganelli said, until it "came crashing down on them."
"And, yet not one of these projects went forward. Not one of them," he added. "They were spending the money as if it's their own ... robbing Peter to pay Paul."
Mr. Walker said the company spent about $4 million of the $6 million just to meet its bills, for subcontractors and other obligations.
Some work to try to acquire the lights for the towns was done, Mr. McLaine testified Wednesday, until PPL held up his company's plans to capitalize on what was once a promising idea.
During the district attorney's cross-examination of Mr. Kearns on Thursday, they quibbled over calling the payouts of the company corporate funds bonuses, with Mr. Kearns repeatedly emphasizing the awards were "disbursements" and "obligations" for $12 million in sales.
"You can call them whatever you want," the DA shot back.
The company's revenue went toward an assortment of other obligations, including legal fees and to do conversion work in the towns, Mr. Kearns testified.
Contact the writer: smcconnell@timesshamrock.com, @smcconnellTT on Twitter