Christine Stuart photo
The law firm that advised the Connecticut Resource Recovery Authority in its failed $220 million deal with the now-bankrupt Enron Corp. agreed to a $16.25 million settlement Thursday.

Murtha Cullina Managing Partner Alfred Smith Jr., maintained the position that his law firm gave the state trash agency sound legal advice back in 2000 and 2001 when the deal was made. He said in a press release that the lawsuit “does not include admission of wrongdoing on the part of our firm.”

Attorney General Richard Blumenthal said Murtha Cullina LP played a “key role in this catastrophe” and failed to properly advise its client by “waving it away from the cliff.” He said the law firm had a responsibility and obligation to warn CRRA of the Enron deal, which he describes as an illegal loan to the Houston-based company.

Blumenthal said entering this “illegal loan” was outside of the scope of the trash agency’s statutory power and Murtha Cullina had the duty to “see the deal for what it actually was.”

The $16.25 million settlement brings the recovery of the loan up to approximately $152 million. In 2005 CRRA received an $82 million settlement from bankruptcy court and was able to sell the claim in the debt market to Deutsche Bank for $111.2 million. The sale of the claim also brought with it a $28.5 million premium. Click here to read that press release.

Pace said he was unable to say how the quasi-public agency would use the money because of a gag order in another lawsuit the agency is fighting.

Pace is referring to the class action lawsuit that was filed by New Hartford and a number of towns that belong to the Mid-Connecticut trash-to-energy project whose tipping fees increased after the trash agency made the failed deal with Enron Corp.

The attorney for the towns has argued the towns have paid the losses from the Enron deal in higher tipping fees, which went from $51 a ton in 2002 to $70 a ton in 2006. After the sale of the $82 million bankruptcy claim CRRA proposed using some of the settlement money to pay down its debt on Mid-Conn and keep tipping fees stable.

Waterbury Superior Court Judge Dennis Eveleigh has filed a gag order, which means the publicly-owned trash agency can’t disclose or talk about any information regarding its budget until he makes a decision on the case.