Former Connecticut housing agency executive director Robert Cappelletti was charged with fraud and money laundering by federal prosecutors. The 60-year-old pleaded not guilty before a federal judge in New Haven and was released on a $500,000 bond.

Cappelletti is accused of borrowing more than $16 million and diverting proceeds to his personal investment account and home-mortgage payment while running housing agencies in Meriden and Groton. He allegedly routed $450,000 into his investment account and paid about $375,000 toward his home mortgage.

While serving as part-time head of Groton's agency, Cappelletti attempted to sell a $750 million bond issue — which would have been the biggest local bond sale in Connecticut history — to finance a $4 billion redevelopment project called Groton 2030. The deal never closed.

Prosecutors allege Cappelletti obtained an unauthorized loan on behalf of Maynard Road Corp., a nonprofit subsidiary of the Meriden Housing Authority, falsifying board resolutions to secure it. He told Groton commissioners the agency money was for bond expenses and promised reimbursement. Instead, he used Groton agency funds to repay part of the unsanctioned Meriden loan.