FirstEnergy to pay $230 million penalty in bribery probe

By Jim Provance

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    COLUMBUS, Ohio (Toledo Blade) — Akron-based FirstEnergy Corp., the utility at the heart of a $61 million Ohio Statehouse bribery scandal, has agreed to pay a $230 million penalty for its role in the scheme.

The corporation has been charged with conspiracy to commit “honest services wire fraud,” devising a scheme to use interstate wiring of monies to engage in bribery of a public official and hide the true purpose of the funds.

However, the charge could be dismissed as a result of FirstEnergy’s continued cooperation with prosecutors. The filing says the utility has provided “substantial cooperation.”

FirstEnergy admits that it conspired with public officials and others to use non-profit entities to conceal its actions and the purpose of its cash.

It also admitted to paying $4.3 million to a second public official to act in his official capacity to further FirstEnergy’s interests in connection with two nuclear power plants owned by what was then a subsidiary.

While not specifically named, that individual is Sam Randazzo, former chairman of the powerful Public Utilities Commission of Ohio and appointee of Gov. Mike DeWine. Mr, Randazzo previously worked as a powerful utilities lobbyist with FirstEnergy as a client before the utility worked to have him named PUCO chairman.

Mr. Randazzo resigned as chairman late last year after the FBI raided his home. He is not among those who have been charged.

Acting U.S. Attorney Vipal J. Patel plans to announce court filings on Thursday in Cincinnati.

FirstEnergy must pay half of its $230 million penalty to the U.S. Treasury and the remaining $115 million to the Ohio Development Service Agency, which must use the funds to benefit Ohio electricity customers.

“FirstEnergy Corp. paid millions of dollars to Public Official A through his (non-profit) Generation Now, in return for Public Official A pursuing nuclear legislation for FirstEnergy Corp’s benefit in his capacity as a public official,” the court filing reads.

That public official is believed to be former Ohio House Speaker Larry Householder.

“Use of (non-profit) entities was central to the scheme because it allowed certain FirstEnergy Corp. executives and co-conspirators to conceal from the public the nature, source, and control of payments to and for the benefit of (Mr. Householder),” the filing reads.

FirstEnergy pursued the nuclear bailout bill in part because of “decoupling” language in the bill that would have allowed the utility to lock in revenue at 2018 levels despite the bill’s elimination of energy efficiency programs to which those funds were tied.

That’s where Mr. Randazzo came in, the case alleges. In November, 2019, the Randazzo-led PUCO terminated the requirement that FirstEnergy to file a new rate case in 2024.

“FirstEnergy believed that the expiration of (its current rate case) and filing of the new rate case in 2024 would result in decreased revenue and negatively impact FirstEnergy Corp’s financial outlook and, therefore, sought a ‘fix for the Ohio hole’.”

While never referring to Mr. Randazzo by name, Thursday’s filing states certain FirstEnergy executives pushed for Mr. Randazzo’s appointment by Mr. DeWine as chairman.

In a conversation repeated in the filing, Mr. Randazzo told a FirstEnergy CEO, “I think I said this last night but just in case—if asked by the administration to go for the Chair spot, I would say yes.”

Mr. DeWine announced his appointment of Mr. Randazzo on Feb. 4, 2019.

The filing notes that FirstEnergy specificially sought help from Mr. Householder when it came to the “decoupling” language and an attempt to extend the duration of nuclear bailout to 10 years. The final law provided for seven years.

The announcement comes one day after the one-year anniversary of the arrest of Mr. Householder, four other individuals, and a non-profit corporation.

The charges were in connection with an alleged $61 billion bribery scheme with the final goal of enacting a $1 billion bailout of two nuclear power plants—the Davis-Besse plant near Oak Harbor and Perry plant east of Cleveland.

Also participating in the press conference is FBI Special Agent in Charge Chris Hoffman, who has played a major role in the bribery investigation.

Mr. Householder and lobbyist and former Ohio Republican Party Chairman Matt Borges have pleaded not guilty and are awaiting trial on federal racketeering charges that could carry 20 years in prison.

Two others — Jeff Longstreth, a Columbus political consultant and close Householder ally, and Juan Cespedes, a Columbus lobbyist—have already pleaded guilty for their roles in the scheme. So has Generation Now, the non-profit corporation at the scandal’s center.

A fourth individual, powerful Columbus lobbyist Neil Clark, had also been charged, but he committed suicide in Florida in February.

While federal prosecutors have previously said that Mr. DeWine’s office was not a target of investigation, Thursday’s filing noted a text between two FirstEnergy executives: “Speaker is saying he needs at least a little help from Governor to get our years increased.” That referred to unsuccessful efforts to increase the duration of the nuclear bailout from seven to 10 years.

“One year later, the connections between the DeWine Administration and top-level operatives leading this alleged bribery scheme only continue to grow,” Ohio Democratic Party spokesman Matt Keyes said. “Mike DeWine should come clean about his discussions with FirstEnergy executives and provide an accounting to the public and the press about any role he and his staff played in the ongoing scandal.”

According to prosecutors, Akron-based FirstEnergy Corp. and related entities provided the cash that flowed through Generation Now and other non-profits to help elect lawmakers loyal to Mr. Householder in 2018, help elect him speaker again in 2019, and then get House Bill 6, the bailout law, across the finish line.

The scheme then continued to successfully thwart a petition effort that would have subjected the controversial new law to voter referendum in 2020.

Mr. Householder’s then House colleagues took away his speaker’s gavel shortly after charges were filed in July, 2020. Last month they voted to remove him from the chamber altogether, the first time in 150 years that such a vote had taken place.

Thursday’s court filings also states that Mr. Householder sought the help of FirstEnergy in February 2020 in funding a ballot initiative that would have changed Ohio’s legislative term-limits, which could have allowed the speaker to stay in office up to 16 more years.

That ballot initiative never came about as Mr. Householder was criminal charges months later.

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