Loveland Magazine

LOVELAND MAGAZINE

News and Events from the Loveland, Ohio Area

Without fear or favor

Since 2004

Tag: bribe

  • Ohio Attorney General Dave Yost settles with FirstEnergy for $20 million

    Ohio Attorney General Dave Yost settles with FirstEnergy for $20 million

    Ohio Governor Mike DeWine (left) and Ohio Attorney General Dave Yost (right) answer questions during a press conference. (Photo by WEWS).

    Unannounced amount dwarfed by scale of epic utility ripoff that featured more than $61 million in bribes and a $1.3 billion bailout

    By:  – Ohio Capital Journal

    Ohio Attorney General Dave Yost has agreed to settle the largest bribery and money laundering scandal in state history with the massive utility that funded it.

    At just $20 million, the settlement amounts only to less than a third of the bribes Akron-based FirstEnergy paid and it is dwarfed by the benefits Ohio utilities have received from ratepayers as a consequence of the corrupt legislation those bribes paid for.

    Yost’s office sends out frequent press releases, but not one regarding Monday’s settlement, which was first reported by the Cincinnati Enquirer, citing an SEC filing by FirstEnergy.

    In response to questions, his office said Yost had “voluntarily walled himself off from the case months ago to avoid any suggestion that the case was politically driven or any outcome was influenced by politics or political decision making.” But it didn’t explain how.

    The statement comes after more than a year of questions about the attorney general’s own involvement in the fight to pass and protect the $1.3 billion ratepayer bailout that mostly went to FirstEnergy.

    Yost’s office added that the company was cooperating in state prosecutions of two former executives, and that the company had reformed in the years since the scandal.

    “The non-prosecution agreement signed between FirstEnergy, the Ohio Attorney General’s Office and the Office of the Summit County Prosecuting Attorney requires FirstEnergy to provide evidence, access to witnesses and testimony in the ongoing criminal cases against (former CEO) Chuck Jones and (former Vice President) Michael Dowling, as well as in civil proceeding relating to the passage of” the corrupt bailout bill, spokesman Steve Irwin said in an email.

    By agreeing to the pact, FirstEnergy won’t be charged criminally. The company paid the federal government $230 million in 2021 to get criminal charges dropped in that instance.

    In dropping the charges, the state and federal governments allowed FirstEnergy to dodge a big financial hit. Consultants told the company it could face nearly $4 billion in fines if indicted, the Cleveland Plain Dealer reported Tuesday.

    According to weeks of testimony in federal court in Cincinnati last year, FirstEnergy executives began wooing Larry Householder and other state leaders in late 2016. The executives had bet heavily on coal and nuclear generation that was losing money because they failed to anticipate that the fracking boom would make gas-fired electricity generation cheaper.

    So the executives — CEO Jones and Vice President Dowling — undertook a frantic search for a bailout.

    They flooded $61 million in corporate money into 501(c)(4) dark money groups. From there, the money went to elect friendly Republicans who would vote to make Householder speaker of the Ohio House at the start of 2019.

    From that perch, Householder shepherded the corrupt bailout, House Bill 6.

    Sam Randazzo, Gov. Mike DeWine’s pick to chair the Public Utilities Commission, helped write and lobby for the bailout even though he was supposed to be a neutral regulator. FirstEnergy later said it paid a $4.3 million bribe to Randazzo, who died by suicide in April.

    DeWine, whose administration had several senior officials connected to FirstEnergy, signed the bill the same day that it passed. But it ran into instant opposition in the form of a fierce campaign to repeal the bailout.

    The FirstEnergy executives — who are now under state indictment — were so alarmed at the repeal effort that they put up $36 million to stop it. The resulting campaign included false, xenophobic TV commercials, bullying people gathering signatures to put a repeal on the ballot and even allegations of assault.

    Yost gave HB 6 supporters a big assist in the heat of the repeal fight.

    Before a repeal could go on the ballot, supporters had to gather 1,000 valid signatures from registered voters and submit a ballot summary to the attorney general. Yost had to approve that before repeal advocates could start gathering the necessary 265,000 additional voter signatures. And they had just 90 days after DeWine signed the corrupt bailout on July 23, 2019 to do it.

    The summary and 1,000 signatures were submitted within 10 days. But then Yost rejected the ballot language on the first go-round. By the time they had submitted different language and more signatures — and Yost approved it — their time to gather more than a quarter-million signatures had been cut by 40% and the repeal failed.

    While Yost — a hopeful to become governor in 2026 — hasn’t commented on his conduct during this period, some of the conspirators did.

    During last year’s trial, federal prosecutors presented messages between former Ohio GOP Chairman Matt Borges, who is serving a five-year prison sentence for his involvement, to Juan Cespedes, who has pleaded guilty to his.

    In one, Borges said the attorney general told him that he thought the bailout was a bad law, but he wasn’t speaking publicly as a favor to Borges and FirstEnergy. Yost “‘would be out front (in opposition) if not for (FirstEnergy) support and your involvement,’” Borges quoted Yost as supposedly saying.

    In another, Borges — who had run some of Yost’s past campaigns — said of the repeal summary, “If there’s any way the law will allow him to reject the language, he will do it.”

    Irwin, Yost’s spokesman, justified the settlement by saying FirstEnergy had reformed.

    “FirstEnergy today is not the company it was five years ago – the corporation has undertaken, and continues to undergo, reforms to strengthen its internal ethics programs, to increase transparency, and promote reporting of questionable conduct by its employees and leadership,” Irwin said. “It has also restructured its board and leadership to remove the individuals responsible for the conduct that gave rise to the House Bill 6 scandal. This is an important step in bringing the disgraced corporate leaders who used their positions of power to betray FirstEnergy’s ratepayers and employees and the people of Ohio to account for their crimes.”

    However, institutional investors are in court arguing that FirstEnergy is trying to limit the blast radius of the scandal. They accuse the company of trying to protect other executives and board members who might have been culpable — or at least might have known of the scheme.

    Indeed, the company is battling furiously not to turn over an internal investigation it commissioned in the wake of the scandal. After being denied an attempt to appeal an order to turn it over, the company filed a risky petition for a writ of mandamus on July 30.

    After the HB 6 scandal broke in 2020, Yost donated $24,000 in contributions from FirstEnergy and Cespedes to charity. It’s an open question when he’ll explain what he knew and did in a scandal that imprisoned Householder for 20 years and led to two suicides — including that of indicted lobbyist Neil Clark.

    Meanwhile, ratepayers are still paying big money as a consequence of HB 6. Its provisions solely benefitting FirstEnergy were repealed after the scandal broke. But the state’s leadership has refused to repeal the rest of the bill.

    It includes a measure that has so far paid $343,000,000 to subsidize two aging coal plants owned by a group of Ohio utilities. One’s not even in Ohio.

    Marty Schladen
    Marty Schladen

    Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He’s won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.

    Ohio Capital Journal is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.

    MORE FROM AUTHOR

  • Ohio AG Yost is prosecuting others in utility scandal, but he won’t discuss his own involvement

    Ohio AG Yost is prosecuting others in utility scandal, but he won’t discuss his own involvement

    Ohio Attorney General Dave Yost. (Photo by Morgan Trau, WEWS.)

    BY:  – Ohio Capital Journal

    Ohio Attorney General Dave Yost this year brought criminal charges against four figures who were involved in the biggest bribery scandal in state history.

    Many thought they were long overdue. That’s especially true of cases filed against men accused of funding the conspiracy, but who still hadn’t been charged by federal prosecutors four years after the last of the alleged wrongdoing took place — and almost a year after two others began lengthy prison sentences.

    But Yost’s own name came up several times in the federal trial and his office last week again ignored detailed questions about the matter.

    The attorney general played an important role in the defeat of an attempted repeal of the corrupt bailout. And there were claims that he believed that the bailout was a bad law, but kept his mouth shut out of loyalty to one of the conspirators — and to the law’s major beneficiary.

    The issue is politically fraught for Yost because the state charges he filed this year have raised new questions about Lt. Gov. Jon Husted’s involvement in the scandal. Yost and Husted are widely expected to face each other in the 2026 race to be Ohio’s Republican nominee for governor.

    New charges

    Former House Speaker Larry Householder, R-Glenford, was sentenced to 20 years in federal prison last June for his role in a scheme in which Akron-based FirstEnergy paid more than $60 million to make him speaker in 2018 and to pass and protect a $1.3 billion ratepayer bailout the following year. It’s one of the biggest scandals in Ohio history, and so far it has also sent former GOP Chairman Matt Borges to prison for five years, resulted in two more guilty pleas — and seen two defendants die by suicide.

    But U.S. Attorney Kenneth Parker sidestepped a pretty important question last June when he stood in front of the federal courthouse in Cincinnati and boasted to the press about the convictions and sentences his assistants had just won. He was asked, what about the people who paid the bribes? Would they be charged? If so, when?

    All Parker would say was that the investigation was ongoing.

    In December, his team indicted Sam Randazzo, Gov. Mike DeWine’s nominee to be Ohio’s top utility regulator. In a deferred prosecution agreement, FirstEnergy said it paid Randazzo a $4.3 million bribe just before he became regulator. From that post, he did a number of lucrative favors for the company related to the bailout and he improperly helped with other matters as well, according to the indictment.

    But still uncharged by the feds are former FirstEnergy CEO Chuck Jones and Vice President Michael Dowling, the executives alleged to have directed truckloads of company money into 501(c)(4) dark money groups that financed the scandal.

    In February, a team of state prosecutors led by Yost stepped into the void by securing a grand jury indictment against Jones, Dowling and Randazzo. The charges relate to the bailout scandal, and also to a decade’s worth of shady dealings that allegedly paid Randazzo more than $10 million and ripped off industrial energy users and residential customers alike.

    In April, Randazzo died by suicide.

    Other questions

    The state indictment also raised new questions about the cozy relationships between the DeWine/Husted administration, FirstEnergy and Randazzo.

    Weeks before they were inaugurated, DeWine and Husted had dinner in downtown Columbus with Jones and Dowling — FirstEnergy’s top leadership — and discussed whether Randazzo would be acceptable to regulate the company. Jones and Dowling then drove about a mile to Randazzo’s German Village residence and negotiated the $4.3 million payoff, according to text messages that are being used in multiple court proceedings.

    The state indictment alleges that DeWine’s chief of staff, Laurel Dawson, knew about the payoff before the governor appointed Randazzo to chair the Public Utilities Commission of Ohio. But Dawson — whose husband was a FirstEnergy lobbyist who allegedly received a $10,000 loan from Randazzo — isn’t talking publicly about what she knew or what she told her boss.

    DeWine also continues to stand behind his former governmental affairs director, Dan McCarthy, who lobbied the legislature on DeWine’s behalf to pass the bailout law.

    Just before taking that job, McCarthy, too, was a FirstEnergy lobbyist — a job in which he set up a dark-money group that became a conduit for tens of millions in funding for the scandal. In last year’s trial, the prosecution presented evidence that FirstEnergy VP Dowling in 2019 ordered a subordinate to keep the then-DeWine aide’s name off of a $10 million infusion into the corrupt bailout even after being told that it would violate IRS rules to do so.

    DeWine and his staff haven’t explained what McCarthy and Dawson knew about the corrupt machinations as the bailout law was in the works — or when DeWine signed it mere hours after its passage.

    DeWine, Husted and their administration also haven’t explained what they knew about the long, shady relationship between Randazzo and FirstEnergy described in the state indictment. The governor’s spokesman has tried to suggest that it was common knowledge, but extensive evidence shows that Randazzo and FirstEnergy went to great lengths to conceal it.

    DeWine also has said he didn’t know about millions in dark money contributions FirstEnergy made in 2018 to support his gubernatorial bid. But a University of Cincinnati political scientist said it’s simply not believable that a company would make that kind of an expenditure and not make sure the beneficiary knew about it. That seems especially true for a company that subsequently admitted that it paid millions more in outright bribes.

    For his part, Husted won’t comment on the $1 million in dark money FirstEnergy spent supporting his 2018 bid for governor, or whether he  promoted Randazzo for the regulatory job when he dropped his bid and joined DeWine’s ticket.

    The two had history. As House speaker in 2007, Husted appointed Randazzo to the PUCO Nominating Council — a position he held until DeWine nominated him to chair the agency.

    Questions for the Attorney General

    Husted and Yost, the attorney general, are widely regarded as the frontrunners for the 2026 GOP gubernatorial nomination in a state that hasn’t elected a Democrat to that job since 2006.

    There hasn’t been any suggestion that Yost brought charges in the bailout scandal as a way of embarrassing his likely opponent. But at the same time, Yost’s office has avoided questions about his own involvement in the bailout controversy.

    According to text messages presented at last year’s federal court trial, Yost was drawn into the fight at a critical time. The bailout passed the Householder-run House at the end of May 2019, but a month later, opposition was growing in the state Senate.

    Borges, the former GOP chair who had run some of Yost’s political campaigns, had a June 26, 2019 text conversation with Juan Cespedes, who was also being paid to push the corrupt bailout law. Borges intimated that Yost believed that the law was a bad one.

    The AG “‘would be out front (in opposition) if not for (FirstEnergy) support and your involvement,’” Borges quoted Yost as saying.

    A spokesperson for Yost declined to comment at the time, citing the fact that he’d been subpoenaed in the case.

    Regardless of the AG’s view, so many people agreed that the bailout was a horrible law that an effort to undertake the cumbersome repeal process was getting underway even before it passed. Borges noted to Cespedes that Yost would have to give his approval before a repeal could get on the ballot. The AG would try to help them there, too, Borges said.

    “If there’s any way the law will allow him to reject the language, he will do it,” Borges texted.

    Regardless of why, Yost ended up doing just that.

    Crucial lost time

    DeWine signed the bailout, House Bill 6, the day the Senate passed it — July 23, 2019. Six days later, repeal advocates had gathered 1,000 signatures from registered voters and submitted a summary of the repeal to Yost for his approval.

    Time was of the essence because under Ohio law, repeal advocates had to gather another 265,000 voters’ signatures within 90 days of the law’s passage to get it on the ballot. But first they had to wait for Yost to approve the ballot summary.

    The attorney general waited the full 10 days allotted him and then issued a rejection letter that seems at odds with any concept of “summary.”

    It was a six-page, 1,535-word document that picked apart the summary in excruciating detail.

    “He listed a lot of different things,” said Rachael Belz, CEO of Ohio Citizen Action, which was strongly opposed to the bailout. “It seemed like a lot to overcome. It didn’t seem very neutral.”

    The repeal was a referendum — the only one for which Yost has considered summary language since he’s been attorney general. Of the 26 other summaries he’s rejected, the vast majority were for proposed constitutional amendments and the rest were for initiated statutes.

    His rejection of the summary for the bailout repeal stands out for its length. It’s more than twice as long as his other rejections are on average, according to information available on the attorney general’s website.

    In the event, Yost’s initial rejection did heavy damage to the repeal effort.

    Proponents on Aug. 16, 2019 submitted a new summary, which Yost certified on Aug. 29, 2019. But by that time, the repeal team had only 54 days left of the original 90 to gather and submit more than a quarter-million valid signatures. Their time to complete the gargantuan task was cut almost in half, in other words.

    What followed was a lying, xenophobic and sometimes-violent campaign to defeat the repeal into which FirstEnergy plowed $36 million in dark money. Perhaps unsurprisingly, the repeal couldn’t get enough signatures and parts of the corrupt bailout law are still on the books.

    Yost’s office didn’t respond to questions about his role in the repeal — or Borge’s statements that were presented at the former political boss’s criminal trial. But for Belz of Citizen Action, there’s plenty of blame to spread among Ohio’s statewide leaders.

    “I don’t think Yost’s hands are clean,” she said. “I don’t think Husted’s hands are clean. I don’t think DeWine’s hands are clean. I don’t know whose hands are clean. Frankly, that’d be a shorter list.”

    Marty Schladen
    MARTY SCHLADEN

    Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He’s won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.

    Ohio Capital Journal is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.

    MORE FROM AUTHOR

  • Multiple signs that federal corruption investigation in Columbus heating up — again

    Multiple signs that federal corruption investigation in Columbus heating up — again

    Getty Images

    BY:  – Ohio Capital Journal

    After two former Republican officials in June were sentenced for their roles in a massive racketeering conspiracy, U.S. Attorney Kenneth Parker said the investigation was continuing. At least two signs emerged last week that the proceedings might be intensifying.

    Former Ohio House Speaker Larry Householder was sentenced to 20 years in federal prison on June 29 and former state GOP Chairman Matt Borges was sentenced to five years a day later. Both played roles in a scandal in which Akron-based FirstEnergy and other utilities paid more than $61 million to pass a $1.3 billion ratepayer bailout that was mostly intended for a subsidiary that FirstEnergy was spinning off that owned two Northern Ohio nuclear plants.

    In addition to Householder and Borges, two others who were arrested in July 2020 have pleaded guilty and a third died by suicide.

    But on March 10, just after a jury convicted Householder and Borges, a reporter asked Parker an obvious question: What about the people who paid the bribes? Would they be charged? Parker would only say that the investigation was continuing.

    Attorneys for the men who were FirstEnergy’s top executives at the time of the conspiracy — former CEO Chuck Jones and former Vice President Michael Dowling — have already said in court filings that they believe federal investigators are looking at their clients.

    This month brought two more pieces of evidence that federal investigators are considering further prosecutions in the bribery and money laundering scandal.

    On Aug. 4, Hilary M. Williams, who is representing FirstEnergy, submitted a filing in a massive class-action case against the company over the bailout scandal. She informed the scores of lawyers for the pension and investment funds suing the company that they’re not the only ones who want to see the emails and text messages the FirstEnergy executives sent as the bribery scheme was taking place.

    “Counsel… we confirmed this morning that we may disclose to the parties that certain governmental authorities have requested the production of the entire contents of iPad and iPhone devices used by Mr. Jones or Mr. Dowling from January 1, 2016 through December 31, 2020,” Williams wrote. “In keeping with the protocol in this matter, those documents will be produced to all parties, and we expect to do so at approximately the same time that production is made to the requesting governmental authorities.”

    She added. “Mr. Dowling and Mr. Jones used more than a dozen devices during the relevant time period, and processing and reviewing the contents of those devices requires substantial processing time and then time to review for confidentiality and privilege. We are working to complete the review as quickly as possible, and expect to make these productions on or about September 15, 2023.”

    A spokeswoman for the U.S. attorney’s office didn’t comment on whether the “governmental authorities” Williams referred to worked for Parker, whose office prosecuted Householder and Borges.

    However, Parker last week sent a letter to the Public Utility Commission of Ohio asking the regulator to further postpone its investigation into the racketeering scandal.

    “The PUCO proceedings involve issues related to the U.S. Department of Justice of the United States’ investigation, and the United States believes that continued discovery in the PUCO proceedings may directly interfere with or impede the United States’ ongoing investigation,” the letter said. “For that reason, the United States respectfully requests that PUCO stay the PUCO proceedings for a period of six months from the date of this letter. The United States reserves the right to request that the stay be extended beyond this time.”

    Among those the feds may be investigating are Jones, Dowling and Sam Randazzo, whom Gov. Mike DeWine nominated to chair the PUCO in early 2019.

    In a deferred prosecution agreement, FirstEnergy said it paid Randazzo a $4.3 million bribe just before his nomination in exchange for favors the ostensible regulator did for the company. Randazzo denies wrongdoing, but in the Householder trial, witnesses testified that Randazzo played a key role in drafting the corrupt bailout legislation.

    Plaintiffs in the class-action suit earlier this month filed texts and emails between Jones, Dowling and Randazzo. They indicate that the three met in Randazzo’s Columbus condo in December 2018 and arranged to pay the soon-to-be regulator $4.3 million and made it clear that they expected something in return. They also appear to indicate that in addition to his work on the the bailout, Randazzo helped exempt FirstEnergy from a 2024 rate review it had been required to undergo.

    The class-action plaintiffs are accusing FirstEnergy of violating securities law by concealing its illegal conduct from investors. Last week, they filed a transcript of an earnings call from July 23, 2020 — days after Householder, Borges and three others were arrested in the racketeering conspiracy. In it, Jones appeared to mislead analysts about his and his company’s role in it.

    “I believe that FirstEnergy acted properly in this matter, and we intend to cooperate fully with the investigation to, among other things, ensure our company and our role in supporting House Bill 6 is understood as accurately as possible,” said Jones, who would be fired months later. “In the meantime, we wanted to share our preliminary perspective on this issue and reinforce the values with which we operate our company.”

    Jones also claimed that he and his subordinates followed “the highest standards of conduct.”

    “This is a serious and disturbing situation,” he said. “Ethical behavior and upholding the highest standards of conduct are foundational values for the entire FirstEnergy family and me personally. These high standards have fostered the trust of our employees, our customers and the financial community. We strive to apply these standards in all business dealings including our participation in the political process.”

    Jones sat for a sworn deposition in the class-action case in July. Last week, U.S. Magistrate Judge Kimberly Jolson ordered Dowling to sit for one in October.

    Marty Schladen
    MARTY SCHLADEN

    Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He’s won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.

    MORE FROM AUTHOR

  • Money paid, favors done. Messages detail relationship between Ohio regulator and energy executives

    Money paid, favors done. Messages detail relationship between Ohio regulator and energy executives

    FBI agents remove boxes of materials from PUCO Chairman Sam Randazzo’s condo in Columbus Nov. 17, 2020. Photo courtesy of Daniel Konik/Statehouse News Bureau.
    BY:  – Ohio Capital Journal

    In early 2019, news of financial ties between Akron-based FirstEnergy and the man incoming-Gov. Mike DeWine had named to lead the Public Utilities Commission of Ohio began to spread. And as it did, FirstEnergy’s top executives feared they wouldn’t have a regulator they could control, according to documents filed in federal court late last week.

    “Great. Now we have none on the list” of nominees, then-CEO Chuck Jones texted Vice President Michael Dowling. Jones later added, ruefully, “Always need a backup plan.”

    As it happened, the nominee, Sam Randazzo, ended up being appointed to the commission after being paid $4.3 million by FirstEnergy. He proceeded to help draft a law providing the utility with a $1.3 billion bailout. The company spent another $60 million to pass and then to protect it from a citizen-initiated repeal in what law-enforcement officials have called one of the biggest bribery and money-laundering scandals in state history.

    Randazzo, Jones and Dowling haven’t been charged in the scandal, but after a jury trial that convicted two others, two guilty pleas, and a suicide, the three men could be the next targets as federal authorities continue their probe.

    If authentic, the communications filed on Friday indicate that the three met in Randazzo’s Columbus condo in December 2018. And they appear to show that the FirstEnergy executives agreed to pay Randazzo a large sum in exchange for favors when Randazzo became the state’s chief regulator.

    Another communication 23 months later — just after the FBI searched the condo in November 2020 — shows Randazzo providing a friend “the number for my home which the FBI does not have.”

    Demanding records

    Lawyers for Randazzo, Jones and Dowling didn’t immediately respond to requests for comment Monday, but attorneys for the former executives have said in separate court filings that they believe the feds are investigating their clients.

    The documents filed in federal court on Friday are part of a huge class-action suit against FirstEnergy, Jones, Dowling and a number of other defendants.

    In a deferred prosecution agreement, FirstEnergy in 2021 agreed to pay $230 million and admitted wrongdoing, including by bribing Randazzo. But the class-action plaintiffs — large pension and investment funds — are arguing that the company violated securities law by not disclosing its corrupt conduct. And, they argue, the company lost much of its value when that conduct came to light, leaving investors holding the bag.

    Randazzo has denied wrongdoing and he isn’t a defendant in the case, but the class-action plaintiffs want him to produce all communications relating to how he spent the $4.3 million he got from FirstEnergy just as he was poised to become its most powerful regulator.

    The plaintiffs have been accusing Randazzo since April of foot-dragging. They obtained the messages they filed Friday from a third party and are pointing to them as examples of Randazzo’s lack of cooperation.

    Early arrangements

    The earliest of the messages was on Dec. 18, 2018, and it appears that the three men had recently met in the residence that the FBI later searched.

    “Got it, Sam,” Dowling, then the FirstEnergy vice president, texted Randazzo. “Good seeing you as well. Thanks for the hospitality. Cool condo.”

    The “got it” was in response to a column of numbers Randazzo sent that appear to indicate that he was expecting payments from FirstEnergy through 2024:

    • 2019 — 1,633,333
    • 2020 — 600,000
    • 2021 — 600,000
    • 2022 — 600,000
    • 2023 — 600,000
    • 2024 — 300,000

    A seventh entry said “Total 4,333,333” — an amount equal to what FirstEnergy said was a bribe.

    The following day, Jones, the CEO, told Randazzo that he wouldn’t have to wait that long for the money, according to the filings. Jones also made it clear that he expected access to Randazzo.

    “We’re going to get this handled this year, paid in full, no discount,” the message says. “Don’t forget about us or Hurricane Chuck may show up on your doorstep! Of course, no guarantee he won’t show up sometime anyway.”

    Randazzo’s response seemed to be meant to reassure — and he linked the money to favors.

    “Made me laugh — you guys are welcome anytime and anywhere I can open the door,” he said. “Let me know how you want me to structure the invoices. Thanks.”

    Connections

    But on Jan. 30, 2019, problems popped up with Randazzo’s nomination.

    FirstEnergy’s nuclear-owning subsidiary, FirstEnergy Solutions, was going through bankruptcy and it had listed the Sustainability Funding Alliance of Ohio on one of its disclosures. Randazzo controlled the group and FirstEnergy had paid him millions through it in the past. Now the press was on to the matter.

    “Chuck — Sam Randazzo is going to pull out of the PUCO process ASAP and it’s related to a disclosure on a (FirstEnergy Solutions) bankruptcy filing,” Dowling texted Jones, according to the documents filed Friday. “Reporters called (FirstEnergy) today inquiring about the relationship between (FirstEnergy Solutions) and a group called the Sustainability Funding Alliance of Ohio. You can guess the rest.”

    That’s when Jones lamented not having a “backup plan” in the event that Randazzo was not seated on the utility commission. Dowling agreed.

    “This is awful,” he wrote. “The FirstEnergy Solutions bankruptcy filing names that group and Sam names the same group on a financial disclosure statement. Unreal. I don’t know why it was listed in the (FirstEnergy Solutions) bankruptcy filing. The payments we made year-end ’18 came from (FirstEnergy) Corp. Services.”

    Dowling was ready to throw Randazzo under the bus if the connection proved to be an embarrassment to the incoming DeWine administration.

    “They’re going to be mad at Sam (and hopefully not us) for not disclosing the financial relationship,” Dowling wrote. “That’s Sam’s responsibility.”

    A day later, however, the financial connection between FirstEnergy and Randazzo apparently wasn’t sufficiently embarrassing and he was picked to head up the PUCO.

    “A bullet grazed the temple,” Dowling told Jones, according to one of the texts filed last week.

    “Forced DeWine/Husted to perform battlefield triage,” Jones responded, referring to Lt. Gov. Jon Husted. “It’s a rough game.”

    A still rougher game

    In a trial held in Cincinnati from late January to mid-March, prosecutors put on witnesses and displayed communications describing Randazzo’s 2019 role in drafting House Bill 6, the bailout bill. Not only did it provide $1 billion to prop up two failing nuclear plants FirstEnergy was spinning off, it charged ratepayers about $100 million a year to insulate the company from an economic downturn. For FirstEnergy, it was easy money, in other words.

    In June, U.S. District Judge Timothy Black sentenced former Ohio House Speaker Larry Householder, R-Glenford, to 20 years in prison for orchestrating the racketeering scandal. Former state GOP Chairman Matt Borges got five years for his role.

    By November of 2019, HB 6 was on the books after FirstEnergy and a subsidiary plowed $36 million into a brutal, dishonest effort to turn back a citizen-initiated repeal. But the FirstEnergy executives weren’t done with Randazzo.

    On Nov. 10, 2019, Jones texted a coal executive that another cloud loomed for FirstEnergy.

    “And the (FirstEnergy) rescue project is not over,” Jones said, according to documents filed as part of the class-action suit. “At (Edison Electric Institute) financial conference. Stock is gonna get hit with Ohio 2024. Need Sam to get rid of the ‘Ohio 2024’ hole.”

    That was an apparent reference to a requirement that FirstEnergy file a “rate case” with the PUCO in 2024. In such a proceeding, regulators assess a utility’s operations and make a judgment about whether its rates and revenues are reasonable.

    FirstEnergy was apparently afraid they wouldn’t be. On Nov. 21, 2019, just 11 days after Jones expressed his concerns, the PUCO under Randazzo’s leadership issued an order saying it was “no longer necessary or appropriate” to require FirstEnergy to file a rate case.

    The next day, Jones wanted to express his appreciation to Randazzo. He did so by sending the erstwhile regulator a list of prices for six energy stocks that day. FirstEnergy stocks were up 1.5%. The next highest was Avangrid, which was up 0.86%.

    “Thank you!!” Jones wrote.

    Randazzo replied, “Ha — as you know, what comes up may come down… Thanks for the note. Spoke to Mike (Dowling) last night.”

    Then Jones said, “My Mom taught me to say Thank you.”

    Flying high

    By the start of 2020, things seemed to be going well for those who orchestrated the bailout.

    FirstEnergy Solutions would emerge from bankruptcy in February as a separate company, Energy Harbor. The class-action plaintiffs argue that one of FirstEnergy’s major goals in the scheme was to prop up the nuclear plants, get them off their books and shed the liability of having to pay for a decades-long process to close and clean up after them.

    At the same time, FirstEnergy was funneling millions more dark-money dollars into an effort to get the state’s legislature to put a constitutional amendment on the ballot. It would change the state’s term-limits so Householder could stay speaker for another 16 years — and presumably continue to do the utilities’ bidding.

    But then in July 2020, it all crashed down.

    On July 21, the FBI arrested Householder, Borges and other conspirators. By the next day, FirstEnergy stock had lost 34% of its value, the class-action plaintiffs contend.

    FirstEnergy fired Jones and Dowling the following October. And then in November, 2020, Randazzo was forced to resign from the PUCO after the FBI searched his condo.

    “Pretty stressful few days which started Monday at 6:00 when 10-12 FBI agents with their guns drawn announced their arrival at our home,” Randazzo emailed a friend on Nov. 21, according to the documents filed by the class-action plaintiffs. “But, Carol and I are handling it and doing better each day. Neighbors, friends (like you) family, PUCO staff and people I have worked for over the years have been great. Roger Sugarman (his attorney) is my new hero. So onward!”

    Then Randazzo encouraged the friend to call him on the number he believed that the FBI didn’t have.

    _________________________

    Marty Schladen
    MARTY SCHLADEN

    Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He’s won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.

    MORE FROM AUTHOR

  • Judge boots lawyers from FirstEnergy bribery suit for failure to ‘diligently prosecute’

    Judge boots lawyers from FirstEnergy bribery suit for failure to ‘diligently prosecute’

    FirstEnergy’s headquarters in Akron. Source: Google Maps.

    BY: JAKE ZUCKERMAN – Ohio Capital Journal

    In an unusual move in a high-profile lawsuit, a federal judge booted lawyers from a lawsuit they filed against FirstEnergy Corp. for their failure to “diligently prosecute” the case against the scandal-mired company.

    U.S. District Judge John Adams said Wednesday he would appoint counsel on behalf of the shareholders who sued the company in connection with what federal prosecutors have called the largest bribery scandal in state history.

    Both the shareholders and FirstEnergy publicly announced that they’d reached a settlement in March that called for insurers to pay the company $180 million and for the ouster of six board members. One federal judge preliminarily approved the settlement in May, but said he had no authority over the two other judges overseeing the related cases.

    Adams has for months lambasted the plaintiffs for agreeing to settlements without deposing witnesses, reviewing evidence, and shirking other typical fact-finding efforts.

    “As the parties have made clear that they do not intend to prosecute the matter before this Court, the Court will appoint counsel,” he said Wednesday. “Consistent with the Court’s authority to oversee this derivative action to its conclusion, the Court will appoint counsel that will be willing to diligently prosecute this matter and seek approval from this Court of any potential resolution, if one is reached.”

    The lawsuit traces back to the 2019 passage of Ohio House Bill 6 — an energy policy overhaul worth about $1.3 billion to FirstEnergy. In 2020, federal prosecutors arrested then-Ohio House Speaker Larry Householder and accused him and four allies of secretly accepting about $60 million from FirstEnergy and using it for personal enrichment, political gain, and to engineer passage and enactment of HB 6.

    Last summer, FirstEnergy Corp. admitted in federal court to the operation, also stating it paid Sam Randazzo, then Ohio’s top utility regulator, a $4.3 million bribe. FirstEnergy paid a $230 million penalty in connection with the filing and agreed to cooperate in related criminal investigations to possibly avert a federal charge of wire fraud.

    Householder has pleaded innocent and awaits trial. Two of four alleged conspirators have pleaded guilty. One died by suicide. Randazzo has not been charged with a crime and denied wrongdoing.

    FirstEnergy’s shareholders filed a derivative action against the company. This entails the shareholders suing the board of directors on behalf of a corporation for an alleged breach of duties, according to the Legal Information Institute at Cornell University. This allows shareholders to benefit as a derivative of the company’s corrective action.

    Adams called on a clerk to post the order in the court’s “News & Announcements” page. Interested lawyers can write him to express interest by July 25.

    His colorful outbursts have pockmarked the lawsuit. In the first hearing after the proposed settlement was announced, Adams demanded someone in the case answer a simple question: “Who paid the bribe?”

    After repeated attempts went nowhere, Adams told a lawyer for the plaintiffs that the attorney was wasting his time. Adams then stormed from the bench, according to an Akron Beacon Journal report.

    He later threatened to dismiss lawyers from the case if someone didn’t answer his question. An attorney for the plaintiffs later identified the alleged orchestrators of the bribery operation — two FirstEnergy executives — for the first time publicly.

    Last week, he denied a request from both the company and its shareholders that he dismiss the case, which could have cleared the way for the settlement. He cited uncomplete exchange of evidence between parities, no testimony under oath from any defendants, and an incomplete forensic examination to identify “possible missing communications” from FirstEnergy CEO Charles Jones’ phone.

    He also noted that of the $180 million, the settlement allows plaintiff’s lawyers to seek nearly $49 million in fees. Thus, he said it’s “hardly surprising” that they’d prefer the case handled by a judge who’s warmer to the settlement proposal.

    Two attorneys representing the shareholders did not respond to inquiries.

    A FirstEnergy spokeswoman declined to comment, citing pending litigation.