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Tag: Chuck Jones

  • 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

  • DeWine says Randazzo’s ties to First Energy were well known, but the evidence of this is lacking

    DeWine says Randazzo’s ties to First Energy were well known, but the evidence of this is lacking

    BY:  – Ohio Capital Journal

    The office of Gov. Mike DeWine has for months been saying that connections between the guy he picked to be the state’s top regulator and a utility at the center of an epic bribery scandal were well known around Capitol Square when DeWine nominated him in January 2019.

    If the relationship were common knowledge, it might seem more innocent that some in DeWine’s administration knew the utility had paid the regulator $4.3 million just before the governor nominated him. However, the administration has provided scant evidence that the claim is true — and there’s considerable evidence suggesting it isn’t.

    The regulator, Sam Randazzo, died by suicide earlier this month and the utility, Akron-based FirstEnergy, has admitted to its role in a scandal that has sent one public official to prison for 20 years and seen yet another defendant die by suicide.

    Meanwhile, DeWine’s lieutenant governor, Jon Husted, won’t talk about a $1 million FirstEnergy contribution to a group supporting him. And DeWine himself hasn’t explained what senior people in his administration with FirstEnergy connections knew about the scheme — in which $61 million in bribes were paid for a $1.3 billion ratepayer bailout.

    Multiple ties

    Among them is Laurel Dawson, who was chief of staff of the incoming DeWine administration at the beginning of 2019. At the same time, her husband, Mike Dawson, was a lobbyist for FirstEnergy.

    A few weeks before, on Dec. 18, 2018, Gov.-elect DeWine and Lt. Gov.-elect Jon Husted had dinner at the Columbus Athletic Club with FirstEnergy CEO Chuck Jones and Vice President Micheal Dowling. At the dinner, they discussed whether Randazzo would be acceptable to head up the Public Utilities Commission of Ohio — the agency that was supposed to regulate the executives’ utility, according to a state indictment of Randazzo, Jones, and Dowling that was filed in February.

    After the dinner, the FirstEnergy executives drove about a mile to Randazzo’s condo and negotiated a $4.3 million payment to Randazzo, the indictment said. FirstEnergy later said the payment was a bribe in a deferred prosecution agreement with the U.S. Justice Department.

    As PUCO chairman, Randazzo helped draft and lobby for the bailout law and did several other lucrative favors for FirstEnergy. His indictment said it capped off a decade-long relationship in which he was a paid “consultant” for FirstEnergy unbeknownst to his law firm or a group of industrial energy users on whose behalf Randazzo was supposed to be negotiating concessions.

    The indictment says at least one person in the DeWine administration — Laurel Dawson — knew that Randazzo had gotten a huge payment from FirstEnergy in the weeks before DeWine nominated him to chair the PUCO at the beginning of February 2019.

    Randazzo told “the Governor-elect through his incoming Chief of Staff that he had received $4.3 million from FirstEnergy, which he claimed was final payment of a ‘consulting agreement,’” Randazzo’s indictment said.

    For her part, Laurel Dawson is cooperating with the state prosecution, but she isn’t commenting publicly.

    Common knowledge?

    In the months since the state indictment of Randazzo and the FirstEnergy executives, DeWine Press Secretary Dan Tierney has been saying that Randazzo’s ties to FirstEnergy weren’t news even at the time the governor was considering him in early 2019 to head the PUCO.

    In February, he told Cleveland’s News Channel 5, “it was well known that Randazzo was a paid consultant for FirstEnergy.”

    Tierney modified that somewhat, telling the Capital Journal earlier this month, “it was well known to our staff that Mr. Randazzo was an energy consultant, and it was well-known to them and many people that Mr. Randazzo was a consultant employed by First Energy.”

    However, it appears that Randazzo and FirstEnergy’s top leadership went to great lengths to keep their relationship secret.

    Many of the counts Randazzo was charged with have to do with his failure to report income from FirstEnergy on state ethics disclosures while he was PUCO chairman. A bill of particulars accompanying the indictment adds that Randazzo didn’t disclose a 2015 consulting agreement with FirstEnergy to the members of his own law firm, McNees, Wallace and Nurick. Randazzo’s membership agreement in the firm barred barred him from outside employment, the filing said.

    Pressed on the matter this week, Tierney said in an email, “Mr. Randazzo testified numerous times at the General Assembly prior to his appointment to the PUCO. In addition, Mr. Randazzo served on the PUCO Nominating Council, which requires ethics disclosures. These were among the reasons Mr. Randazzo’s relationships with utilities and FirstEnergy were well known at the Statehouse and on Capitol Square.”

    The Capital Journal obtained Randazzo’s disclosures from the Ohio Ethics Commission for the period he served on the PUCO Nominating Council — 2007 to 2017. “FirstEnergy” doesn’t appear on any of them.

    Tierney was informed of that and asked whether DeWine’s office could point to any testimony Randazzo gave to the General Assembly in which he divulged his long, profitable relationship with FirstEnergy. Tierney didn’t answer that question, saying instead, “My understanding is that Mr. Randazzo’s business entities are listed on the ethics form(s), and those business entities not only were well known to be associated with Mr. Randazzo on Capitol Square, but also well known to have First Energy as clients.”

    Shell game

    The entity that appears on Randazzo’s ethics disclosures is the Sustainability Funding Alliance of Ohio — a group prosecutors accused Randazzo of using as a shell corporation to skim millions in FirstEnergy money earmarked for his industrial clients. The group’s relationship with FirstEnergy was so secret that the corporation’s top executives feared that a partial disclosure would tank Randazzo’s nomination to the PUCO.

    FirstEnergy Solutions — a subsidiary Jones and Dowling desperately wanted ratepayers to bail out — was going through bankruptcy. One of its filings mentioned the Sustainability Funding Alliance, which Randazzo had also listed on his ethics disclosures.

    The FirstEnergy executives were in a panic about it and their communications show that the connection between their company and Randazzo’s entity was far from well known.

    The DeWine administration is “going to be mad at Sam (and hopefully not us) for not disclosing the financial relationship,” Dowling texted Jones on Jan. 30, 2019, less than a week before DeWine nominated Randazzo. “That’s Sam’s responsibility.”

    When the nomination went through anyway, Dowling told Jones, “A bullet grazed temple,” to which the FirstEnergy CEO replied, “Forced DeWine/Husted to perform battlefield triage.”

    “Secret for-profit entity”

    In his email Monday, Tierney also said, “What media has described as the ‘dossier’ regarding Randazzo’s relationship with First Energy, which is a collection of public domain documents from the time in 2019, shows that much of this was colloquially known on Capitol Square and within the energy advocacy community.”

    The “dossier” Tierney referred to was a 198-page document from a former aide warning DeWine about Randazzo’s murky relationships. It was delivered to Laurel Dawson on Jan. 28, 2019 — about a week before her boss nominated Randazzo.

    Tierney said the document shows that Randazzo’s ties to FirstEnergy were well known. But the first page of the dossier says something quite different.

    “Publicly available documents suggest that PUCO applicant Sam Randazzo has opaque, undisclosed financial ties to FirstEnergy that should be fully examined and made public,” it says. “The enclosed evidence demonstrates that Randazzo personally profits from a secret for-profit entity funded by FirstEnergy Solutions.”

    Catherine Turcer, executive director of Common Cause Ohio, said that it’s past time for DeWine, Husted and their staffs to be much more forthcoming about their involvement in the bailout and about what DeWine and Husted did to investigate whether any member of the administration acted improperly.

    “It makes sense to be as clear as possible about what actually happened,” she said. “And I don’t just want to hear from the governor. I want to hear from the lieutenant governor.”

    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

  • FirstEnergy gave $1 million to boost Ohio Lt Gov Husted’s campaign before scandal, document shows

    FirstEnergy gave $1 million to boost Ohio Lt Gov Husted’s campaign before scandal, document shows

    Records show Jon Husted worked behind the scenes to bail out the company’s nuclear power plants. The million dollar donation was secret — until now.

    BY:  AND 

    Versions of this story were published by Floodlight, Energy News Network and the Ohio Capital Journal.

    A surge in FirstEnergy political spending ahead of the utility’s push to secure a legislative bailout for its nuclear power plants included a $1 million dark money contribution to support the campaign of Ohio Gov. Mike DeWine’s eventual running mate.

    The previously unreported gift linked to Lt. Gov. Jon Husted’s 2017 primary bid was revealed as part of a raft of documents obtained under Ohio’s public records law by a coalition of news organizations, including Floodlight, Energy News Network, and the Ohio Capital Journal.

    Among the documents are company emails describing behind-the-scenes efforts by Husted to persuade DeWine to support House Bill 6, the utility-backed legislation at the heart of the state’s ongoing $60 million public bribery scandal.

    Neither Husted nor DeWine, whose campaign also benefited from a previously reported $1 million in dark money from the utility, has been implicated in the scheme in which eight people, including the state’s former House Speaker Larry Householder, have been indicted.

    Two of those charged in the multi-million-dollar scandal surrounding the passage of HB 6 may have taken their own lives, including Sam Randazzo, the former chairman of the Public Utilities Commission of Ohio, who was found dead earlier this week of an apparent suicide.

    ‘Confidential’ email details campaign gift

    One of the documents from the Office of the Ohio Consumers’ Counsel Office is a spreadsheet attached to a January 2020 message labeled “confidential.” It shows $1 million went from FirstEnergy to the conservative group Freedom Frontier in 2017, with “Husted campaign” noted as the reason.

    That group backed Husted during his 2017 primary campaign for governor. The group then supported DeWine after Husted dropped out of the race to become his running mate.

    Husted is considered among possible front runners for the Republican nomination for governor in 2026. A January report by the Jon Husted for Ohio campaign committee shows it got roughly $1.7 million last year.

    Husted was also dubbed the “‘Golden Boy’ for FirstEnergy” by lobbyist Neil Clark, a co-defendant with Householder and others in the federal government’s criminal corruption case. Clark died by suicide in 2021.

    In several of the recently released records, Husted is mentioned in the same breath as Householder, the convicted House speaker, and Randazzo, the former PUCO commissioner, by FirstEnergy leadership as they sought to pass and then defend HB 6, the nuclear and coal bailout law at the heart of Ohio’s ongoing corruption scandal.

     FirstEnergy records released via public records request show how executives at the power company relied on Ohio Lt. Gov John Husted and convicted former House Speaker Larry Householder to help them pass a $1.3 billion nuclear bailout bill. 

    Husted has maintained that his support for the 2019 law stemmed from his belief that nuclear energy is an important part of Ohio’s energy portfolio. Parties in HB 6-related shareholder litigation have subpoenaed Husted to answer questions under oath, although a new date needs to be set.

     FirstEnergy records released via public records request show how executives at the power company relied on Ohio Lt. Gov John Husted and convicted former House Speaker Larry Householder to help them pass a $1.3 billion nuclear bailout bill. 

    “The Husted campaign never received this donation and is not affiliated with any of these groups,” said spokesperson Hayley Carducci. By law, candidate campaigns are not supposed to coordinate with groups like Freedom Frontier, which can spend unlimited amounts to support or attack them.

    The document and others reflect a major commitment by FirstEnergy to Husted’s political future. Before 2017, the company’s reported political spending to support Husted was less than $25,000 per campaign, according to data from OpenSecrets.

    Dark money spending rises sharply

    More broadly, the document also indicates a major increase in FirstEnergy’s political spending through nonprofit groups exempt from taxes under Section 501(c)(4) of the Internal Revenue Code. Those, along with privately held corporations, are common structures for dark money organizations — groups that aren’t required by law to disclose the ultimate source of their funding.

    The company’s giving to such groups jumped to more than $12 million in 2017, after much lower levels of $200,000 in 2016 and $100,000 in 2015, according to the spreadsheet.

    Starting in 2014, FirstEnergy had sought bailouts for noncompetitive coal and nuclear plants. And in late 2016, regulators approved a $456 million consumer surcharge that ultimately was held unlawful. Yet the company claimed it needed more.

    The document details once-secret contributions to groups supporting “everyone from the mayor of Akron to President Trump that FirstEnergy made to secure bailouts for its soon-to-be bankrupt coal and nuclear plants and to gain influence on other key issues,” said Dave Anderson, policy and communications manager for the Energy and Policy Institute.

     A spreadsheet details dark money expenditures by northeastern power company FirstEnergy as it sought to secure a $1.3 billion bailout for its struggling nuclear power plants. The sheet reveals a previously unreported $1 million donation to benefit the candidacy of Ohio Lt. Gov. Jon Husted. 

    Anderson added that the spreadsheet also “provides some key new evidence for utility regulators and consumer advocates to use to ensure that every dollar of ratepayer money that FirstEnergy misused to fund its secret political spending is publicly disclosed and refunded, with interest and ideally serious financial penalties.”

    At the time, the author of the document that details the donations, Kristina Housley, was executive assistant to FirstEnergy’s Mike Dowling, who is now a defendant in a state criminal case along with former CEO Chuck Jones.

    Finding out all the details about the dark money spending behind HB 6 is like peeling back the layers of an onion, said Catherine Turcer, executive director of Common Cause Ohio.

    “The reason that transparency matters so much is that money that is spent in the shadows influences elections, and it influences really important policy decisions that impact us every day,” Turcer said. “And we have the right to know what is going on in government and how decisions are being made and who’s attempting to influence those decisions.”

    The ‘Golden Boy’ for FirstEnergy

    A December 2017 email from former FirstEnergy lobbyist Joel Bailey said Husted was working to get DeWine on board with FirstEnergy’s “issues.” FirstEnergy also supported other pro-DeWine/Husted efforts during the election cycle.

     Former FirstEnergy CEO Chuck Jones (top left), former FirstEnergy VP Michael Dowling (top right), former PUCO Chair Sam Randazzo (bottom middle). Graphic by WEWS. 

    After the election, Husted and DeWine dined with Jones and Dowling on December 18, 2018. Later that night, FirstEnergy agreed to pay $4.3 million to energy lawyer Randazzo, who went on to become DeWine’s first pick for chair of the Public Utilities Commission of Ohio. FirstEnergy later identified Jones and Dowling as the two people responsible for paying alleged bribes.

    Husted’s office has been evasive about his recollections, despite Jones noting in texts to Randazzo that the PUCO chair position was discussed in at least general terms. Another text by Jones in 2019 said the DeWine/Husted team was forced “to perform battlefield triage” to secure Randazzo’s nomination after a 198-page dossier provided to DeWine’s staff threatened to derail it.

    Evidence from last year’s criminal trial of Householder, the former Ohio House speaker, and lobbyist Matt Borges also included messages between former FirstEnergy executives Jones and Dowling about Husted working behind the scenes to build support for the bill. Among the actions were efforts to extend the bailout period for the company’s former nuclear power plants in Ohio.

    Husted long a friend of utilities

    Husted had been Ohio’s secretary of state immediately before becoming lieutenant governor. Before that, he served as House speaker in the General Assembly. In that role, he played a pivotal part in securing passage of another major energy bill, Senate Bill 221.

    At the time, Husted supported the law’s clean energy standards that were ultimately gutted by HB 6. However, SB 221 set the stage for so-called electric security plans. Those have let FirstEnergy and other utilities avoid full rate cases for more than a decade, while allowing cross-subsidies and adding multiple additional charges to consumers’ bills.

    “That bill upset the balance” of energy regulation in Ohio, said Ashley Brown, a former PUCO commissioner. “It was a humongous gift for the utilities.”

    Lawmakers repealed HB 6’s $1 billion-plus in subsidies for FirstEnergy’s former nuclear power plants and its recession-proofing provisions in 2021, eight months after the arrests of Householder and others.

    Earlier this year, Husted told NBC4 in Columbus the rest of HB 6 “needs to be completely removed.” He did not respond to Energy News Network questions this week about whether that includes both the law’s subsidies for two 1950s-era coal plants and its gutting of Ohio’s renewable energy and energy efficiency standards.

    FirstEnergy spokesperson Jennifer Young declined to comment on the company’s 2017 donation to Freedom Frontier due to ongoing litigation. However, she added, “FirstEnergy will post information regarding its support of 501(c)(4) social welfare organizations on the company’s website on a quarterly basis.”

    Those disclosures are currently required under the company’s July 2021 deferred prosecution agreement. That agreement expires later this year.

    Meanwhile, FirstEnergy still has not disclosed its dark money spending for the years 2018 through 2020. And proposals for reforms that would require such disclosures from all electric utilities remain stalled in the General Assembly.

    “It’s incredibly frustrating that Ohioans can be aware that dark money impacted decision-making at the statehouse,” Turcer said, “and yet we still haven’t gotten the legislators to create greater transparency.”

    The Energy News Network is a nonprofit news site dedicated to keeping influencers, policymakers and citizens informed of the important changes taking place in the transition to a clean energy system. Floodlight is a nonprofit newsroom that investigates the powerful interests stalling climate action. 

    This article first appeared on Energy News Network and is republished here under a Creative Commons license.

    _____________

    Mario Alejandro Ariza, Floodlight
    MARIO ALEJANDRO ARIZA, FLOODLIGHT

    Mario Alejandro Ariza is an investigative reporter and a Dominican immigrant. His byline has appeared in publications like the South Florida Sun Sentinel, The New Republic, and The Atlantic. Mario wrote a book called “Disposable City: Miami’s Future on the Shores of Climate Catastrophe,” which was published by Bold Type Books. His essays have been featured in The Believer and selected for Best American Essays. He lives in South Florida with a cat, a dog, and a sturdy pair of waterproof boots.

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    Kathiann M. Kowalski, Energy News Network
    KATHIANN M. KOWALSKI, ENERGY NEWS NETWORK

    Kathi is the author of 25 books and more than 600 articles, and writes often on science and policy issues. In addition to her journalism career, Kathi is an alumna of Harvard Law School and has spent 15 years practicing law. She is a member of the Society of Environmental Journalists and the National Association of Science Writers. Kathi covers the state of Ohio.

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  • Digging into the latest indictment of former Ohio House Speaker Larry Householder

    Digging into the latest indictment of former Ohio House Speaker Larry Householder

    Former Ohio House speaker Larry Householder arrives for day two of his racketeering trial. (Photo by Morgan Trau, WEWS.)

    Some allegations address Householder’s actions after the feds arrested him in 2020

    BY:  – Ohio Capital Journal

    Former House Speaker Larry Householder has again been indicted on charges related to his actions in a massive bribery and money laundering scandal.

    The Glenford Republican is already serving a 20-year sentence in federal prison after being convicted last March of racketeering in a scheme in which Akron-based FirstEnergy paid more than $60 million to purchase a $1.3 billion, ratepayer-financed bailout.

    The state charges concern some conduct Householder engaged in after he was arrested in July 2020. They also concern debts and other items that Householder admitted during his federal trial that he didn’t report to the Joint Legislative Ethics Commission as required.

    The former speaker faces maximum sentences of from three to eight years on each of the 10 state charges from the Cuyahoga grand jury. And importantly, if he’s convicted of one of the counts — theft in office — he’s permanently disqualified from holding public office.

    In a video accompanying the announcement of the indictment, Ohio Attorney General Dave Yost noted that Householder has served two different stints as speaker, and that if he’s successful in appealing his federal conviction, “he might well try for a third bite at the apple.”

    Five of the 10 state counts Householder faces stem from his use of campaign funds to pay lawyers after his July 2020 arrest. In the video in which Yost appeared, Deputy Attorney General Carol O’Brien said Householder knew that was illegal when he did it.

    Several other counts relate to Householder “not reporting significant credit card debts going back to at least 2016, as well as gifts from lobbyists and significant loans from individuals.”

    Among gifts Householder received from FirstEnergy were flights to and from the 2017 inaugural of Donald Trump.

    Householder is due in Cuyahoga Common Pleas Court to be arraigned on April 12.

    The new state charges follow the announcement last month of state charges against former FirstEnergy CEO Chuck Jones and Vice President Michael Dowling. The executives are accused of financing the $60 million scheme to bail out two unprofitable nuclear plants owned by the utility so they could spin them off.

    Also indicted was Sam Randazzo, Gov. Mike DeWine’s pick to be Ohio’s top utility regulator. Jones and Dowling paid Randazzo $4.3 million mere weeks before DeWine nominated him to the commission in February 2019.

    DeWine’s chief of staff, Laurel Dawson, knew of the payment, but an administration spokesman said she didn’t tell the governor until after the FBI searched Randazzo’s Columbus condo in 2020.

    The governor stands behind Dawson because it wasn’t until 2021 that the payment was alleged to be a bribe, the spokesman said.

    Randazzo was charged by federal authorities in relation to his role in the scandal in December.

    Despite all the prosecutions and allegations of wrongdoing, the bailout law, House Bill 6, is still on the books. As a result, ratepayers have ponied up nearly a quarter-billion dollars to prop up two aging coal plants.

    Despite the fact that Ohio ratepayers are shouldering that burden, one of the plants isn’t even in Ohio, but in Indiana instead.

    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 indictments provide a better picture of squalid relationships that spurred massive scandal

    Ohio indictments provide a better picture of squalid relationships that spurred massive scandal

    Former Public Utilities of Ohio Chair Sam Randazzo at court. (Photo by WEWS.)

    BY:  – Ohio Capital Journal

    An Ohio grand jury has handed up a 44-count indictment against three players in what is likely the biggest bribery scandal in state history. And when the 50-page indictment was unveiled Monday, it provided new details about a decade of payoffs and conflicts as one of them — who became the state’s top regulator — allegedly did a huge electric utility’s bidding.

    The indictment concerns a $1.3 billion dollar bailout that Akron-based FirstEnergy has already admitted to the federal government that it paid more than $60 million in bribes to purchase.

    Former Ohio House Speaker Larry Householder, R-Glenford, and former state GOP Chairman Matt Borges are serving federal prison sentences for their roles in the 2019 passage of the bailout and the dirty-but-succesful fight to thwart a voter-led repeal.

    When federal prosecutors in 2021 charged those two and three others, they said their investigation continued. But it wasn’t until December that they charged another in the case — Sam Randazzo, a lawyer and longtime energy consultant whom Gov. Mike DeWine nominated to chair the state’s top regulator, the Public Utilities Commission of Ohio.

    That left the people who paid the alleged bribes — FirstEnergy’s top executives — uncharged in a scheme that took place more than four years ago.

    Double dealing

    All that changed Monday when Ohio Attorney General Dave Yost announced state charges against Randazzo and former First Energy CEO Chuck Jones and former Vice President Michael Dowling for their alleged roles in the criminal conspiracy. The three were arraigned in Akron on Tuesday and each pleaded not guilty.

    They were charged in an indictment that alleged shady dealings between the them stretching back 13 years.

    “It all began with a well-lawyered theft in 2010,” the indictment said.

    It went on to describe how Randazzo was general counsel for a group of large FirstEnergy customers — the Industrial Energy Users of Ohio — while also working as a FirstEnergy consultant. Only, the Industrial Energy Users didn’t know that Randazzo was also being paid by the company they were paying him to fight, the indictment said.

    It accuses Randazzo of settling the industries’ claims against FirstEnergy on terms acceptable to FirstEnergy and running the settlements through Randazzo-controlled shell companies where he took a skim — again, unknown to the industrial energy users.

    “His clients, the industrial members of IEU-Ohio, did not know he was a consultant for FirstEnergy,” the indictment said. “Randazzo did not tell them. Years later, some of the money would make its way to IEU-Ohio. Some of it would end up in Randazzo’s pocket.”

    The Industrial Energy Users appear to have engaged in some cynical conduct of their own, however. The indictment describes a 2015 agreement in which FirstEnergy was to pay Randazzo’s company $8.5 million for “consulting services.”

    It was really a cash “side deal” in which FirstEnergy paid the industrial users to drop their objections to a rate hike FirstEnergy wanted, supposedly in the name of “energy security,” the indictment said. In other words, prosecutors said that with Randazzo’s facilitation, FirstEnergy paid off a wealthy, powerful group of electricity users in order to raise rates on everybody else.

    Such arrangements proved quite profitable for Randazzo.

    “Between 2016 and 2019, FirstEnergy paid… $13,152,639.94 to Randazzo’s two shell companies,” the indictment said. “Of that total, Randazzo gave $7,756.903.84 to his IEU-Ohio Client and kept $5,395,736.10 for himself.”

    Cozy relationships

    This is the guy the incoming DeWine-Husted administration thought would be a good candidate to regulate utilities — companies to which Ohioans have little choice in paying their billions.

    The state indictment describes how, on Dec. 18, 2018, FirstEnergy execs Jones and Dowling met with Gov.-elect DeWine and Lt. Gov.-elect Jon Husted at the Columbus Athletic Club and discussed whether the executives wanted Randazzo to regulate their massive electric utility.

    The notion that a governor would ask a huge utility who might be acceptable as a regulator might itself seem startling. But after the dinner, according to the indictment, Jones and Dowling did something even more brazen.

    They went to Randazzo’s German Village condo and pursuant to that, Randazzo solicited a $4.3 million payment from Jones and Dowling, the indictment said. FirstEnergy paid the money “without ever having received an invoice for the payment and without any work or consulting services being performed,” the indictment said. It added that the executives made the payment over the objections of a company lawyer.

    Randazzo told Laurel Dawson, DeWine’s chief of staff, about the payment, calling it a “consulting agreement.” But he didn’t tell her of the other millions he’d gotten from the utility he was seeking to regulate, the indictment said. Randazzo also never told the Ohio Ethics Commission about any of the money he’d gotten from FirstEnergy, the indictment said.

    In Dawson, Randazzo might have had a sympathetic audience. Her husband, Michael Dawson, was a “paid FirstEnergy lobbyist” in 2016, when he’d gotten a $10,000 loan from Randazzo, the indictment said.

    But if his chief of staff told DeWine about the huge payoff Randazzo got from FirstEnergy, it must not have fazed the new governor. DeWine nominated Randazzo to be chairman of the Public Utilities Commission — the ratepayers’ supposed protector — on Feb. 4, 2019.

    Versatile player

    During Householder’s six-week trial in Cincinnati last year, federal prosecutors put on exhaustive evidence of how the FirstEnergy executives financed Householder’s bid to become speaker and to pass the notorious bailout known as House Bill 6.

    “Together, Jones, Dowling, Randazzo and his shell companies worked in concert to steal the power of government and bend it to the will of FirstEnergy,” was the way the state indictment unveiled on Monday put it.

    Most of the details of Randazzo’s involvement in the creation and passage of HB 6 are already known from the federal trial. They show him acting in multiple, conflicting, often-undisclosed capacities — similar to those the state indictment alleges he had already played with FirstEnergy and the industrial energy users.

    Even though he was supposed to be a regulator, Randazzo drafted portions of the bailout legislation and passed them between FirstEnergy officials and a Householder employee who had recently worked for the PUCO. They sometimes only shared printed copies of the huge bill, out of an apparent apprehension about leaving electronic fingerprints.

    According to text messages between Jones and Dowling, Randazzo went so far as to actively lobby for passage of the bailout — which would seem a big departure from the traditional duties of a disinterested regulator.

    Jones and Dowling discussed a meeting about HB 6 that Randazzo had with Sen. Steve Wilson, R-Maineville, and the Senate’s counsel. “We have a good plan to help,” Dowling told his boss.

    Other officials

    Despite the fact that DeWine had reason to know Randazzo was connected to FirstEnergy, the governor made him the state’s top utility regulator and he signed the billion-dollar bailout that benefitted the company the day it passed. And on July 21, 2021 — the day Householder was arrested — DeWine said he wasn’t in favor of repealing the measure.

    The governor subsequently walked that back, but HB 6 is still on the books and Ohio utilities are still getting hundreds of millions in ratepayer subsidies as a result.

    DeWine wasn’t the only state official to act at least peripherally in the scandal.

    Secretary of State Frank LaRose has refused to explain the “private” updates that FirstEnergy CEO Jones said the state’s chief elections official was providing during an attempt to gather signatures to put an HB 6 repeal on the ballot.

    And Yost himself dealt a mortal blow to the signature gathering when he initially rejected the ballot language — cutting nearly in half the time HB 6 opponents had to gather a quarter-million valid signatures. And in text messages presented in the federal trial, Borges told a co-conspirator that Yost thought HB 6 was a bad law, but wouldn’t speak up because of help he’d gotten from FirstEnergy in the past.

    Beyond the bailout

    Randazzo’s alleged help to FirstEnergy wasn’t limited to HB 6. He also thwarted a PUCO look into the company’s books that was likely to force a cut in electricity bills. That would have caused falling stock prices and a hit to Jones’ and Dowling’s portfolios, the indictment said.

    The erstwhile regulator was apparently so helpful that Jones at one point told a FirstEnergy subordinate to back off for fear of being too obvious. In a text message included in the indictment, Jones told Dennis Chack that Randazzo’s pro-FirstEnergy conduct “has a lot of talk going on in the halls of PUCO about does he work there or for us?”

    Even so, Randazzo’s behavior at the PUCO continued to be shameless, urging fellow regulators to join him in lobbying for the corrupt bailout, the indictment said.

    Randazzo “began internally lobbying PUCO staff members between July 2020 and September 2020 to generate strategies to save HB 6, despite facing internal objections about the inappropriateness of the effort to save HB 6,” it said.

    The indictment included a Sept. 15, 2020 email in which Randazzo told subordinates, “One option (and I really think we need to get other commissioners and staff into a proactive mode): We could, on our own initiative, issue a show-cause order to (FirstEnergy) directing (FirstEnergy) to show that no costs associated with HB 6 have been included in any riders or base rates.”

    Had such an order been issued, the result would have been misleading. While the bill didn’t raise consumer costs through riders or base rates, it included a provision that ensured FirstEnergy would collect at least as much as it did in one of its best years and it created a massive subsidy for money-losing coal plants.

    Randazzo’s efforts seemed finally to end two months later, when the FBI searched his condo.

    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

     

     

  • [BREAKING] Ex-First Energy executives, Ohio utility regulator charged by state in bailout and bribery scandal

    [BREAKING] Ex-First Energy executives, Ohio utility regulator charged by state in bailout and bribery scandal

    From left to right: Former PUCO Chair Sam Randazzo, former FirstEnergy CEO Chuck Jones, former FirstEnergy VP Michael Dowling. (Mugshots from the Summit County Sheriff’s Office. Graphic by WEWS.)

    BY:  AND  Ohio Capital Journal

    Ohio law enforcement authorities on Monday filed numerous felony charges against two former First Energy executives and a former top utility regulator in what has been called the biggest bribery and money-laundering scandal in Ohio history.

    Ohio Attorney General Dave Yost announced scores of felony charges against a former regulator who also has been charged federally, and against two people who haven’t — former top executives for Akron-based FirstEnergy whom the company admitted paid more than $60 million in bribes between 2016 and 2020 in exchange for a $1.3 billion ratepayer bailout.

    Charged were Sam Randazzo, former chairman of the Public Utilities Commission. Already facing felony charges in federal court, the state indictment charges him with 22 more, including grand theft, bribery, and money laundering. The indictment accuses him of taking bribes from FirstEnergy from 2010 until just before he became chairman of the commission in 2019.

    Also charged were former FirstEnergy CEO Chuck Jones and Vice President Michael Dowling. Between them, they face 22 felony charges similar to those faced by Randazzo.

    “This indictment is about more than one piece of legislation,” Yost said Monday. “It is about the hostile capture of a significant portion of Ohio’s state government by deception, betrayal, and dishonesty.”

    The state charges that were announced Monday didn’t deal with much of the activity addressed in the federal case. They instead focused on the relationship between Jones, Dowling, and Randazzo between 2010 and early 2019, when they paid him $4.33 million just as he was becoming the state’s top utility regulator.

    The House Bill 6 scandal

    Back in 2019, former Ohio House Speaker Larry Householder took $61 million in bribes in exchange for legislation to give FirstEnergy a $1 billion bailout, named House Bill 6, all at the expense of the ratepayers.

    The scheme was revealed in three main ways — two separate whistleblowers and a phone wiretap.

    In March 2023, a jury found Householder and former Ohio Republican Party leader Matt Borges guilty beyond a reasonable doubt for their involvement in the racketeering scheme that left four men guilty and another dead by suicide.

    In late June that year, federal judge Timothy Black sentenced Householder to 20 years in prison. Borges got 5 years. The two surviving defendants took plea agreements early on, helping the FBI, and are still awaiting their sentencing. The feds are asking for 0-6 months for them.

    Until Monday, only federal indictments had been handed out.

    HB 6 mainly benefited FirstEnergy’s struggling nuclear power plants, but those provisions were later repealed. There are aspects of the bill still in place, though.

    The Ohio Valley Electric Corporation (OVEC) got a handout from the scheme. It expanded a bailout of the OVEC plants and required Ohioans to pay for two 1950s-era coal plants— one in the Southern area of the state and the other in Indiana. The main beneficiaries of this are American Electric Power Company (AEP), Duke Energy and AES Ohio.

    Despite this scandal becoming public years ago, ethics laws in the state have not changed to prevent schemes like this from happening.

    There are numerous bipartisan efforts to repeal HB 6 totally and to put forward ethics laws. None are going anywhere, it seems.

    Monday’s indictments

    AG Yost was joined by Summit County Prosecutor Sherri Bevan Walsh and Sheriff Kandy Fatheree for the announcement Monday.

    “The crimes committed by these individuals impacted the pocketbooks of every hard working Ohioan and further shook our faith in the institutions and organizations that we count on to represent us and to provide us with essential services,” Fatheree said. “Today, we take another important step in ensuring that justice is served for these crimes and that those who took advantage of the public’s trust are held accountable.”

    FirstEnergy as a company has already admitted in a deferred prosecution agreement to bribing public officials in Ohio, including a $4.3 million bribe to Randazzo. Jones and Dowling allegedly paid this to him.

    Randazzo pleaded not guilty to the federal charges against him in December.

    The Sustainability Funding Alliance of Ohio and IEU-Ohio Administration Company are also named in the filing. Randazzo controlled each of them, and they were allegedly shell companies created to further his criminal activity.

    Reactions

    While Monday was probably not the best day for Randazzo, Jones and Dowling, it was a great day for whistleblower Tyler Fehrman.

    Fehrman is the Republican operative-turned-FBI informant who is credited with exposing this mass public corruption at the Statehouse — and he is cheering the AG and Summit County for these arrests.

    “These guys deserve to have everything taken away from them,” Fehrman said. “They deserve it.”

    Borges attempted to bribe Fehrman, and threatened him, to be a part of the scandal — even at one point telling him that if he snitches, Borges would “blow up his house.”

    That conversation was actually set up and recorded by the feds. Instead of staying quiet, Fehrman testified, helping the jury to return guilty verdicts in the federal trial.

    Fehrman ended up having to change careers and flee the state due to fears of retaliation — and because he was ostracized — but now he gets to watch as the scheme continues to unravel.

    “You can hide your actions in the dark for a little bit,” Fehrman said Monday. “But the sun always rises and the truth always comes out. Every time one of these guys gets indicted, especially the people that made it possible for Matt and Larry to have the opportunity to do what they did to me — to see them get in trouble, it’s extremely vindicating.”

    He agreed with Yost’s statement that there can be no justice without holding the check-writers and the masterminds accountable.

    Case Western Reserve University law professor Mike Benza believes these charges are going to be hard to fight. When asked the best possible scenario for them, other than pleading guilty, he said their best bet could be to argue this is politics as usual.

    “It seems that the focus from the defense side is going to be much like the focus from Householder and Borges — this is just how things get done in Columbus,” Benza said. “This is just the normal sausage-making of public policy and it may not be pretty and you may not like it, but this is the reality and it doesn’t equal corruption.”

    Clearly, that wasn’t a winning argument in federal court.

    Part of the reason why it may have worked so poorly in Black’s federal courtroom is because Householder went against the advice of the vast majority of criminal defense attorneys and decided to testify in his defense.

    The now-convicted felon used the bribe money to put himself and his allies into power, demolishing and threatening anyone in his path, as well as paying off credit card debt and renovations to his home in Florida.

    Benza believes Randazzo, Jones, and Dowling are facing difficult days ahead.

    “Randazzo is probably going to be looking at dying in prison,” Benza responded. “Jones and Dowling are probably in that same boat.”

    Ferhman is hoping for more indictments, including high-profile names.

    “The clock is ticking for the other people that were involved,” Fehrman said.

    He named Gov. Mike DeWine Lt. Gov. Jon Husted as people of interest for him.

    DeWine has been complying with a subpoena he received in a civil case connected to the scandal, he said.

    FirstEnergy investors are suing for being negatively impacted financially by the scandal. They have subpoenaed documents from DeWine, and they’re scheduling a sworn deposition with Husted.

    In a one-on-one interview with the governor, DeWine was asked if he was nervous about the scandal, or, more importantly — if was he worried for Husted. DeWine said no to both.

    Randazzo has been named as the mastermind behind HB 6, due to him being one of the creators of it — according to the feds. But DeWine was how he came into power.

    DeWine was asked in the same interview if he regretted naming Randazzo the state’s top utility regulator.

    “Oh, look, if I knew what I know now, if I knew that — I certainly would not have appointed Sam Randazzo to that position,” DeWine responded.

    DeWine said he was the best person for the job, claiming that he wasn’t aware that Randazzo was FirstEnergy’s handpicked man.

    “While our office was not privy to the indictment and have not yet reviewed it, the indictment alleges very serious acts,” DeWine’s spokesperson Dan Tierney said Monday afternoon. “Our office has full faith in the criminal justice system to adjudicate these serious allegations in an appropriate manner.”

    ________________

    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

    Morgan Trau
    MORGAN TRAU

    Morgan Trau is a political reporter and multimedia journalist based out of the WEWS Columbus Bureau. A graduate of Syracuse University’s S.I. Newhouse School of Public Communications, Trau has previously worked as an investigative, political and fact-checking reporter in Grand Rapids, Mich. at WZZM-TV; a reporter and MMJ in Spokane, Wash. at KREM-TV and has interned at 60 Minutes and worked for CBS Interactive and PBS NewsHour. 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

  • FirstEnergy exec tried to keep DeWine aide’s name off of $10M transaction

    FirstEnergy exec tried to keep DeWine aide’s name off of $10M transaction

    BY: MARTY SCHLADEN – Ohio Capital Journal

    In October 2019, as a battle raged over an attempt to repeal a $1.3 billion utility bailout, a FirstEnergy executive worked to keep the name of a senior aide to Gov. Mike DeWine off of a $10 million infusion of corporate cash into the fight. 

    The executive, Vice President Michael Dowling, did so even after an assistant told him it would violate IRS rules to not list the DeWine aide on the transaction, according to text messages presented Tuesday in the federal corruption trial of former Ohio House Speaker Larry Householder and lobbyist Matthew Borges. The men are accused of racketeering in a scheme to use $61 million from FirstEnergy in exchange for the massive bailout, most of which went to prop up the company’s failing nuclear and coal plants in order to make them attractive to buyers.

    DeWine has denied involvement in the arrangement even though he met with FirstEnergy executives and visited one of its nuclear plants in 2018 as he was seeking the governorship and FirstEnergy was lavishly funding Householder’s effort to elect sympathetic Republicans who would then vote to make him speaker. For his part, DeWine received $23,000 from the Akron-based utility for his campaign and his inaugural celebration, according to Ohio Citizen Action. He vowed to donate the money to charity following revelations of the scandal.

    The governor appointed as chairman of the Public Utility Commission of Ohio a former FirstEnergy consultant who was paid $4.3 million by the utility just before taking his seat on the commission. Even though he was supposed to be regulating the utility, the official, Sam Randazzo, played a role in writing the bailout legislation, according to documents released by the Ohio House. 

    In early 2019, DeWine also appointed FirstEnergy lobbyist Dan McCarthy to be his legislative affairs director, meaning McCarthy was in charge of representing DeWine’s interests before the General Assembly.

    In early 2017, while McCarthy was still working for FirstEnergy, Householder and his son, along with FirstEnergy CEO Chuck Jones and others, flew corporate jets to Washington, D.C. for fancy dinners and Donald Trump’s inaugural. 

    Just after that, McCarthy formed a 501(c)(4) group called Partners for Progress. Also known as a “dark money” group, it received $5 million from FirstEnergy within a few weeks of when McCarthy founded it.

    In an affidavit supporting Householder’s arrest, FBI Special Agent Blane Wetzel said Partners for Progress was “designed to conceal the nature, source, ownership, and control of the payments” from FirstEnergy and associated companies. Through the rest of 2018, McCarthy continued as president of Partners for Progress as it pumped FirstEnergy money into a Householder-controlled dark money group and funded the effort to make Householder speaker.

    The following year, McCarthy resigned that role to work for DeWine in the legislature as Householder shepherded the bailout legislation, House Bill 6. When a final version passed in July 2019, DeWine signed it the same day.

    But opponents quickly started a campaign to circulate petitions to put a repeal on the ballot. That prompted FirstEnergy to pump even greater sums into a “decline to sign” campaign aimed at thwarting the petitions.

    It funded xenophobic mailers and broadcast ads claiming without evidence that the repeal effort was a Chinese plot.

    “Who is knocking at your door?” began a mailer read in court Tuesday. “Foreign enemies have infiltrated our energy grid,” it added and said, ominously, that circulators of repeal petitions “are asking for your information.”

    In October 2019, executives with FirstEnergy and its generation-owning subsidiary seemed panicked that the repeal effort might succeed and they were planning to pump $10 million more into the effort to stop it — through Partners for Progress, the dark money group started by McCarthy, who was now a DeWine aide.

    Dowling, the FirstEnergy vice president, seemed to think it wouldn’t be a good look for the name of a DeWine official to show up on paperwork accompanying the huge transaction.

    “Please make sure Dan McCarthy’s name is not on the filing,” Dowling said in a text message to Partners for Progress Treasurer Michael Vanburen that was presented in court Tuesday.

    Vanburen replied that even though McCarthy was no longer president of the dark money group, IRS rules required that his name be on the filing. Dowling didn’t accept that.

    “There must be a creative way to handle this,” he said. “It’s important that (McCarthy’s) name not be listed.”

    Asked if DeWine asked that McCarthy’s name not be used in paperwork regarding the money transfers, Press Secretary Dan Tierney in an email said, “No. Dan McCarthy resigned from Partners for Progress in December 2018. Dowling’s comments, as you have relayed them to me, do not match the timeline of McCarthy’s affiliation with Partners for Progress.”

    DeWine seems to have been in touch with FirstEnergy executives around the time of the repeal effort. Later in October 2019, FirstEnergy CEO Jones texted Vice President Dowling to say, “DeWine’s on board. I talked to him on Wednesday.”

    According to Jones, they talked about whether the repeal HB 6 effort would gather enough valid signatures to get the measure on the ballot.

    “He said their valid rate was less than 30%,” Jones said of DeWine.

    For his part, Tierney said, “The Governor does not have any recollection of such a conversation.”

    In a later text conversation, Jones said he’d received similar assurances from Secretary of State Frank LaRose.

    After arrests were made in the House Bill 6 scandal, DeWine staunchly defended McCarthy and kept him in his administration for more than a year, until Sept. 24, 2021.

    “As far as I know, Dan McCarthy has been well-respected for many, many years, long before he started working for me as our legislative director and I have faith in his integrity,” DeWine said in early 2021 as questions about the role McCarthy’s dark money group played in the bribery and money laundering scandal continued.

    In another trial-related matter, U.S. District Judge Timothy Black on Tuesday said that he had released a second juror, this time for testing positive for COVID. An earlier juror had been released for refusing to wear a mask.

    That brings the number of alternate jurors to two for a trial that is expected to last into early March.