Five have been charged and four have been convicted in a massive bribery and money-laundering scandal, but there were more signs this week that the federal criminal investigation is continuing.
In court documents filed in a separate case on Monday, a special master said that a major player in the conspiracy — Akron-based FirstEnergy — continues to cooperate with federal prosecutors. The same documents order the major beneficiary of the conspiracy, a former FirstEnergy subsidiary, to do more to cooperate in a federal class-action suit.
Former House Speaker Larry Householder, R-Glenford, and former GOP Chairman Matt Borges in June were respectively sentenced to 20 and five years in federal prison for their roles in the conspiracy. Two others have pleaded guilty and await sentencing, while a third who was charged died by suicide.
In the conspiracy, FirstEnergy and its then-subsidiary paid more than $60 million from 2017 to 2019 to make Householder speaker so he could pass and protect a $1.3 billion bailout. Of that sum, the vast majority was intended to prop up two nuclear plants owned by the subsidiary, then called FirstEnergy Solutions.
Over the course of a six-week trial in Cincinnati early this year, prosecutors put on evidence that FirstEnergy found itself in a precarious state because its heavy investments in coal and nuclear-powered generation were being undercut by cheap natural gas. Top executives with the company — including then-CEO Chuck Jones and Vice President Michael Dowling — desperately sought a ratepayer bailout to prop up the nuclear plants so they could spin them off and get most of the liability associated with closing and cleaning them up off their books.
In 2019, as Householder was shepherding the bailout through the legislature, FirstEnergy Solutions was in bankruptcy and emerged in February 2020. It had a new name, Energy Harbor, and it was no longer a subsidiary of FirstEnergy.
Five months later, the FBI arrested Householder and the others. Then large pension and investment funds sued FirstEnergy, saying the reckless, undisclosed conduct of its top executives caused investors to lose billions when that conduct hit the public fan.
FirstEnergy signed a deferred prosecution agreement admitting wrongdoing and agreeing to pay a $230 million penalty to the government. But that didn’t get it off the hook in the multiple civil suits it’s faced, including the class action filed in the Southern District of Ohio by large investors.
As part of the suit, those investors have been battling FirstEnergy for communications and other information that might implicate officials other than Jones and Dowling, who were fired.
They’re also battling Sam Randazzo. He isn’t named in the suit, but FirstEnergy said he took a $4.3 million bribe from Jones and Dowling just as Gov. Mike DeWine nominated Randazzo to chair the Public Utilities Commission of Ohio at the beginning of 2019. The class-action plaintiffs say Randazzo might be sitting on text messages and other communications relevant to the conspiracy.
Jones, Dowling and Randazzo deny criminal wrongdoing in the scandal, but U.S. Attorney Kenneth L. Parker in June said that the investigation was continuing. On Monday, Special Master Shawn Judge also said in a court filing that the investigation continues — and that FirstEnergy is cooperating.
“During this jury trial, the government highlighted Jones’s and Dowling’s purported relationships with Householder and involvement in the conspiracy,” Judge wrote, referring to the criminal trial earlier this year. “And multiple representations before the Court suggest that FirstEnergy’s cooperation with government investigations is ongoing.”
Judge is helping to referee the numerous discovery disputes in the class-action case. In this instance, he ordered Energy Harbor to provide almost everything the FirstEnergy investors wanted.
As a now-independent company, Energy Harbor said it’s not a defendant in the civil case, so it shouldn’t be put to the trouble and expense to provide the information the pension and investment funds are demanding.
But Judge noted that while it was still a FirstEnergy subsidiary, the company “contributed $43 million of the $60 million paid to Householder and his affiliates in exchange for the official action of passing (the bailout law) and defending it from a repeal referendum.”
In addition, Judge wrote, the subsidiary’s lobbyist, Juan Cespedes, helped direct some of those funds and pleaded guilty to his role in the racketeering conspiracy.
Judge then ordered Energy Harbor to provide the plaintiffs with the information they requested, but reduced the time period the required documents span by several months.
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.
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.
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.
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.
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.
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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.
A billion-dollar nuclear subsidy was the subject of an intense fight in 2019 and great controversy since. But the president of the Ohio Senate this week predicted that a repeal will make it through the House, Senate and that Gov. Mike DeWine will sign it.
The reason: The company that owns the nuclear reactors no longer wants the money, he said. And that raises serious questions about whether the subsidies were needed in the first place.
The subsidy was the product of House Bill 6. The legislation was passed in 2019 after a nasty fight which led to federal criminal charges against then-House Speaker Larry Householder, four associates and a dark-money group.
Prosecutors said $61 million from Akron-based First Energy and associated groups was used in the corrupt effort to pass the bailout. Two of Householder’s associates and the dark money group have pleaded guilty, FirstEnergy’s CEO was fired and Gov. Mike DeWine’s appointee to chair the Public Utility Commission of Ohio has resigned as part of the scandal.
Despite intense calls for a full repeal of HB 6, it remains in place — although a Franklin County Judge has temporarily stopped collection of the money by the owner of the nuclear plants, FirstEnergy successor Energy Harbor.
DeWine and others have said they want a repeal, but they want to continue to subsidize the Northern Ohio nuclear plants for environmental reasons.
“We were for nuclear power,” he said Tuesday, referring to his initial support for HB 6. “Nuclear power was the only way in this state, today, that we can have very much non-carbon production. It’s the only way we can do it.”
But early this month, Sens. Jerry C. Cirino, R-Kirtland, and Michael Rulli, R-Salem, introduced legislation, Senate Bill 44, to get rid of the subsidies. On Wednesday it received a hearing by the Senate Energy and Public Utilities Committee.
Despite the governor’s statements, Senate President Matt Huffman, R-Lima, said he expects the repeal legislation to become law.
“I think that provision will likely get passed out of the Senate and I think it will pass out of the House and get signed by the governor,” Huffman told the governing board of the Ohio Consumers’ Counsel, the state’s official utility watchdog. “When I say the House and the governor, I’m not speaking for them, nor have I spoken to them about this. But if a large company that got a subsidy in a dubious way… says ‘We don’t want it,’ that seems to me to be a pretty easy call.”
Energy Harbor, the owner of the plants, didn’t respond to requests for comment on Wednesday. But Huffman was apparently referring to a December 2019 ruling by the Federal Energy Regulatory Commission and Energy Harbor’s response to it.
The ruling said, in essence, that the company that would become Energy Harbor would have to cut its prices if it was going to sell its subsidized nuclear energy onto the massive grid that serves all or part of 13 states, including Ohio.
It would “threaten the competitiveness” of the long-term, or “capacity,” marketplace if companies like Energy Harbor could sell subsidized power on the same basis as power that wasn’t subsidized. So Energy Harbor and the others have to discount it according to a formula, the ruling said.
Recent developments appear to be a sharp reversal from 2019.
As proponents pushed HB 6, they threatened that closure of the Ohio nuclear plants was imminent if they didn’t get a bailout — and quickly. But Huffman’s statements on Tuesday indicate that Energy Harbor has no plans to shutter the plants even now that it isn’t getting the money.
“I don’t want the nuclear power plants to close,” he said. “However, it’s been made clear to me that the plants will not close if this subsidy is removed. In fact, they’re better off because of machinations at another level. In fact, these subsidies will likely harm these power plants.”
There’s other evidence that Energy Harbor’s pre-bankruptcy predecessor, FirstEnergy Solutions, might not have been as broke as it claimed in 2019.
Shortly after emerging from bankruptcy in early 2020, it did an $800 million stock buyback. Such buybacks typically raise stock values, in this case enriching shareholders just months after pleading poverty and winning a $1 billion bailout from Ohio ratepayers.
The federal ruling also raises questions about whether it was wise even to start the bailout fight, which has caused so much damage in Ohio. On June 29, 2018, more than a year before DeWine signed HB 6 into law, FERC issued a ruling strongly foreshadowing what it later did: effectively erase the subsidies bailout supporters had gained if they wanted to sell power into the long-term market.
The arrest of former Ohio House Speaker Larry Householder and others in July revealed how the use of dark money organizations enabled an alleged $60 million conspiracy to sway elections and provide costly bailouts to noncompetitive nuclear and coal plants.
As federal and state court cases move forward, questions remain about what can be done to restore confidence in the legislature and to prevent similar situations in the future.
“Dark money is really how special interests win right now,” said Jay Costa, executive director at Voters’ Right To Know. When corporations use shell groups to hide their political spending, they “gain a level of credibility they wouldn’t otherwise have,” he explained. “I like to think of it as the ‘Wizard of Oz’ effect.”
In other words, voters don’t get to see who’s behind the curtain.
Two months after the federal government’s criminal complaint and indictment in July, Ohio Attorney General David Yost has filed a state court lawsuit. The complaint alleges a “pattern of corrupt activity,” and seeks injunctive relief to prevent FirstEnergy, FirstEnergy Solutions, Energy Harbor and others from reaping benefits from the bailouts under House Bill 6. A hearing on a preliminary motion for that relief is currently scheduled for Friday, Oct. 2.
Meanwhile, it’s unclear whether Ohio lawmakers will actually repeal House Bill 6, the bailout law passed as a result of the alleged conspiracy. Both Democratic and Republican lawmakers called for a swift repeal in late July and early August. However, leadership in the Ohio House has so far refused to allow a full House vote on any pending repeal bills.
‘Dragging their feet’
Rep. David Leland, D-Columbus
“They’re just dragging their feet,” said Rep. David Leland, D-Columbus. “We have 58 members of the legislature who are willing to repeal HB 6 right now.”
Instead, Speaker Robert Cupp, R-Lima, has referred the bill to a House Select Committee on Energy Policy and Oversight. So far, those hearings have largely been a general review of the pros and cons of HB 6, rather than a focused oversight of the alleged corruption that led to its passage and whether it should be repealed in order to repair any claimed harm to public trust in the legislature’s integrity.
“The only way that we can prove that Ohio is not for sale is by repealing HB 6,” Leland said. “The polling we’ve seen shows that people by an overwhelming margin are going to punish those people who have voted for HB 6 and have done nothing to repeal it.” Early and absentee voting in Ohio begins on Oct. 6.
“Our legislators are supposed to act in the public interest,” said political scientist Leah Stokes at the University of California at Santa Barbara. Corporations’ interests may sometimes conflict. But, she adds, “it’s really politicians’ and regulators’ job not to be listening to those special interests. That basic responsibility of democracy has failed in Ohio with House Bill 6.”
A straight repeal would mostly restore Ohio energy law to before HB 6 became effective, subject to some follow-up regulatory matters before the Public Utilities Commission of Ohio. A quick replacement could potentially reenact all or much of the law, which also gutted the state’s clean energy standards.
Advocates say that rushing to ram through anything more than a simple repeal this year would either just repeat bad policy or create more problems, even aside the alleged conspiracy’s past influence on the current makeup of the Ohio House of Representatives. Even at that, a repeal bill would now need either an emergency clause or an injunction sought by the state attorney general in order to stop the nuclear subsidies slated to start in January. The committee adjourned on Sept. 30 and no additional meetings are currently scheduled.
HB 6 “is so questionable at this moment. The vehicle itself and the way it was sold is all just a pack of lies,” said Rachael Belz, executive director of Ohio Citizen Action. “We need them to repeal it, and then we need to go from there.” And that second step will take time, she said.
“It’s complicated and complex legislation and policy. And we have to get it right,” said Chris Neme, a principal and co-founder of Energy Futures Group. “Passing a bill in less than a couple of months like the way HB 6 was just leads us down the road of unintended consequences.”
Shining a light on dark money
The bigger question is how to prevent similar abuses in the future. Utilities and fossil fuel interests have given heavily to Ohio political campaigns since the state enacted a 1999 law calling for competition in electricity generation. And the level of giving went up dramatically once a competitive market actually began to develop in the state.
Utilities’ political spending has continued during this election season. FirstEnergy spokesperson Jennifer Young said that its political action committee has since canceled campaign donations it had originally reported as going out in July shortly before Householder’s arrest.
Campaign donations shown for August have in fact been sent out, Young said. FirstEnergy has denied any wrongdoing in connection with its political donations or the alleged Householder scandal.
Meanwhile, a 2010 Supreme Court case, Citizens United, “really opened up the floodgates of fossil fuel and electric utility influence over politics,” Stokes said. Utilities’ political spending is “particularly pernicious,” in her view, because customers “have to buy from these companies” to get electricity delivered to their homes.
At the same time, reporting requirements currently apply only to immediate spenders on political issues and campaigns. They don’t reach all the way up the chain to the original source of the money.
“It’s basically this Russian nesting doll scenario, where you have one donor giving to another donor, giving to another donor, to get to the person who finally spends the money to influence the voters,” Costa explained.
In the case of HB 6, money flowed into Generation Now from multiple sources, with a lion’s share allegedly originating with Company A — understood to be FirstEnergy — and its subsidiaries, according to the federal complaint.
Some of the money in turn then went to a political action committee. Or, it went to other organizations that directly funded pro-HB 6 ads. One such ad claimed a debunked Chinese conspiracy was behind last year’s failed effort to put a referendum on the law on the ballot this fall. A for-profit group called Ohioans for Energy Security paid for that ad. When asked last year, lawyers at the firm that set up the corporation, Isaac Wiles, would not answer questions about the source of its funding.
“The notion that dark money is something some people don’t like is not part of the elements of the crime,” Mark Weaver, an attorney at that firm, said at a Columbus Metropolitan Club forum after news broke about the Householder arrest.
Asked if there was too much money sloshing around at the statehouse, he said it’s “a lot of money, no doubt,” but it “pales in comparison” to the amount that Americans spend on Halloween candy and costumes every year. And he said that the First Amendment protects the right to conduct political speech anonymously.
“Of course, state and local governments may (depending on how they draft) pass additional 501(c)4 disclosure requirements that could meet constitutional scrutiny,” Weaver later added.
Ian Vandewalker, Ian PHOTO CREDIT: Courtesy of Brennan Center for Justice
“There is no absolute right to anonymous speech,” said attorney Ian Vandewalker at the Brennan Center for Justice at New York University School of Law. Elections are treated differently from general speech, because of the overriding interest in making sure elections function properly, he explained at a panel organized by the League of Women Voters of Ohio.
“That requires informed voters. And it requires policies to not be able to cheat the public,” Vandewalker said. “And so those interests require that there be a level of transparency.”
“No regulation, no law, no set of ethical rules substitutes for American voters paying attention to who’s running for office — pressing them hard on what they stand for, looking closely at the issues, and going into the ballot box having done your homework,” Weaver said.
“The reason that information is important and transparency is important is so that voters are educated,” said Catherine Turcer, executive director of Common Cause Ohio. “You can’t make the argument that voters need to be better educated but you shouldn’t give them actual education. It doesn’t make any sense.”
Moreover, disclosure needs to be timely, said Heather Taylor-Miesle, executive director for the Ohio Environmental Council. In the case of HB 6, Generation Now didn’t report its 2017 spending to the Internal Revenue Service until late 2019. By then, millions more had been spent to influence the 2018 elections, the passage of HB 6, and the failed referendum effort against it.
Pending bills
Several bills introduced by Democratic and Republican lawmakers could make a strong start toward improved disclosure, including HB 737, HB 739, and SB 347. Those bills should be broadened to include digital media, as well as more traditional campaign spending, Turcer said.
The bills should also call for disclosure not only of the name of an organization, but the identity of the top three original donors of funding, Turcer added in her Sept. 16 testimony in support of SB 347. “Otherwise, wealthy special interests will attempt to avoid disclosure by creating pop-up shell groups,” she said.
And while Ohio voters won’t know who’s behind all the groups funding attack ads or other political spending this election season, information is available about how lawmakers voted on HB 6. The Akron Beacon Journal has also compiled some information on how some funds were used in the 2018 Ohio House campaigns.
“People should contact their legislators about HB 6” if they want to speak out about the issue, Stokes said, noting that the law passed with support from a mix of both Republicans and Democrats.
“When the public is outraged about an issue and really shows up, these issues get reversed,” Stokes added. “There’s a lot of leverage right now.”
[Note: the original version of this story took additional comments made by Mr. Weaver and summarized them to help the story flow better and to highlight the most relevant points. Mr. Weaver contacted Eye on Ohio and the Energy News Network after publication expressing his concern that the summary was not an accurate representation of his public comments. While we do not share that view, we are happy to share the full text from which that summary was taken. We know our readers are smart and can draw their own conclusions regarding their meaning. Beneath this article is that text, as well as a link to the entire video.]
Mark Weaver: Blaming Citizens United for this I think is wrongheaded. The New York Times, it’s sort of been proven that their collusion story about Russia has fallen completely apart and yet I don’t blame the First Amendment for the right to print what they printed. I think they had a right to print all that. I think it was substantively wrong, but I wouldn’t go after their ability to print that stuff.
And so what the Supreme Court said in Citizens United was, if a few of us get together and want to form a group to communicate, we ought to have a right to do that under the First Amendment.
And a lot of donors are looking at what’s happening in America right now with the doxxing, or the releasing of personal information and targeting people for shame. So that’s why some donors don’t want to give. Now some may have less noble notions for wanting to keep their money and their name private. But we saw what happened to Amy Acton for example where her personal home was targeted by protesters– that’s just wrong.
The notion that- I disagree with you so I’m going to personally vilify you and show up at your house where your family or your children are- so many donors see that as part of 2020 current affairs and so many of them want to avoid that. And I know not everyone has that reason.
Mike Thompson: But the problem comes in not just that somebody gives $500 to a candidate or a cause they believe in. It’s that somebody gives– $61 million or $35 million, let’s be conservative, and we don’t know that’s happening. Is there a middle ground where we can say, okay I can protect your identity, your First Amendment rights, but you can’t have THAT much influence?
Weaver: Well, not Constitutionally, no. It’s not just Citizens United. There was a case out of Ohio called McIntyre vs. the Ohio Elections Commission. This is the 7-2 Supreme Court case that said it’s legal to keep yourself anonymous when spending politically, based out of Ohio, in Westerville, Mrs. McIntyre. I used to teach the case. This morning I looked at it again and I had forgotten about this quote. This is not a close call. 7-2. This is Supreme court on anonymous speech: “It’s not a pernicious, fraudulent practice but an honorable tradition of advocacy and of dissent.”
And they pointed to the Federalist Papers that were written anonymously, to avoid scrutiny of the authors and focus on the ideas. So this notion of anonymous speech is one that’s protected by Supreme Court precedent.
Thompson: Laura, there are efforts at the statehouse to make it more transparent. Is it just lip service or are they serious efforts?
Laura Bischoff: You know it’s interesting. I do think the conditions are probably better now for reform than they were six months ago. So, there’s a couple of different bills pending. One is House Bill 737, which is sponsored by Gayle Manning, a Republican from North Royalton, and Jessica Miranda, a Democrat from Cleveland. And it’s got the support of the Ohio Secretary of State, Frank LaRose. And it would require, if you’re going to have a 501c(4) that’s spending in Ohio on political matters then it would require reporting through the state. Louis Brandeis said that the best disinfectant is sunshine. And so, this kind of works on that premise– transparency and disclosure will help clean it up.
Thompson: Derrick, It comes down to the Supreme Court. And the courts have said money equals speech. How much money? We have unlimited amounts of Free Speech. We can stand on a street corner, 24 hours a day, 7 days a week, and as long as we don’t yell fire in a crowded theatre we can do all we want. Should that same apply to the amount of money someone can give to a campaign? Or to a political cause?
Derrick Clay: Well you know if you have the money to give it, that’s your discretion whether you want to give that money to a c(4). You know, right now we’re under the law from that Citizens United case where people can give unlimited amounts of money to a c(4) nonprofit. So until that court case is overturned or challenged, then that’s the law of the land that we all have to abide by unfortunately.
Thompson: Is it too much money sloshing around at the statehouse? And you guys [points at Weaver and Clay] have both advocated for groups, and helped raise money and spent money that’s been raised. I mean, you’re part of the system-
Weaver: It’s a lot of money, no doubt. But when you look at what America spends on Halloween candy and costumes every year it pales in comparison. There’s lots of money done for lots of things.
Halloween candy and costumes don’t have the protection of the First Amendment. Remember, the Supreme Court has been very clear: the speech that aggravates us the most gets the most protection. And when you’re laying out what’s protected, political speech is the highest. And so whatever laws get passed, and I’m interested to read the details, and I’m interested in whatever laws are being put out there, they will have to withstand First Amendment scrutiny just like the news organizations represented today.
This article first appeared on Eye on Ohio and is republished here under a Creative Commons license.
Make no mistake – the $61 million came from Company A’s ratepayers and ultimately extorted from every residential and commercial electrical utility user in Ohio. The racketeering scheme of lies and deception corrupted Ohio citizen’s ability to overturn corrupt legislation at the ballot box. – David Miller, Loveland Magazine Publisher
By Marty Schladen The Ohio Capital Journal and David Miller/LovelandMagazine
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Cincinnati, Ohio – Ohio House Speaker Larry Householder, four political operatives and a dark-money group were charged Tuesday in a criminal complaint that an Ohio energy company paid them $61 million to get a $1.5 billion nuclear bailout from taxpayers.
Read the Press Release issued by the Department of Justice
Neil Clark, a lobbyist who owns Grant Street Consulting – Photo from Grant Street Consulting who exclaim, “Clark’s decades of experience and role in shaping Ohio’s political landscape makes him an indispensable resource to Ohio’s elected leaders, to whom he often serves as a trusted and highly sought after campaign advisor.”
All are charged with racketeering, which carries a prison sentence of up to 20 years.
David M. DeVillers, U.S. Attorney for the Southern District of Ohio
The alleged conspiracy, which revolved around the bailout of two failing nuclear plants in Northern Ohio, is “likely the largest bribery and money-laundering scheme ever in the state of Ohio,” David M. DeVillers, U.S. Attorney for the Southern District of Ohio, said at a Tuesday afternoon press conference.
Shortly after the press conference, Ohio Gov. Mike DeWine called on his fellow Republican to step down.
“I am deeply concerned about the allegations of wrongdoing in the criminal complaint issued today by the U.S. Attorney’s Office,” DeWine, who last year signed the bailout into law, said in a written statement. “Every American has the presumption of innocence until proven guilty. Because of the nature of these charges, it will be impossible for Speaker Householder to effectively lead the Ohio House of Representatives; therefore, I am calling on Speaker Householder to resign immediately. This is a sad day for Ohio.”
The criminal complaint says that “Company A,” the former FirstEnergy Solutions of Akron, worked to save its failing nuclear plants by funneling $61 million into Generation Now, a 501(c)(4) “dark money” group controlled by Householder.
On September 9, 2019, President Donald Trump nominated DeVillers for the United States Attorney in the Southern District of Ohio. The Senate confirmed the nomination in October, and DeVillers took his oath on November 1, 2019.
“Make no mistake, this is Larry Householder’s 501(c)(4),” the U.S. attorney said.
The money was used for three general purposes, the complaint said. First it was used to build “Team Householder” through campaign contributions and other measures that helped Householder win the speakership in 2019.
“In exchange for payment from Company A, Householder’s enterprise helped pass House Bill 6, legislation described by an enterprise member as a billion-dollar ‘bailout’ that saved from closure two failing nuclear power plants in Ohio affiliated with company A,” the complaint said
The money was also used for the personal benefit of Householder and the other conspirators, DeVillers said. Householder got about $500,000, he said.
Despite the companies claims of poverty, the interests behind the bailout spent millions — much of it in the form of hard-to-trace dark money on campaign contributions, a xenophobic ad campaign and then on an aggressive effort to stymie a petition drive to repeal the bailout DeWine signed into law a year ago.
And the money was used to fend off a petition effort to repeal HB6, going so far as to buy plane tickets for and pay $1,000 each to people circulating it to get out of town, DeVillers said.
The federal prosecutor said that it was crucial to keep the investigation secret until Tuesday. Now it begins a new phase that might be causing some lawmakers, energy executives and some others to lose sleep.
“We are not done with this case,” he said. “There were things we couldn’t do before. People we couldn’t interview. People we couldn’t subpoena. Documents and search warrants we couldn’t execute.
“As of this morning there are a lot of FBI agents knocking on a lot of doors asking a lot of questions, serving lots of subpoenas. That’s going to go on for days.”
“It takes courage for citizens to assist law enforcement in the ways detailed in the affidavit,” U.S. Attorney David M. DeVillers said. “We are grateful to those who felt a moral duty to work together with agents in bringing to light this alleged, significant public corruption.”
House Bill 6 is adding $1.5 billion in additional taxpayer bailouts to the $10.2 billion that Akron-based FirstEnergy Solutions and its former parent company, FirstEnergy Corp, have received from taxpayers since 1999. Most of the funds have gone to prop up the Davis-Besse and Perry nuclear power plants in Northern Ohio.
The company that owns the plants was renamed Energy Harbor after emerging from bankruptcy earlier this year.
Despite the companies claims of poverty, the interests behind the bailout spent millions — much of it in the form of hard-to-trace dark money on campaign contributions, a xenophobic ad campaign and then on an aggressive effort to stymie a petition drive to repeal the bailout DeWine signed into law a year ago.
The interests behind the nuclear bailout also contributed heavily to the effort at the beginning of 2019 to elect Householder speaker. He ended up winning the support of 26 Republicans and 26 Democrats, His opponent, Ryan Smith, R-Bidwell, got the votes of 34 Republicans and 12 Democrats.
The Ohio Republican Party didn’t respond Tuesday to requests for comment.
The Ohio Democratic Party didn’t respond when asked about the fact that Householder wouldn’t have worn the speakership without Democratic votes. However, the party chairman, David Pepper called on Householder to step down as speaker.
“As the U.S. attorney indicated, this investigation is ongoing, and we will wait to hear all the facts as they emerge. However, given what was revealed in today’s complaint and the taint of corruption over Ohio legislative activity, we believe Speaker Householder should step down from leadership immediately as he avails himself of his due process rights,” Pepper said in a written statement.
House Bill 6, which passed 51-38, was quickly signed into law by Gov. Mike DeWine. Under the bill, from 2021 until 2027, every Ohio electricity customer will have to pay a new monthly surcharge that ranges from 85 cents for residential customers to $2,400 for large industrial plants. Ratepayers around the state would also have to chip in up to $1.50 monthly (and up to $1,500 per month for commercial and industrial users) to subsidize coal plants in Ohio and Indiana run by the Ohio Valley Electric Corporation.- cleveland.com
Starting next January, ratepayers around the state would also have to chip in up to $1.50 monthly (and up to $1,500 per month for commercial and industrial users) to subsidize coal plants in Ohio and Indiana run by the Ohio Valley Electric Corporation.
This isn’t Householder’s first encounter with federal law enforcement.
In 2006, the Justice Department told the FBI that it wouldn’t pursue charges against Householder. The FBI had been told two years earlier that Householder had used his post as head of the House Republican Campaign Committee to overpay some vendors in exchange for kickbacks from them.
Nor is Householder, 61, of Glenford, the first Ohio House speaker to find himself in the FBI’s crosshairs. In 2018, Speaker Cliff Rosenberger, a Republican, resigned amid an FBI probe of his overseas travel. He has not been charged, but the investigation remains open.
