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Tag: FirstEnergy

  • 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.

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  • Former GOP Chair Borges chair sentenced to five years in massive corruption case

    Former GOP Chair Borges chair sentenced to five years in massive corruption case

     Center, former Ohio Republican Party chair, and statehouse lobbyist, Matt Borges with his attorneys outside of the federal courthouse. Photo courtesy of WEWS.

    BY:  – Ohio Capital Journal

    CINCINNATI — It was Matt Borges, the former chairman of the Ohio Republican Party, who was handcuffed by U.S. Marshals Friday after being sentenced to five years in prison for his participation in the biggest corruption scandal in state history.

    But federal prosecutors made clear that they were trying to send a message to other state leaders who played roles in the scandal and are now trying to pretend they didn’t.

    The sentencing of Borges, 51, follows the 20-year sentence U.S. District Judge Timothy Black meted out a day earlier to former Ohio House Speaker Larry Householder for masterminding the scheme. Akron-based FirstEnergy and other Ohio utilities ponied up more than $60 million between 2017 and 2020 to pass and protect a $1.3 billion ratepayer bailout that was mostly intended to benefit FirstEnergy.

    Borges received a lesser sentence because he was only involved in 2019, when FirstEnergy funneled $38 million into a dark-money group that funded an ugly, falsehood-strewn campaign to defeat a citizen-initiated repeal of the unpopular bailout. Because those voices were squelched — and because Ohio’s Republican legislature refuses to repeal the corrupt bailout — Ohioans continue to be harmed by the racketeering conspiracy, said Assistant U.S. Attorney Matthew Singer.

    The bulk of the subsidies — those going to two nuclear plants in Northern Ohio and a fee to “recession-proof” FirstEnergy — have been suspended. But Ohio ratepayers continue to pay hundreds of millions to prop two coal plants owned by AEP and other utilities, including one that’s in Indiana.

    The effort to gather enough voter signatures to put a repeal of the bailout — House Bill 6 — failed after Borges bribed a worker with the petition drive $15,000 for inside information and opened lines of communication with Republican officeholders.

    At the same time, teams of “blockers” harassed and allegedly assaulted petition gatherers and Householder’s minions flooded the airways with ads falsely claiming that the repeal effort was really China’s bid to take over the Ohio energy grid.

    The scheme Borges participated in was meant to “prevent Ohio voters from exercising their right to reject this corruption,” Singer said. “Ohioans never had the opportunity to vote up or down on this legislation.”

    Singer also pointed the finger at people only speaking out about Householder now and not earlier.

    “It’s interesting that some people are piling on (Householder) after the fact,” he said. “So many knew what was happening in real time and did nothing about it. Not only did they do nothing about it, they helped facilitate it.”

    Ohio Secretary of State Frank LaRose in a Tuesday appearance on Cincinnati’s 700WLW claimed that everybody who knew Householder knew he was “a crook” at the time the mammoth conspiracy was taking place. However, LaRose never spoke out against the deal at the time. And in text messages presented to the jury, FirstEnergy CEO Chuck Jones said that LaRose — who also heads up the Ohio Ballot Board — was giving him “private” updates about the signature-gathering effort.

    LaRose has refused to explain whether he was in communication with Jones or what he might have told him, but Singer, the prosecutor, seemed to refer to the state’s top elections official on Friday.

    Not only did Householder, Borges and their Republican allies squelch a citizen-initiated attempt to repeal the corrupt utility bailout, the gerrymandered legislature is now putting Issue 1 on the Aug. 8 ballot. It would make it virtually impossible for citizens to initiate amendments to the state Constitution. LaRose, a major supporter of the move, claims it will reduce corruption in Ohio.

    During Borges’ sentencing Friday, Singer decried the fact that many of the uncharged players in the racketeering scandal continue to thrive on Capitol Square. They include mega-lobbyist Robert Klaffkey, whom co-defendant Juan Cespedes testified slid a check for $400,000 in FirstEnergy dark money across a table to Householder during a 2018 meeting. Klaffkey denied sliding the check, but he didn’t deny being present.

    Singer said that it was remarkable that Klaffkey was “comfortable sitting in a room and sliding a $400,000 check to a public official.”

    Klaffkey is hardly alone.

    Megan Fitzmartin was paid hundreds of thousands as she aided Householder and co-defendant Jeffrey Longstreth in creating a Householder-friendly Republican majority in the state House. Now she’s policy director for the Republican supermajority in Ohio’s gerrymandered House.

    Corruption — and tolerance of it — corrodes our political foundation, Singer said.

    “Once corruption takes hold democracy itself becomes a charade,” he said.

    Cespedes and Longstreth are yet to be sentenced and U.S. Attorney Kenneth L. Parker on Thursday hinted that others might yet be charged in the scandal.

    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.

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  • Federal judge blasts disgraced Ohio House speaker as a “bully,” sends him straight to jail

    Federal judge blasts disgraced Ohio House speaker as a “bully,” sends him straight to jail

    Former House Speaker Larry Householder, R-Glenford. Source: Ohio General Assembly.

    BY:  – Ohio Capital Journal

    CINCINNATI — Former Ohio House Speaker Larry Householder spent possibly his last moments as a free man around 2:30 p.m. Thursday and they couldn’t have been pleasant.

    U.S. District Judge Timothy Black gave the Glenford Republican the maximum possible sentence of 20 years and then ordered blue-shirted U.S. Marshals to immediately take him into custody. He rose, put his hands behind his back, the marshals cuffed him and led the once-powerful pol away.

    But before that humiliation, the judge blistered Householder for being the ringleader of a racketeering scandal in which Akron-based FirstEnergy paid him more than $59 million in bribes in exchange for a $1.3 billion bailout, most of which was intended to save two failing nuclear plants in Northern Ohio.

    Ratepayers could have used that money for things like education, health care or to start businesses, the judge said.

    “You handed that money to suits in private jets,” Black said.

    The judge made the speech and imposed the sentence after saying Householder clearly perjured himself during his criminal trial, which lasted from late January until mid-March.

    In it, Householder claimed to barely know FirstEnergy executives as federal prosecutors put on a mountain of evidence that Householder flew on their corporate jets, sat in their luxury boxes and dined in fancy restaurants as they plowed tens of millions of the corporation’s dollars into dark-money accounts.

    “You conned the people of Ohio and you tried to con the jury, too,” Black said in his gravely voice as Householder, clad in a gray suit and red tie, slumped his bulk back in his chair.

    The money from FirstEnergy and one of its subsidiaries was used to elect fellow Republicans in 2018 who would vote to make Householder speaker in early 2019. More than $500,000 of it was used to pay off Householder’s credit card bills, settle a lawsuit and to repair a house he owned in Florida.

    Tens of millions more went to pass the corrupt bailout — House Bill 6 — and to fund a thuggish campaign to thwart a citizen-initiated repeal.

    Earlier in the hearing, Assistant U.S. Attorney Emily Glatfelter said Householder used FirstEnergy’s dark money to crush a “citizen veto” and “because of this House Bill 6 remains in effect today.”

    That’s also because Republican supermajorities in Ohio’s gerrymandered legislature have refused to repeal the corrupt law even after arrests were made, and as they try to make it virtually impossible for citizens to initiate amendments to the Ohio Constitution.

    Also arrested in the scandal were lobbyists Juan Cespedes and Jeffrey Longstreth — who cooperated with prosecutors within days of their arrests — and Neil Clark, who died by suicide. Former Ohio GOP Chairman Matt Borges is slated for sentencing at 11 a.m. today, Friday.

    Steven Bradley, Householder’s attorney, sought leniency for his client. Referring to the possibility of a 20-year sentence, he said “That is effectively a life sentence for Larry Householder given his age and health situation.”

    Householder is 64 and overweight.

    Bradley argued that his client was around 60 when the racketeering conspiracy began in late 2016 and that prior to that, Householder did “innumerable” good deeds “for decades.” A 20-year sentence would “effectively give no consideration” to those good deeds, Bradley said.

    But when he spoke on his own behalf, Householder appeared to do more to harm his case than to help it, just as he did at trial.

    “My greatest commitment is to my creator… My next commitment is to my family,” he read from a prepared statement as he stood at the podium.

    Householder said that in the course of 38 years of marriage, “I can count on one hand” the number of nights he spent away from his wife, Taundra. Householder also described the crushing pain they suffered when they lost a four-year-old daughter.

    But then he pushed his claims past the point of plausibility.

    He said Taundra was planning to retire from her teaching position and next year, when he turns 65, he wanted to retire as well, saying he planned to “hang up my suit and tie.”

    Householder made that statement in the same courtroom where, only three months earlier, prosecutors put on testimony and displayed bank records and written messages from early 2020 that showed FirstEnergy and AEP putting money into dark money groups intended to fund an effort to change the state’s term limits so Householder could stay in office for as long as 16 more years.

    The former House speaker also implied that he wanted a lenient sentence not for himself, but for his family. Taundra, he said, would be alone while “I’ll be in a cold cell hours away.”

    But what might really have set Judge Black off was Householder’s profession of selfless public service.

    “My life has been a total and full dedication to making life better for those I serve,” he said.

    Black described voters who put out Householder yard signs, donated their hard-earned money to his campaigns, and pushed a button for him in the voting booth.

    “I’m not talking about some corporation or the (former FirstEnergy CEO) Chuck Joneses of the world,” Black said. Householder’s constituents who supported him “were saying, ‘I’m choosing to trust you,’ and you betrayed that trust,” the judge said.

    Black used Householder’s own words to give the lie to his claims. He quoted several recordings of Householder that were surreptitiously made during the conspiracy and played at trial.

    “If you’re going to fk with me, I’m going to fk with your kids,” Householder said in one of them.

    “Bottom line, you were a bully,” the judge said.

    If the federal racketeering statute didn’t cap sentences for a single count at 20 years, sentencing guidelines would have recommended life for the former House speaker, Black said. One reason for that is because Householder’s use of a mountain of hidden corporate money to elect a legislature, pass an exponentially bigger bailout for the company, and to crush a citizen repeal is “an assault on democracy,” the judge said.

    Black explained the special harm done by public corruption like that committed by Householder and his co-conspirators. To do so, he quoted former President Theodore Roosevelt, who ironically advocated the citizen-initiated amendment process in Ohio that Householder’s former Republican colleagues in state government are now trying to gut.

    “There can be no crime more serious than bribery,” Roosevelt said in a 1903 message. “Other offenses violate one law while corruption strikes at the foundation of all law.”

    When Borges, the former GOP chair, is sentenced today, it’s unclear what he’ll face. His involvement in the conspiracy was considerably less than Householder’s, but Judge Black showed that he’s not much in the mood for leniency when it comes to Ohio’s corrupt political culture.

    Also uncertain is when — or if — others might be charged.

    Former FirstEnergy CEO Chuck Jones and Vice President Micheal Dowling — as well as former FirstEnergy Solutions President John Kiani — directed the flood of corporate dollars into the Householder-controlled dark money groups, according to prosecutors.

    And FirstEnergy admitted in a deferred prosecution agreement that it paid  a $4.3 million bribe to Sam Randazzo just as Gov. Mike DeWine was appointing him to chair the Public Utilities Commission. Randazzo the helped draft the corrupt bailout law, according to trial testimony.

    On the steps of the Potter Stewart U.S. Courthouse just after the sentencing, U.S. Attorney Kenneth Parker was asked when or whether those men or others might be charged.

    “We continue to look through evidence and we continue to listen to recordings and speak to individuals, so if something’s there we’re going to go there, too, and address it,” he said.

    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

  • As Borges delay is denied, former FirstEnergy execs say “no doubt” the feds are after them

    As Borges delay is denied, former FirstEnergy execs say “no doubt” the feds are after them

    Litigation, prosecutions in massive corruption scandal move forward

    BY:  – Ohio Capital Journal

    Judges denied two delays in recent days that would have been key to a bribery and money laundering scandal that took place in Ohio between 2017 to 2020. Lawyers in one suit called it “one of the largest corruption and bribery schemes in U.S. history.”

    Denial of a delay in one court case means that a player will still be sentenced late next month.

    In denying the other, the judge in that case agreed with two former FirstEnergy executives who said federal law enforcement has them in its crosshairs. But she ordered that they be questioned under oath anyway.

    One of those denied was former Ohio Republican Party Chairman Matt Borges, who on March 9 was convicted of racketeering along with former Ohio House Speaker Larry Householder, R-Glenford. Two others who were also charged in 2020 pleaded guilty and a third died by suicide.

    Borges and Householder played very different roles in a scheme to use more than $60 million from Akron-based FirstEnergy to make Householder speaker at the start of 2019 so Householder could pass and protect a $1.3 billion ratepayer bailout that mostly benefited FirstEnergy. But both made heavy use of funds that were passed through 501(c)(4) “dark money” accounts that enabled them to disguise its FirstEnergy source.

    Householder directed the effort in 2018 to elect friendly representatives who would make him speaker. He led the 2019 legislative fight to pass the bailout. And he engineered the nasty, dishonest battle to beat back an attempted repeal.

    Borges’ role was much more limited. He acted as a go-between with statewide officials such as Attorney General Dave Yost and Secretary of State Frank LaRose — and he paid a worker on the repeal campaign $15,000 as the worker shared inside information about its likelihood of success.

    Even though Householder’s role in the scandal was much bigger than that of Borges, each faces a sentence of up to 20 years in prison on the one count of racketeering of which he was convicted. Householder is scheduled to be sentenced in the Potter Stewart U.S. Courthouse in Cincinnati on June 29. Borges was scheduled for sentencing the next day.

    But after his conviction, Borges asked the court for extra time to file post-trial motions asking that his conviction be thrown out. U.S. District Judge Timothy Black agreed, giving him until April 24.

    Borges didn’t file anything by that deadline. But on May 15, Borges again asked permission to file post-trial motions. He argued that his conviction was on much shakier ground in light of two decisions handed down on May 11 by the U.S. Supreme Court: Ciminelli vs. United States and Percoco vs. United States.

    Judge Black, however, on Monday agreed with Assistant U.S. Attorney Emily Glatfelter that the legal theories those decisions dealt with were “neither charged, nor argued, nor instructed” in Borges’ case. Black added that it’s important to keep the case moving.

    “Finally, this case has been litigated, tried, and a verdict returned. Defendant Borges is now scheduled for sentencing on June 30, 2023. Disrupting the schedule would needlessly undermine the interests in judicial efficiency and finality,” the judge wrote.

     Former FirstEnergy CEO Charles “Chuck” Jones. Source: FirstEnergy, via Flickr 

    Similarly, a separate federal judge declined to postpone sworn depositions of the two former FirstEnergy executives who directed more than $60 million in corporate cash to Householder-controlled dark money groups that fueled the scandal. She did so even as she acknowledged that former CEO Chuck Jones and former Vice President Michael Dowling “fear they are next in line for indictment” and don’t want to incriminate themselves in their depositions.

    U.S. Magistrate Judge Kimberly Jolson is helping to manage the administration of a massive class-action suit against FirstEnergy, Jones and Dowling over the Householder scandal. Investors say the recklessness of the scheme cost them big — especially when it came to light and stock values plummeted.

    Alleging federal securities fraud, lawyers for pension funds and other investors have said in court filings, “FirstEnergy and its most senior executives bankrolled one of the largest corruption and bribery schemes in U.S. history.”

    Judge Jolson already slapped Sam Randazzo — Gov. Mike DeWine’s chairman of the Public Utilities Commission of Ohio — for not producing documents related to the $4.3 million FirstEnergy paid him just as DeWine was nominating Randazzo. Even though he was supposed to be regulating the utility, Randazzo, who has not been charged, helped draft the corrupt bailout law.

    Last Friday, Jolson also rejected attempts by Jones and Dowling — the former FirstEnergy executives — to delay sworn depositions to September or even later. The depositions had been scheduled for this week and next, but plaintiffs and defendants agreed to a short delay while Jolson considered the request.

    In asking to hold off until Sept. 8, Jones and Dowling said that having to give a deposition under oath put them in a position in which they were damned if they did, and damned if they didn’t.

    Answering questions could put them in criminal jeopardy, but if they took the Fifth, the jury in the class-action case is free to conclude they have something bad to hide, Jones and Dowling argued. They added that it’s certain that the feds are coming after them.

    “Although the defendants in (the Householder trial) have been found guilty (but are yet to be sentenced) and charges have not yet been brought against Jones or Dowling, there can be no doubt that the government’s investigation into Jones and Dowling remains ongoing,” their motion said.

    Judge Jolson replied that she had to weigh those concerns against those of FirstEnergy investors, who already have been fighting the case for nearly three years.

    Jones and Dowling “say the stay is temporary, (but) their grounds supporting the stay could extend for months or even years,” Jolson wrote. “Presently, they request that the depositions be delayed until at least September 8, 2023. (Jones and Dowling) have chosen this date because it is the first date on which investigations and proceedings conducted by PUCO might resume—after a third six-month stay of those proceedings was recently granted at the request of” federal prosecutors.

    The judge added it didn’t help the former executives’ argument that they haven’t been indicted yet because waiting until that question is resolved is a recipe for further delay.

    Jolson said she understood the executives’ dilemma.

    “In sum, there is substantial overlap between the issues in this case and the criminal investigation surrounding the Householder case,” she wrote. “And (Jones and Dowling) are faced with legitimate concerns regarding the invocation of their Fifth Amendment rights.”

    Jolson added, however, that granting a delay would privilege the former executives who funded the corrupt bailout scheme over the aggrieved investors and the public.

    “A stay of these key depositions at this moment — with no clear end in sight — would throw a wrench into the works of discovery and impede or even halt the litigation,” she wrote. “It would privilege the interests of (Jones and Dowling) above those of Plaintiffs, the public (whose interests are particularly implicated given that this is a class action), and the Court.”

    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.

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  • Ohio SOS gives yet another reason to make it a lot harder for voters to amend Constitution

    Ohio SOS gives yet another reason to make it a lot harder for voters to amend Constitution

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    Secretary of State Frank LaRose announces the referral of 117 cases of alleged voting and voter registration fraud stemming from the 2020 elections. Photo courtesy The Ohio Channel.

    BY:  – Ohio Capital Journal

    Ohio Secretary of State Frank LaRose on Wednesday offered another rationale for making it much more difficult for voters to amend the Ohio Constitution. Now he’s saying it’s needed to fight a possible power grab like one that grew out of a massive bribery and money-laundering scandal.

    But LaRose didn’t mention in his op-ed that his name came up repeatedly in a criminal trial related to the scandal and that he appeared to be in close communication with some of its central figures.

    Nor did his office respond when asked whether LaRose ever spoke out against the corrupt utility bailout before the FBI started arresting people in July 2020.

    Slippery explanations

    The secretary of state — who is said to be eyeing a run for U.S. Senate next year — has been pushing to increase the portion of votes needed for a citizen-initiated amendment from 50% to 60%. As he and his allies have, they’ve given a shifting set of reasons for why that’s needed.

    Last November, during a lame-duck session of the legislature, LaRose and state Rep. Brian Stewart, R-Ashville, held a press conference saying that the change was necessary to prevent wanton amendments to the Ohio Constitution by monied special interests. But they didn’t point to any examples of how that had happened in the past.

    Many suspected an ulterior motive.

    LaRose sat on a Republican-dominated redistricting commission that last year ignored seven Ohio Supreme Court rulings saying that the legislative and congressional maps the commission produced violated anti-gerrymandering amendments overwhelmingly approved by Ohio voters. That prompted Maureen O’Connor, the outgoing Republican chief justice, to urge Ohioans to pass new, more-tightly written amendments this year.

    Ohio was also roiled when a highly restrictive abortion law took effect last June just after the U.S. Supreme Court overturned Roe v. Wade and horror stories poured out of abortion clinics and hospitals. An effort quickly started to get an amendment on the ballot protecting abortion rights after other protections easily passed in other states.

    But at last year’s presser, LaRose denied that his goal was to block anti-gerrymandering or abortion-rights amendments. The constitutional change he was advocating was a long-term, fundamental one that he didn’t seek to block such short-term disputes, he claimed.

    Just weeks later, however, Stewart, LaRose’s sidekick at the presser, sent a letter to his GOP colleagues in the House explaining the real reasons for making it harder for Ohioans to amend their constitution: to stop abortion-rights and anti-gerrymandering amendments that appear to be favored by strong majorities of Ohioans.

     

    [/vc_column_text][vc_raw_html]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[/vc_raw_html][vc_column_text]The attempt to rush a bill through lame duck last year failed.

    Now Stewart, LaRose and their allies are trying to pass it through Ohio’s now-unconstitutionally gerrymandered legislature. If it passes, it would put the measure requiring 60% of the vote to amend the state constitution on the ballot. And, since the vote would be under the existing rules, it would require just 50% of the vote to pass.

    Also on the pile of accusations that it’s a naked power grab is that LaRose, Stewart and their allies want to put the measure on the ballot in a low-turnout August election. They’re doing so just months after passing a bill that had LaRose’s support to eliminate such elections as costly and unnecessary — and three months before the abortion amendment is expected to hit the ballot.

    A new reason

    While he’s being accused of attempting a power grab, LaRose says he’s trying to stop them.

    On Tuesday, The Columbus Dispatch published an op-ed in which he furnished yet another reason to make it harder for voters to change the state Constitution. He cited an attempt by former House Speaker Larry Householder to pass an amendment changing the state’s term limits so Householder could stay speaker for another 16 years.

    It was part of a breathtaking scheme in which Householder and his allies took more than $61 million from Akron-based FirstEnergy and other utilities, used the money to make him speaker in January 2019, and then pass and protect a $1.3 billion ratepayer bailout that mostly went to FirstEnergy.

    Fresh off the passage of the bailout, Householder raised millions in early 2020 from FirstEnergy and AEP for his scheme that would allow him to stay longer in office. But it died with his arrest that July.

    It might seem ironic that LaRose would use a corruption scandal to gut a 1912 reform measure that was aimed at curbing corrupt, unresponsive government, but that’s what he argued. He said all it takes to change the Constitution now “is a well-funded, dishonest political campaign and a simple majority vote.”

    LaRose added that Householder planned to call his tenure-extension scheme “Ohioans for Legislative Term Limits, a deceptive name for a constitutional amendment that would more than double his term in office. It should come as no surprise that FirstEnergy Corporation, the company at the center of Householder’s racketeering scandal, agreed to bankroll the amendment campaign.”

    Significant omissions

    While he accused his opponents of “hysterical hyperbole” as he tries to make it 20% harder for voters to succeed in the already difficult process to amend the Ohio Constitution, there were some important things LaRose didn’t say in his Op-Ed.

    For starters, FirstEnergy didn’t only bankroll Householder in 2018 as the now-convicted former speaker elected a team of lieutenants who would hand him the speaker’s gavel. The utility also bankrolled LaRose to the tune of $25,000 that year as he ran for secretary of state.

    It was part of nearly $50,000 that the energy company — which signed a deferred prosecution agreement in the Householder scandal — has given LaRose, the campaign-finance tracker FollowTheMoney.org reports.

    And while LaRose is decrying the bailout now that there have been arrests and convictions, there was reason to know there was something wrong with it well before they took place.

    Insiders knew that somebody was burying Capitol Square in cash throughout the 2019 passage of House Bill 6, the corrupt utility bailout. That was especially true as FirstEnergy dumped what the FBI later determined was $36 million into a blatantly-dishonest-but-successful fight to beat back a repeal.

    Because the funds were non-disclosable 501(c)(4) dark money, it was impossible for the public to know exactly where they were coming from until the feds stepped in and used subpoenas and other special powers to find out.

    But HB 6 was such bad legislation and the campaign to stop the repeal so over-the-top that there was plenty of reason to suspect that somebody was being bought off to pass it. It was a massive corporate bailout that Householder and others were trying to officially declare a tax. Republican lawmakers who didn’t want to cast such a damaging vote described withering pressure from House leadership.

    Former friends

    LaRose’s office didn’t answer Wednesday when asked if the secretary of state ever spoke out against HB 6 before the FBI started making arrests.

    In the Cincinnati corruption trial that ran from late January to mid-March, federal prosecutors presented several communications to the jury that might indicate that LaRose was actually sympathetic to the effort to pass and protect the corrupt bailout.

    On July 23, 2019, as the repeal effort got underway, text messages flew between two prominent figures in the scandal: Matt Borges, the former Ohio Republican Party chairman who was convicted along with Householder; and Juan Cespedes, a lobbyist who pleaded guilty and cooperated with prosecutors.

    Borges told Cespedes he had received “a message from the secretary of state on the ballot-measure issue.”

    The men were hoping for help from LaRose. He’s chairman of the Ohio Ballot Board, which, along with Attorney General Dave Yost, has to approve the language of constitutional amendments before they’re circulated for the hundreds of thousands of needed voter signatures — and before they’re placed on the ballot.

    In the case of the HB 6 repeal, Yost initially sent the language back for revisions, then he and the ballot board approved it. But that wasn’t before the original 90 days opponents had to gather the signatures was whittled down to 53.

    In the end, time ran out before opponents could gather them. But at the beginning of the effort, Borges seemed to be talking to LaRose about what LaRose needed in exchange for his help.

    “LaRose is expecting us to be publicly supportive of him,” Borges said. “Apparently petitioners (for the repeal of HB 6) are going to call on him to step down from the ballot board because of ‘conflicts.’ He can be our friend in this process, so let’s be prepared to speak for him.”

    Continuing communication

    Later in the repeal fight, FirstEnergy’s two top executives discussed asking LaRose’s help with Yost. In addition to hamstringing the petition effort, supporters of the corrupt bailout wanted to have it officially declared a tax, and thus legally exempt from repeal.

    “I’ve been asked by (subsidiary FirstEnergy Solutions) to call Frank LaRose to get Frank to call Dave Yost,” Vice President Michael Dowling texted CEO Chuck Jones, according to messages put into evidence by prosecutors. “If Frank tells Yost that he believes HB 6 is a tax, Yost will come out publicly and say it, which (FirstEnergy Solutions) thinks helps with the Supreme Court. Frank is reluctant to make the call. I have a call in to Frank and I will ask him to do it.”

    LaRose may have been reluctant about making that call. But he apparently wasn’t reluctant to keep talking to the people who funded the scandal he’s now condemning and using as a reason to make it harder for voters to amend the Ohio Constitution.

    In October 2019 — shortly before the repeal effort failed — Jones sent a text to John Kiani, the chairman of the FirstEnergy subsidiary that was to receive $1 billion of the bailout. It indicated that both LaRose and Householder had been providing the FirstEnergy CEO with “private” information on the repeal effort.

    “For what it’s worth, LaRose and Householder think it’s game over,” Jones told Kiani. “But that is a private conversation unless they’ve told you the same thing. And Householder has a ‘quick fix’ anyway.”

    And then in November 2019 — just after the repeal failed — other messages indicated that LaRose wanted to cement a relationship with Kiani, the hard-charging former Enron executive whom Cespedes testified stood to make $100 million off the sale of FirstEnergy’s bailed-out nuclear and coal plants.

    Borges texted Cespedes that LaRose, “told me he wants to get to know Kiani, and I said, ‘Are you sure about that?’”

    Cespedes replied, “He will live to regret that.”[/vc_column_text][/vc_column][/vc_row]

    ____________________________________

    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

  • Former Ohio speaker, GOP chair found guilty of racketeering

    Former Ohio speaker, GOP chair found guilty of racketeering

    Former Ohio House Speaker Larry Householder gives the thumbs up as he enters the courthouse where he is expected to testify Wednesday, March 1, 2023. Photo from WEWS.

    BY: MARTY SCHLADEN – MARCH 9, 2023 2:03 PM Ohio Capital Journal

    CINCINNATI — After more than nine hours of deliberation, a jury on Thursday found former Ohio House Speaker Larry Householder and state Republican Chairman Matt Borges guilty of felony racketeering charges in connection with a billion-dollar utility bailout that was passed in 2019.

    Both men face maximum sentences of 20 years in what prosecutors said was likely biggest bribery and money laundering scandal in Ohio history. U.S. District Judge Timothy Black will schedule a sentencing hearing.

    After the verdict, one of Householder’s attorneys, Steven Bradley, confirmed what observers have suspected almost from the start of testimony.

    “Of course we’re going to appeal the verdict,” he told reporters minutes after the jury left the courtroom. Householder stood off to the side in a blue business suit, clutching a camouflage trucker cap.

    He affirmed that he would continue to fight the charges.

     Convicted felon Larry Householder outside the federal courthouse in Cincinnati where a jury found him guilty of racketeering. Photo by Marty Schladen, Ohio Capital Journal.

    “This is just the first step in the process,” Householder said. “Stay tuned.”

    As part of the racketeering scheme, Akron-based FirstEnergy and other utilities paid tens of millions into an effort to elect friendly lawmakers in 2018 who would vote to make Householder speaker the following year. Immediately after taking the speaker’s gavel, Householder worked furiously to pass a $1.3 billion bailout, the vast majority of which benefited FirstEnergy subsidiary FirstEnergy Services.

    The company was being dragged down by losses from its nuclear and coal plants and executives were seeking a bailout. While it got more than $1 billion out of the deal, Householder got political power as well as more than $500,000 personally, jurors found. Borges played a smaller role, but he paid a $15,000 bribe to help defeat an attempt to repeal the bailout and he received more than $100,000 in funds that originated with FirstEnergy, prosecutors said.

    The verdict could have far-reaching implications for the use of “dark money” — funds paid into 501(c)(4) organizations that don’t have to reveal the sources of their funding. In the wake of the 2010 U.S. Supreme Court decision Citizens United v FEC, the use of such funds has become ubiquitous in state and national politics.

    Thursday’s verdict might start to start to draw some boundaries around such expenditures.

    In the case of the Ohio bailout, a financially strapped Householder found common cause with a financially ailing FirstEnergy. After paying billions to prop up a subsidiary with failing and nuclear and coal plants, the parent corporation in 2016 decided to send the subsidiary into bankruptcy. They wanted a ratepayer subsidy for the failing nuclear and coal plants so they could be sold off after the subsidiary emerged from bankruptcy.

    FirstEnergy’s top executives were seeking a bailout at the same time a financially strapped Householder was seeking a return to the Ohio speakership. Their relationship grew in luxurious settings that belied the financial problems besetting both.

    Householder attended a World Series game in November 2016 in the FirstEnergy box in Cleveland with CEO Chuck Jones. Two months later, Householder flew to Donald Trump’s inauguration aboard FirstEnergy’s private jet and stayed in the same $500-a-night hotel as Jones. Prosecutors showed the jury photos of Householder’s son and a FirstEnergy executive in the back of a limousine just outside a fancy steakhouse dinner.

    Within weeks of the inauguration, Householder’s underling set up Generation Now, a 501(c)(4) dark money group into which FirstEnergy almost immediately started pouring what would become tens of millions of dollars.

    The money was used to fund support staff for candidates who would vote to make Householder speaker and to finance attack ads against their opponents.

    When opponents started gathering signatures to repeal the bailout law, House Bill 6, FirstEnergy poured $36 million into an effort to block it. Householder took control of the push to block the repeal, while Borges assisted — both by pressuring Attorney General Dave Yost and by paying $15,000 for inside information about the petition campaign.

     Center, former Ohio Republican Party chair, and statehouse lobbyist, Matt Borges with his attorneys outside of the federal courthouse. Photo courtesy of WEWS.

    That money was used to finance a torrent of misleading, anti-China ads and a petition-blocking effort that in some cases devolved into outright battery, witnesses testified.

    And because it was dark money, the public couldn’t know that it was FirstEnergy that was financing the gargantuan fight to pass and protect a much larger bailout from which it benefited — until federal law enforcement stepped in. During the trial, investigators from the FBI described how they used accountants, informants, subpoenas and wiretaps to unravel the tangle of dark money groups and political-action committees that were used to obscure the origins of the funds that were used in the scheme.

    “Today was a victory for the people of Ohio,” U.S. Attorney Kenneth L. Parker said on the steps of the Potter Stewart U.S. Courthouse shortly after the verdict. Parker declined to answer whether further indictments can be expected in the case — including for Jones and other FirstEnergy executives who paid the money that the jury on Thursday determined to be bribes.

    Also unknown is whether Gov. Mike DeWine’s first appointee to chair the Public Utilities Commission of Ohio, Sam Randazzo, will be charged. Randazzo took $4.3 million from FirstEnergy shortly before being nominated to the post and once nominated, he helped write the bailout law, House Bill 6. He resigned shortly after the FBI searched his Columbus condo in 2020.

    The verdict might be sending shock waves around Capitol Square and other power centers because defense attorneys for Householder and Borges argued that the conduct described by prosecutors was perfectly legal — politics as usual.

    In a statement, Parker offered a different take.

    “As presented by the trial team, Larry Householder illegally sold the statehouse, and thus he ultimately betrayed the great people of Ohio he was elected to serve,” the U.S. attorney said. “Matt Borges was a willing co-conspirator, who paid bribe money for insider information to assist Householder. Through its verdict today, the jury reaffirmed that the illegal acts committed by both men will not be tolerated and that they should be held accountable.”

    Outside the courthouse, Householder said that he will go back to his Perry County farm to plant a garden and fish with his kids while federal authorities complete a pre-sentence report and a sentencing hearing is scheduled.

    That his attorneys plan to appeal has been suspected almost since testimony began on Jan. 23. On Feb. 1, they undertook the risky gambit of accusing Judge Black of being biased against their client in open court.

    They also took a risk by placing Householder on the stand to testify in his own behalf. During cross examination, Assistant U.S. Attorney Emily Glatfelter confronted Householder with numerous inconsistencies and apparent falsehoods.

    Householder was asked just after the verdict if he thought the decision to testify was a mistake. He said it wasn’t

    “I waited two-and-a-half years to tell my story,” he said. “I wanted the opportunity to speak.”

  • On the stand, former House speaker confronted by prosecutors with inconsistencies

    On the stand, former House speaker confronted by prosecutors with inconsistencies

    Former Ohio House Speaker Larry Householder gives the thumbs up as he enters the courthouse where he is expected to testify Wednesday, March 1, 2023. Photo from WEWS.

    BY: MARTY SCHLADEN – Ohio Capital Journal

    The cross examination prompted some observers to say Householder badly damaged his defense against federal racketeering charges by using the risky tactic of testifying in his own defense. It marked the end of the evidentiary phase of the trial. Closing arguments will begin Tuesday.

    Householder and former Republican Party Chairman Matt Borges are accused in a scheme to use $61 million in funds mostly from Akron-based FirstEnergy to make Householder speaker and then to pass and protect a $1.3 billion bailout that primarily went to prop up a subsidiary’s failing nuclear plants.

    Over more than five weeks of testimony, prosecutors have put on evidence they say proves Householder passed the bailout in return for massive 501(c)(4) “dark money” contributions and for more than $500,000 in personal benefits. Perhaps as a sign that they didn’t believe things were going well, Householder and his defense team took the controversial step of putting him on the witness stand on Wednesday.

    Defense attorneys are usually reluctant to put their clients on the stand because prosecutors can use cross examination to catch them in lies. That seemed to be Assistant U.S. Attorney Emily Glatfelter’s goal as she cross-examined Householder on Thursday.

    Hardball

    Glatfelter played secret recordings of conversations that jarringly contradicted Householder’s claims that as speaker, he wanted to be a peacemaker. Under its earlier leadership, Householder said, the House Republican Caucus was too “divisive.”

    “I didn’t want enemies. I wanted friends,” Householder said Wednesday, trying to refute claims that he was an autocratic leader who demanded unstinting loyalty from lawmakers and contributors.

    Glatfelter played a wiretap recording of a conversation between Householder and Neil Clark, a lobbyist who was charged in the conspiracy and later died by suicide.

    “We like war and you know that Neil,” Householder told Clark. Then referring to Republican Reps. Dave Greenspan and Scott Lipps, whom Householder considered insufficiently supportive, he said, “If you f**k with me, I’ll f**k with your kids.”

     Former House Speaker Larry Householder, R-Glenford. Source: Ohio General Assembly.

    The former speaker had earlier denied being involved in using dark, or “C4” money to make attack ads, but when Clark asked “You’re talking about C4 money?” Householder responded, “Yeah.”

    When Glatfelter asked Householder if he punished contributors and lawmakers who supported his foes instead of him, Householder said, “I can’t think of any consequences” he had meted out to non-supporters.

    Then Glatfelter played a recording between Householder and Clark in which they discussed what to do about non-supporters.

    “We can f**k them over later,” Householder said.

    In the dark about dark money

    The prosecutor also didn’t buy Householder’s claim of general ignorance about the operations of Generation Now, a 501(c)(4) dark money group into which FirstEnergy pumped scores of millions to pass and protect the bailout legislation. The entity was created and controlled by Jeffrey Longstreth, Householder’s underling, a few weeks after Householder flew with FirstEnergy Vice President Michael Dowling to Donald Trump’s 2017 inauguration aboard FirstEnergy’s corporate jet.

    Householder claimed that he was so new to the dark money game that Longstreth had to explain how such groups worked.

    And, as he did through much of the cross examination, Householder answered questions repetitively and seemingly grudgingly. When asked by Glatfelter what the former speaker thought the purpose of Generation Now was, Householder responded, “To educate the public on important issues and support candidates who support those issues.”

    Records and testimony from Longstreth — who pleaded guilty in the case — indicated that dark money from Generation Now was used to make and run ferocious attack ads against opponents of “Team Householder.” Then it was used to claim without evidence that an effort to repeal the bailout was really a Chinese effort to take over the Ohio energy grid. 

    Because such groups don’t have to disclose their contributors, FirstEnergy was able to keep its fingerprints off its involvement in passing and protecting legislation of such interest to the company.

    Prosecutors also played recordings and showed written messages indicating that Householder was involved in planning Generation Now-funded messages. But asked by Glatfelter several times on Thursday what he believed the dark money group actually did, Householder tried not to move far from his initial answer.

    The group was for “educating the public on issues that are important to Ohio and me and supporting candidates who support those issues,” he said.

    Champagne travel for a “country Republican”

    The former speaker and the prosecutor also clashed over Householder’s flight to the Trump inaugural. Householder and his son were invited to do so by Cleveland businessman Tony George.

     Former FirstEnergy CEO Charles “Chuck” Jones. Source: FirstEnergy, via Flickr

    Glatfelter asked what George’s relationship with FirstEnergy was. Householder said George “knew Chuck” — referring to FirstEnergy CEO Chuck Jones.

    Incredulous, Glatfelter said, “There’s a difference between knowing somebody and having access to his company jet, right?”

    Householder said that the only reason Dowling, the FirstEnergy vice president, flew with the group is because George said someone from the company had to be on the flight. The implication, apparently, was that the trip wasn’t part of the plan for a FirstEnergy bailout.

    Householder said he agreed to take the flight to save time. But traveling by private jet might not fit with  his explanation earlier in the day of the difference between him and Borges.

    “He’s a country club Republican and I’m more of a country Republican,” Householder said.

    The former speaker also claimed that he didn’t intend to fly free. 

    “From day 1, I was going to pay for that flight,” he said.

    More than two months later, Householder paid FirstEnergy $2,647. He said he paid then because that’s how long it took for FirstEnergy to send him a bill — not because the Dayton Daily News had written a story about the flight and the questionable appearance that it made.

    That Householder would take a private jet without knowing what the cost would be is difficult to square with another statement he made about himself when he testified a day earlier.

    “Anybody who’s been around me knows I’m cheap,” Householder said. “I drive a 2001 GMC Sonoma and I don’t like to spend money.”

    Glatfelter punched other holes in Householder’s attempts Wednesday to distance himself from FirstEnergy executives on the trip to the Trump inaugural. She showed that George reserved rooms at the same hotel for Householder and CEO Jones within a minute of each other and paid the same amount for both — $1,500. 

    Householder said he believed the Ohio Republican Party paid for his room.

    Personal payments, questionable sources

    Observers have said that one of the most damning kinds of evidence against Householder is that Longstreth had paid more than $500,000 to settle a lawsuit against the speaker, repair a house he owned in Florida, and to retire credit card debt. Longstreth said he had papers drawn up to formalize the payments as loans, but Householder never would sign them.

    Householder said his plan was to pay Longstreth when the Florida house was sold. When it finally did sell — for nearly $700,000 — Householder said he couldn’t pay Longstreth because both had been arrested in July 2020 and he believed any payments to a co-defendant could be used against him. The former speaker said he planned to pay Longstreth when the case is over.

    Householder also showed a curious lack of interest in the sources of Longstreth’s money. 

    Longstreth testified that he received millions in FirstEnergy money through Generation Now and into a separate account that he used to pay Householder’s debts, hire contractors, pay himself, and the like.

    Glatfelter asked Householder where Longstreth got the money to pay Householder’s debts and to run the sweeping political operation.

    “His business wasn’t my business,” Householder said of the man he hired to recruit candidates, get them elected, and then get them to vote to make him speaker.

    Lack of disclosure

    Glatfelter also took Householder to task for not disclosing debts and gifts in compliance with state ethics laws. 

    He didn’t disclose a $1.89 million judgment against him over a failed Alabama coal mine. Nor did he disclose 2016 World Series tickets that were given him at a discount from the going rate of $2,500 apiece, Glatfelter said. And he failed to report the $1,500 hotel room George got him for Trump’s inauguration.

    Householder testified that his attorney filed the disclosures and that he had only “glanced over” them. 

    Glatfelter pointed him to the portion of the disclosures in which the filer says he or she knows the contents of the disclosure and has to swear it’s accurate — a legally binding attestation similar to the one Householder made before testifying. She asked Householder if the documents bore his electronic signature.

    “I don’t even know what an electronic signature is,” he replied.

    Pressed, Householder responded with several versions of, “I relied on the advice of my attorney.”

  • Householder denies D.C. dinners, tying donations to legislation

    Householder denies D.C. dinners, tying donations to legislation

    BY: MARTY SCHLADEN – Ohio Capital Journal

    Former House Speaker Larry Householder, R-Glenford. Source: Ohio General Assembly.

    CINCINNATI — Former Ohio House Speaker Larry Householder on Wednesday claimed that he never promised any legislative action to FirstEnergy in exchange for the tens of millions the company paid into a 501(c)(4) dark money group he controlled.

    He also denied attending dinners in Washington, D.C., during Donald Trump’s inauguration during which other witnesses said he met with top FirstEnergy executives. 

    And the former speaker denied that he demanded unquestioning loyalty from lawmakers whose elections he worked for. Instead, he said, he wanted them to be independent thinkers.

    After sitting through federal court testimony since Jan. 23, Householder on Wednesday took the witness stand in his own defense. That’s considered by many lawyers to be a risky strategy because he will be subject to cross examination by prosecutors who are eager to catch the former speaker in a lie.

    Householder, a Republican from Glenford, and former Ohio GOP chair Matt Borges are being tried on accusations of racketeering in a case that federal prosecutors have said is likely the biggest bribery and money laundering scandal in Ohio history. 

    Householder is accused of masterminding a scheme to use $61 million in utility money to elect House members who would vote to make him speaker at the beginning of 2019. He led the effort to pass a $1.3 billion ratepayer bailout of failing nuclear and coal plants the following July and then protected it from a repeal campaign that failed in October 2019. Prosecutors say the bailout was explicitly tied to FirstEnergy’s contributions.

    On the stand, Householder introduced himself as a guy from Appalachia who had worked for years to protect Ohio’s energy independence. But he also made a number of statements prosecutors are likely to challenge.

    One is that as it neared passage, the bailout law, House Bill 6, became the object of “misinformation” in commercials that he said were financed by the American Petroleum Institute. The nuclear reactors the law would subsidize couldn’t compete with natural gas, which Householder said the petroleum institute supported instead of nuclear power.

    However, in his testimony, Householder didn’t point to anything specific that the group had misstated. Similarly, he complained of misinformation in a Cleveland Plain Dealer editorial, but he didn’t point to anything specific, nor did he say whether he asked for a correction.

    At the same time, the former speaker seemed guilty of some misinformation of his own.

    Householder said one of the chief goals of House Bill 6 — dubbed the “Ohio Clean Air Program” — was to lower carbon emissions. But the bill provided hundreds of millions in subsidies to coal-burning plants owned by FirstEnergy subsidiary FirstEnergy Solutions and other Ohio utilities.

    Householder’s claimed concern for carbon emissions also seems to clash with earlier statements he made on the stand. He testified that he was president of a group that owned an Alabama coal mine and that during an earlier stint in the Ohio House, he worked to subsidize coal production.

    Householder also tried to soften his image after three former House Republicans portrayed the former speaker as a heavy-handed autocrat who demanded loyalty at all times. He pointed out that even though they didn’t vote to make him speaker and they voted against HB 6, he didn’t remove Reps. Laura Lanese and Dave Greenspan from their leadership positions.

    In secret FBI recordings played earlier in the trial, lobbyist Neil Clark described Householder as ruthless and said he told Greenspan that because the lawmaker had opposed HB 6, Householder would never allow legislation Greenspan wanted to move forward. What Householder wanted, witnesses testified, were “casket carriers” — people so loyal that they would stay with him until he died and then lower his casket into the ground.

    But Householder on Tuesday said he didn’t want blind loyalty, he wanted independence. As for wanting casket carriers, that meant “I didn’t want enemies. I wanted friends,” Householder testified.

    Householder also disputed some of the basic factual allegations that had been made against him. 

    He denied testimony from former aide Jeffrey Longstreth that in an Oct. 10, 2018 meeting, lobbyist Robert Klaffky slid a $400,000 check from FirstEnergy Services across a conference table and under Householder’s hand. It was a FirstEnergy Services employee who gave him the check and there was no conference table to slide it across, Householder said.

    Even if that’s true, it’s hard to square that account with other parts of Householder’s testimony.

    At issue in the case is whether Householder pushed the bailout legislation in exchange for all the millions he received from FirstEnergy. He said he had little involvement in Generation Now, the main 501(c)(4) dark money group the company paid into and which supported Householder-friendly candidates and ferociously attacked their opponents.

    Householder said his understanding was that Generation Now was “a vehicle that would educate the public on issues that were important to Ohio.”

    But on Wednesday, Householder said he accepted a $400,000 check from FirstEnergy Solutions that was made out to Generation Now, which was created and controlled by Longstreth, his underling. The former speaker conceded that it was a huge contribution — and the jury might find it hard to credit that he played such a passive role in the group’s activities.

    Householder also denied Longstreth’s account of a dinner during Trump’s 2017 inaugural. Longstreth testified that he sat at one end of a long table in a crowded steakhouse with FirstEnergy Vice President Michael Dowling, while Householder sat at the other with CEO Chuck Jones. Longstreth said he couldn’t hear the conversation at the other end of the table, but he did hear Dowling instruct him to set up an organization that could accept “undisclosed and unlimited contributions” from FirstEnergy and its subsidiary. 

    Householder testified that he went to the inaugural with his wife and several of his sons and only briefly saw Jones and Dowling, but didn’t dine with them. Instead, he and his family went to the inauguration, the parade that followed and attended functions where they were photographed with such luminaries as former Indiana University basketball coach Bob Knight, Householder said.

    However, Householder said he and one of his sons flew to D.C. and back on a FirstEnergy jet. 

    The former speaker testified that on March 29, 2019 — more than two months later — he wrote a check for $2,647 reimbursing the company for the flight. But he didn’t say why it took him that long to make the payment or what prompted him to do so.

    In addition, paying for flights on private jets crashed pretty hard against another bit of Householder’s testimony Wednesday — that he is very frugal.

    “Anybody who’s been around me knows I’m cheap,” Householder said. “I drive a 2001 GMC Sonoma and I don’t like to spend money.”

  • Citing a hazy memory, former rep seems to distance himself from scandal

    Citing a hazy memory, former rep seems to distance himself from scandal

    State Rep. Nino Vitale, R-Urbana. Photo from Ohio House website.

    Vitale was said to be a big supporter of Householder now charged with racketeering

    BY: MARTY SCHLADEN – Ohio Capital Journal

    CINCINNATI — Former state Rep. Nino Vitale on Tuesday testified that he didn’t have much of a memory for — nor was he much interested in — raising money or campaigning for office. At several points, the Republican from Urbana even said he didn’t remember what year he was first elected to the legislature (it was 2014.)

    But on cross examination, federal prosecutors showed him records and written communications indicating that Vitale was regarded as an enthusiastic member of “Team Householder” who, as part of the team, received thousands in campaign funds and other assistance that originated with Akron-based FirstEnergy.

    As former Speaker Larry Householder’s appointee to chair the Energy and Natural Resources Committee, Vitale in 2019 helped to pass a $1.3 billion bailout that primarily benefited FirstEnergy. When they announced arrests in the summer of 2020, federal prosecutors said the bailout was at the center of what was likely the largest bribery and money-laundering scandal in Ohio history.

    Vitale was called by Householder’s lawyers in the trial, which started on Jan. 23. Householder and former Ohio Republican Party Chairman Matt Borges are charged with racketeering in an alleged scheme to use $61 million in utility money to elect friendly lawmakers who would make Householder speaker and then bail out FirstEnergy’s failing nuclear and coal plants.

    Vitale has long been known for controversial political gestures — including refusing to wear a mask at the height of the coronavirus pandemic because human faces are “the likeness of God.“

    But on Tuesday, Vitale portrayed himself as a reluctant politician. In a possible nod to how uncompetitive his district was, the former lawmaker said he didn’t have to do much to get reelected.

    “The whole marketing side of things wasn’t big on my radar because my district elected me overwhelmingly and frequently,” Vitale said.

    Householder’s attorneys seemed to call Vitale and other Householder supporters in the House to testify so they could say they believed the bailout law was good public policy. But U.S. District Judge Timothy Black limited such testimony, saying the proceeding wasn’t a referendum on the merits of House Bill 6.

    Vitale also said he never felt pressured to support Householder for speaker or to support the bailout. 

    But Assistant U.S. Attorney Megan Gaffney Painter then posed a series of questions that seemed to be intended to show that Householder made Vitale chairman of the Energy and Natural Resources Committee not because Vitale had any particular qualifications, but because he was an enthusiastic member of Team Householder who would do the speaker’s bidding.

    Vitale tried to refute that characterization.

    When Painter tried to get him to agree that he had little in his background to school him in large-scale electricity generation or the management of the state’s natural resources, Vitale wouldn’t. 

    “I know quite a lot about those topics, actually,” he testified.

    Vitale said he works for his wife’s family’s company, which makes parts for truck brakes. It has an electricity substation and it sits on 30 acres, and those factors gave him expertise on the power grid and the environment, Vitale said.

    When Painter proposed that Vitale had no academic credentials that would make him expert in those areas, Vitale disagreed again, saying his business degree provided him with such knowledge.

    “In a business degree, part of what you study is energy inputs to a business,” Vitale said.

    The former lawmaker also claimed that he wasn’t very familiar with FirstEnergy and had to be convinced to support the bailout bill. Then Painter displayed a text message from FirstEnergy Vice President Michael Dowling to CEO Chuck Jones on Feb. 17, 2019 — before the bill was introduced. Earlier testimony showed that the executives believed the bailout was critical to their company, and Jones had asked Dowling who was going to chair the House Energy and Natural Resources Committee.

    “Nino Vitale from Springfield will chair,” Dowling responded. “Good friend and bigtime (Householder) supporter.”

    Confronted with the message, Vitale said he’d only met Dowling a few times.

    Vitale also disputed that it was Householder who first broached the idea of Vitale being chairman.

    “I asked him,” Vitale said.

    Then Painter played a voicemail message that Vitale left for Householder in January 2019, just after Householder had been made speaker. In it, Vitale said he had talked the matter over with his family.

    “I’m in if that’s what you want me to do,” Vitale said.

    As Painter tried to move on to another question, Vitale insisted that chairing the Energy and Natural Resources Committee was originally his idea.

    And to refute Vitale’s claims that he was half-hearted about fundraising and political marketing, Painter displayed an October 4, 2017 text message Vitale sent to Jeffrey Longstreth, Householder’s right-hand man in making him speaker and then passing the bailout. It certainly seemed to link FirstEnergy’s policy agenda to Vitale’s desire for corporate contributions.

    FirstEnergy lobbyist “Ty Pine wants to meet with me on a legislative matter and I want to meet with him on a contribution matter,” Vitale said in his message.

    After more than a month, testimony in the trial is entering the homestretch. Householder’s final witnesses — including Householder himself — are expected to testify Wednesday and Thursday. Then it will be Borges’ turn to call any witnesses he may have.

    After that, the prosecution and the defense teams will make closing statements, Judge Black will instruct the jury and then it will deliberate.

  • Ohio utility regulator front and center in massive bailout scandal

    Ohio utility regulator front and center in massive bailout scandal

    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: MARTY SCHLADEN – Ohio Capital Journal

    CINCINNATI — Ohio’s utility regulator is at the center of a massive bribery and money laundering scandal that has been the focus of a trial here since late last month. In 2019, its chairman and a very recent senior official played a central role in writing corrupt bailout legislation that would give more than $1 billion in subsidies to companies the Public Utilities Commission of Ohio was supposed to be regulating.

    But did their role in the process violate any PUCO rules? The answer is unclear.

    When it comes to being a consumer watchdog, the PUCO doesn’t have the best track record. 

    Since 2008, it has granted more than $1 billion in electric rate increases that were later declared illegal by the Ohio Supreme Court. But, thanks to the way the increases — or “riders” — were written, there’s no way to force utilities to return those ill-gotten gains to ratepayers.

    In at least one of those instances, a regulator might have known the rate hike was illegal when he voted to grant it.

    In June of 2019 — as Akron-based FirstEnergy was funneling millions through dark-money groups to pass the bailout that is the subject of the trial here — the Supreme Court struck down an increase that had already paid the company a non-refundable $460 million. Asim Haque, who months earlier was chairman of the PUCO, sent a FirstEnergy executive a text suggesting that Haque knew the increase was illegal when he voted for it. Haque then said he was just kidding.

    Then, just last month, the PUCO approved an increase of more than 50% in fixed rates for Columbia Gas without making the company go through a formal process to show that it needs the money. That means that after five years throughout much of Ohio, it likely will cost nearly $60 a month just to have gas service  — regardless of whether you live in a 500 square-foot apartment or if you live in a mansion on a five-acre lot. Any payments for gas itself will be in addition to that amount.

    It doesn’t appear that Columbia owner NiSource needed the money. Last year, before the PUCO allowed the rate hike, NiSource’s profits came in $217 million — or 41% — higher than expected. Then, a month after the increase was granted, NiSource announced it was increasing its profit forecast for 2023.

    In a press release, the company boasted of “strong regulatory execution” — including by winning the fixed-rate increase from the PUCO.

    And then there’s House Bill 6, the 2019 law that is the subject of the trial in federal court here that has been ongoing since Jan. 23.

    Former Ohio House Speaker Larry Householder and former Ohio Republican Party Chairman Matt Borges are on trial for their participation in what prosecutors say is likely the biggest bribery and money laundering scandal in Ohio history. They allege that $61 million that mostly came from FirstEnergy was used to make Householder speaker in 2019, and then to pass and protect the $1.3 billion bailout. Most of that money was intended to prop up FirstEnergy’s failing nuclear and coal plants.

    No current or former PUCO employees have been charged in the scandal. But, to put it charitably, the conduct of at least two of them was puzzling — given that the agency’s mission is to protect ratepayers who don’t have a choice about buying the utilities’ products.

    In January 2019, Householder won the speakership and was beginning his push for a FirstEnergy bailout. At the same time,  FirstEnergy lobbyist Ty Pine sent PUCO senior advisor Pat Tully’s resume to Jeff Longstreth, Householder’s right-hand man, according to testimony in the trial. Within weeks, Tully had moved from his PUCO job to one as senior advisor for energy policy in the House Republican Caucus.

    Sam Randazzo, a former FirstEnergy consultant, was confirmed as Gov. Mike DeWine’s nominee to chair the utility commission in April 2019. When he nominated Randazzo, DeWine brushed off warnings that his nominee had “opaque and undisclosed” ties to FirstEnergy.

    In the Householder trial, Tully testified that while Randazzo was still a nominee, he met with Tully, Householder and Rep. Nino Vitale R-Urbana. From there, Tully worked with Randazzo to help draft the utility bailout, HB 6, and to reconcile it with draft legislation submitted by FirstEnergy. The bill secured final passage in July 2019 — months after Randazzo had taken the helm at the utility commission.

    In other words, Ohio’s top utility regulator helped write a law that gave a billion-dollar bailout to a company he was supposed to be regulating on the ratepayers’ behalf. And he was heading an agency that over the previous decade had awarded electric utilities more than $1 billion in illegal, non-refundable rate hikes.

    Randazzo would later resign after the FBI in 2020 raided his Columbus condo. And in a deferred prosecution agreement, FirstEnergy admitted that it paid him $4.3 million just before he became PUCO chairman.

    But does the PUCO have any rules against the role Randazzo played in drafting HB 6? 

    Asked if the agency had a policy prohibiting a commissioner from helping write legislation affecting a utility he or she is supposed to be regulating, spokesman Matt Schilling initially seemed to say that it did not.

    “The PUCO is a state agency and will always be responsive to requests for information or technical assistance to the Ohio General Assembly on matters related to utilities and commercial transportation,” Schilling said in an email last week.

    But in answer to a follow-up, Schilling seemed to say something different. He was asked if that means PUCO believes there was nothing inherently improper about its chairman helping to draft legislation creating subsidies for utilities the agency regulates.

    “No, I never stated anything like that,” Schilling replied. “The PUCO does not comment on ongoing proceedings or court cases.”

    So what about commission employees doing as Tully did when he had a FirstEnergy lobbyist passing out his resume? After all, you might pull punches as a regulator if you’re hoping to land a job with one of the companies you’re supposed to be regulating.

    Schilling’s response might not be very reassuring. He cited a law that “prohibits Commission employees from seeking employment with utilities regulated by the Commission.”

    But Schilling also sent along agency guidance that contains a pretty big loophole.

    “Although this law prohibits Commission employees from soliciting Commission-regulated utilities for employment, it does not prevent employees from considering employment opportunities with these utilities in instances in which the utility approaches the employee,” it said.

    It seems that, after the fact, it might be difficult for the PUCO to figure out who approached whom when an employee jumps ship for a well-paid utility job. And its protections against conflicts of interest during the hiring process don’t seem ironclad.

    “However, if you are contacted by a utility concerning a possible job offer, you must immediately advise your supervisor of the contact so that your supervisor can limit your duties to matters which do not involve the utility in question while any discussions are taking place,” the guidance said.

    In Tully’s case, he didn’t end up directly on FirstEnergy’s payroll. But he did help write a law that the company paid more than $60 million for.