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Tag: Laurel Dawson

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

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

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

    BY:  – Ohio Capital Journal

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

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

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

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

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

    New charges

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

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

    All Parker would say was that the investigation was ongoing.

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

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

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

    In April, Randazzo died by suicide.

    Other questions

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

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

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

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

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

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

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

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

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

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

    Questions for the Attorney General

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

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

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

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

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

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

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

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

    Regardless of why, Yost ended up doing just that.

    Crucial lost time

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

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

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

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

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

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

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

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

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

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

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

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

    Marty Schladen
    MARTY SCHLADEN

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

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

    MORE FROM AUTHOR

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

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

    BY:  – Ohio Capital Journal

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

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

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

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

    Multiple ties

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

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

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

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

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

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

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

    Common knowledge?

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

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

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

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

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

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

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

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

    Shell game

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

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

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

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

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

    “Secret for-profit entity”

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

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

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

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

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

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

    Marty Schladen
    MARTY SCHLADEN

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

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

    MORE FROM AUTHOR

  • Further questions about DeWine administration’s involvement in Ohio bribery scandal

    Further questions about DeWine administration’s involvement in Ohio bribery scandal

    File photo of Ohio Gov. Mike DeWine and advisor Laurel Dawson at a press conference. (Photo from WEWS.)

    New court filing gives new details about aide, husband

    BY:  –

    As Gov. Mike DeWine in 2019 nominated Sam Randazzo to be Ohio’s top utility regulator, Randazzo went to great lengths to hide a decade-long relationship with FirstEnergy that had paid him more than $10 million. Those payments included $4.3 million just as DeWine was picking Randazzo, according to court documents filed last week.

    Yet DeWine Press Secretary Dan Tierney in February said it “was well known that Randazzo was a paid consultant for FirstEnergy.” On Tuesday, Tierney modified that statement to say “it was well known to our staff that Mr. Randazzo was an energy consultant, and it was well-known to them and many people that Mr. Randazzo was a consultant employed by First Energy.”

    DeWine’s appointee to chair the Public Utilities Commission of Ohio, Randazzo went on to help write and lobby for a $1.3 billion bailout that Akron-based FirstEnergy paid more than $60 million in bribes to pass, according to a federal jury and the indictments of Randazzo and two former FirstEnergy executives.

    The scandal broke into the open in July 2020, when the FBI arrested former House Speaker Larry Householder, R-Glenford, and four others. Householder and former Ohio GOP Chairman Matt Borges were convicted, two others pleaded guilty, and lobbyist Neil Clark died by suicide.

    DeWine, who signed the bailout law, and his staff haven’t been accused of illegal activity in the case. But with the administration’s many connections to FirstEnergy, questions continue to linger about exactly what DeWine and his team knew about the conspiracy and what they did with that knowledge.

    A big question relates to the period when the governor was picking Randazzo to be the state’s top utility regulator. Did DeWine or top members of his staff know that Randazzo had a long, lucrative relationship with FirstEnergy, one of the biggest utilities he’d be regulating?

    A state indictment of Randazzo said that he had a shady relationship with FirstEnergy stretching back to 2010. It included hiding his work for FirstEnergy from industrial energy users Randazzo served as general counsel as he secretly skimmed from settlement payments FirstEnergy made to the industrial users, the indictment said.

    Big money, big favors

    On Dec. 18, 2018, Gov.-elect DeWine and Lt. Gov.-elect Jon Husted had dinner at the Columbus Athletic Club with FirstEnergy CEO Chuck Jones and Vice President Michael Dowling.

    The executives would be indicted along with Randazzo in February 2024. At the dinner, the men discussed with DeWine and Husted whether to make Randazzo the chief regulator of the executives’ company, the indictment said.

    The executives drove from the dinner to Randazzo’s German Village condo for another discussion. The same evening, Randazzo texted Dowling a column of figures ending with “Total 4,333,333.”

    The indictment said that within weeks, the executives paid Randazzo that amount without an invoice and over a company lawyer’s objections. DeWine nominated him to chair the PUCO a few weeks after that.

    Over the next 18 months, Randazzo labored to draft, pass, and protect the company’s massive bailout and did a number of additional, highly lucrative favors besides, the indictment said. It all ended with his resignation after the FBI searched his condo four months after Householder and the others were arrested.

    But what DeWine and his staff knew about Randazzo’s relationship with FirstEnergy as they were considering whether to make him its regulator appears to be a matter of dispute.

    “In January 2019, FirstEnergy agreed to pay out in full Randazzo’s consulting services contract just before he was nominated to run the PUCO,” a bill of particulars that was filed last week to accompany the indictment says. “It was not a gift: Randazzo would work hard for FirstEnergy from inside the government. He did not disclose his relationship, going so far as to lie about it in testimony to the General Assembly and failing to disclose to the Ohio Ethics Commission the massive sums of money he’d received from the company he would soon regulate.”

    Who knew?

    Randazzo’s indictment says Randazzo did, however, “tell the Governor-elect through his incoming Chief of Staff that he had received $4.3 million from FirstEnergy, which he claimed was final payment of a ‘consulting agreement.’” It added that Randazzo didn’t disclose the other millions he made as a FirstEnergy consultant or his work lobbying for the electricity giant.

    Tierney, DeWine’s press secretary, on Tuesday said that Randazzo’s consulting work for FirstEnergy was well known — at least inside the administration.

    “I note our office is not a party to the prosecution, so we cannot vouch for any claims made by the prosecution or defense in these cases,” he said in an email. “Speaking for the staff of the Governor’s office, it was well known to our staff that Mr. Randazzo was an energy consultant, and it was well-known to them and many people that Mr. Randazzo was a consultant employed by FirstEnergy.”

    However, FirstEnergy’s top brass feared public knowledge of their relationship could scuttle his nomination. On Jan. 30, 2019, Dowling, the FirstEnergy vice president, sent a panicked text to CEO Jones. It said Randazzo was going to pull out of the PUCO nomination process because the press found the name of one of his shell companies on a bankruptcy filing by a subsidiary FirstEnergy was seeking to bail out.

    When Randazzo’s nomination got back on track, the executives expressed relief.

    “A bullet grazed the temple,” Dowling told Jones, according to one of the texts filed as part of a civil suit over the scandal.

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

    So while administration insiders might have known about the Randazzo-FirstEnergy relationship, it clearly wasn’t common knowledge to the public who would have to pay the utility’s inflated bills. Tierney didn’t answer why, if DeWine knew that Randazzo was a FirstEnergy consultant, he didn’t disclose that to the public the PUCO is supposed to protect from monopoly utilities.

    Inside connections

    While Tierney said he couldn’t vouch for the information in the indictments or other court filings, he said it would have been extraordinary to ask Randazzo whether he had been paid money by Ohio utilities as the administration was vetting him for the position as their chief regulator.

    “…it would have been unusual to review past employment compensation with the Governor as part of cabinet director vetting,” Tierney said.

    As for the chief of staff who did the vetting — Laurel Dawson — she had a FirstEnergy connection of her own. Her husband, Mike Dawson, was a FirstEnergy lobbyist whom the indictment said had received a $10,000 loan from Randazzo a few years earlier.

    It’s unclear whether the loan was repaid or whether Laurel Dawson reported it to DeWine. The DeWine aide isn’t speaking publicly.

    It’s also unclear whether Laurel Dawson told the governor that her husband participated in an early 2020 text conversation with Randazzo and Dowling. The conversation was included in the bill of particulars filed last week.

    The three jokingly discussed rate cases and decoupling — two matters for which prosecutors say Randazzo had by then received multi-million-dollar bribes from FirstEnergy in exchange for doing even more valuable favors for the company.

    State prosecutors say that for Randazzo, engaging in the exchange amounted to an improper ex parte conversation. It might have been of interest to DeWine to know that his chief of staff’s lobbyist husband was having such talks with the governor’s PUCO chairman.

    According to a witness list reported on Tuesday by the Toledo Blade, prosecutors plan to call both Dawsons to testify at the trial of Randazzo, Dowling and Jones.

    Pretending?

    Despite the questions surrounding what Laurel Dawson knew about Randazzo and FirstEnergy — and about what she told her boss — she remains on his staff as an advisor, making $182,000 last year.

    “The Governor has previously stated on the record at media briefings he has full faith in Ms. Dawson,” Tierney said.

    But what did he know?

    The indictment of DeWine’s PUCO chairman and the energy executives has an image of notes that Dowling made in late 2018 as FirstEnergy lobbyist Josh Rubin coached him up on how to talk to Gov.-elect DeWine. They warn the FirstEnergy executives not to tell him that they planned to go meet Randazzo just after discussing his appointment at dinner with DeWine and Husted.

    Rubin added that DeWine could be cagey.

    “Sometimes he knows what you’re talking about,” Dowling wrote in his notes. “Sometimes he doesn’t. Sometimes he does and pretends he doesn’t.”

    Tierney was asked if DeWine now is feigning ignorance of the dealings between his administration, his nominee to head the PUCO and FirstEnergy. Tierney replied by saying that some of the players in the scandal have shown a tendency to make questionable statements.

    “Throughout the (utility scandal) prosecutions, third parties have made claims which have been self-serving and ultimately not true,” he said. “I will note, however, the state prosecution alleges the defendants deliberately withheld relevant information from the Governor, Lt. Governor, and other government officials.”

    Marty Schladen
    MARTY SCHLADEN

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

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

    MORE FROM AUTHOR

     

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

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

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

    BY:  – Ohio Capital Journal

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

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

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

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

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

    Double dealing

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

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

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

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

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

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

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

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

    Such arrangements proved quite profitable for Randazzo.

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

    Cozy relationships

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

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

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

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

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

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

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

    Versatile player

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

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

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

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

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

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

    Other officials

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

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

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

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

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

    Beyond the bailout

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

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

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

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

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

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

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

    Marty Schladen
    MARTY SCHLADEN

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

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