Former House Speaker Larry Householder has again been indicted on charges related to his actions in a massive bribery and money laundering scandal.
The Glenford Republican is already serving a 20-year sentence in federal prison after being convicted last March of racketeering in a scheme in which Akron-based FirstEnergy paid more than $60 million to purchase a $1.3 billion, ratepayer-financed bailout.
The state charges concern some conduct Householder engaged in after he was arrested in July 2020. They also concern debts and other items that Householder admitted during his federal trial that he didn’t report to the Joint Legislative Ethics Commission as required.
The former speaker faces maximum sentences of from three to eight years on each of the 10 state charges from the Cuyahoga grand jury. And importantly, if he’s convicted of one of the counts — theft in office — he’s permanently disqualified from holding public office.
In a video accompanying the announcement of the indictment, Ohio Attorney General Dave Yost noted that Householder has served two different stints as speaker, and that if he’s successful in appealing his federal conviction, “he might well try for a third bite at the apple.”
Five of the 10 state counts Householder faces stem from his use of campaign funds to pay lawyers after his July 2020 arrest. In the video in which Yost appeared, Deputy Attorney General Carol O’Brien said Householder knew that was illegal when he did it.
Several other counts relate to Householder “not reporting significant credit card debts going back to at least 2016, as well as gifts from lobbyists and significant loans from individuals.”
Also indicted was Sam Randazzo, Gov. Mike DeWine’s pick to be Ohio’s top utility regulator. Jones and Dowling paid Randazzo $4.3 million mere weeks before DeWine nominated him to the commission in February 2019.
DeWine’s chief of staff, Laurel Dawson, knew of the payment, but an administration spokesman said she didn’t tell the governor until after the FBI searched Randazzo’s Columbus condo in 2020.
Randazzo was charged by federal authorities in relation to his role in the scandal in December.
Despite all the prosecutions and allegations of wrongdoing, the bailout law, House Bill 6, is still on the books. As a result, ratepayers have ponied up nearly a quarter-billion dollars to prop up two aging coal plants.
Despite the fact that Ohio ratepayers are shouldering that burden, one of the plants isn’t even in Ohio, but in Indiana instead.
MARTY SCHLADEN
Marty Schladen 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.
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 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.
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.
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.”
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 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.
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.
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.”
Former Ohio House Speaker Larry Householder, a Perry County Republican, second from left, with attorneys outside of his racketeering trial. Photo courtesy of WEWS.
CINCINNATI — The defense of former Ohio House Speaker Larry Householder erupted Thursday in Householder’s epic corruption trial.
Defense attorney Mark Marein of Cleveland suggested it was because of U.S. District Judge Timothy Black’s unfairness. But it came after a day in which the defense team’s attempts to undermine prosecution witnesses’ credibility might have come to naught.
The sparks flew in the fourth week of the trial. Householder and former Ohio Republican Party Chairman Matt Borges are accused of racketeering in a scheme to use $61 million in utility money to make Householder speaker and pass a $1.3 billion bailout that mostly benefited Akron-based FirstEnergy, the primary contributor.
Earlier on Thursday, defense attorney Steven Bradley cross examined Jeffrey Longstreth, who operated as Householder’s right-hand man through his bid for the speakership and the 2019 passage and defense of the bailout law, House Bill 6.
Longstreth was arrested along with Householder, Borges, and two others in July 2020. He is now cooperating with prosecutors in exchange for a sentencing recommendation of less than six months.
The dinners
During direct examination Wednesday, Longstreth described fancy dinners with Householder and FirstEnergy’s top executives during Donald Trump’s inauguration in 2017 in Washington, D.C.
At one, Longstreth described being at one end of a long table with FirstEnergy Vice President Michael Dowling in a noisy steakhouse, while Householder sat with company CEO Chuck Jones at the other. Longstreth said he couldn’t hear the conversation at the other end of the table, but at his end Dowling told him FirstEnergy needed help and it wanted to help Householder become speaker.
Dowling instructed Longstreth to set up an organization to receive FirstEnergy’s millions, Longstreth said.
“He said (the money) needed to be undisclosed and unlimited contributions,” Longstreth testified on Wednesday.
Apparently seeking to impeach Longstreth’s memory, Bradley on Thursday showed the jury an itinerary indicating that Jones took the FirstEnergy corporate jet to D.C. the morning after the steakhouse dinner. He also produced a credit card receipt showing that Jones attended a dinner at a different restaurant the following night than where a second, more-intimate dinner was described by Longstreth on Wednesday.
But Assistant U.S. Attorney Emily Glatfelter asked Longstreth if itineraries change. He agreed they often do.
She then produced credit card receipts and car records that indicated Jones may well have been in D.C and could have attended the first dinner as Longstreth described. She also showed that on the following night, the dinner Bradley said Jones attended ended about 30 minutes before the one Longstreth said he attended began.
Longstreth testified that it was common at presidential inaugurations to attend multiple receptions and dinners in the same evening. Apparently that’s a major purpose of the quadrennial gatherings: To stay in $600 hotels, eat multiple $200 dinners, and figure out how to split up the taxpayers’ —or ratepayer’s — money.
Whistleblower former state Rep. Dave Greenspan
Former State Rep. Dave Greenspan, R-Westlake. Official photo.
After Longstreth left the stand, the prosecution called former state Rep. Dave Greenspan, R-Westlake. He said he never voted to make Householder speaker and he never supported House Bill 6.
“I didn’t believe in corporate bailouts,” Greenspan said, explaining that this one was especially hard to support because FirstEnergy hadn’t shown that it needed the money and the bill put no restrictions on how it was spent. “There was nothing in the bill that required FirstEnergy to do anything.”
As a sign of how unpopular the bill was, 17 Republicans voted against it when it passed the House in April 2019. And it’s an important reminder that it would never have become law without the support of Ohio House Democrats.
Greenspan described the intense pressure he was under from Householder and lobbyist Neil Clark to vote for the bill. He was so disturbed by it that he contacted a member of the U.S. Marshal’s Service, who put him in touch with the FBI.
During cross examination, Marein, another of Householder’s attorneys, seemed dumbfounded that Greenspan contacted the FBI, which he referred to as the “Federal Bureau of Investigation” in a tone that in many places would pass for shouting.
Then, as he tried to read lengthy passages of Greenspan’s grand jury testimony, Judge Black repeatedly cut the attorney off and told him to ask a question.
CINCINNATI — Former Ohio Republican Party Chairman Matt Borges paid $15,000 off the books in 2019, a witness testified Tuesday. It was in an attempt to gather inside information about the campaign to repeal a $1.3 billion utility subsidy that had just been passed by the legislature, a Borges associate said.
In addition, the chairman of the company that benefited most from the subsidy in an email referred to the scheme as a “black op” and said he was prepared “to do whatever it takes” to defeat the repeal effort, the witness, Juan Cespedes, said. Coincidentally, the chairman, John Kiani, started his career at Enron, a Houston Energy company that collapsed under a wave of unmet contracts and accounting scandals in 2001.
It was the 11th day in the federal court trial of Borges and former Ohio House Speaker Larry Householder, R-Glenford. Borges is accused of assisting Householder and others in a scheme to use $61 million from Akron-based FirstEnergy to make Householder speaker and pass the massive bailout.
The bulk of the bailout was intended to benefit money-losing nuclear and coal plants owned by FirstEnergy subsidiary FirstEnergy Solutions. It was going through bankruptcy proceedings and executives with the parent company and the subsidiary desperately wanted the bailout to complete the bankruptcy, spin off FirstEnergy Solutions and possibly sell the nuclear plants.
Gov. Mike DeWine signed the bailout the same day it passed in 2019, but a repeal effort started amid reports that it was “the worst energy bill of the 21st century.” Not only did it prop up 70-year-old coal plants under the guise of being a “Clean Air Program,” it also gutted the state’s renewable energy standards.
Borges was part of a team of lobbyists who worked to pass and protect the bailout, House Bill 6. And, because of his long experience in Ohio politics, he was asked to make use of some of his relationships in the effort, Cespedes, another member of the team, testified.
Cespedes was also charged with racketeering, but he pleaded guilty and is cooperating with prosecutors.
The off-the-books payment
One of the primary acts Borges is charged with has to do with a $15,000 payment he made during the repeal effort to Tyler Fehrman, who was helping manage the campaign to gather enough valid signatures to get the repeal on the ballot.
Inside information was valuable to the pro-H.B. 6 team because it enabled them to gauge the strategy and likelihood of success of the repeal effort.
Cespedes testified that he tried to keep the plan to recruit Fehrman from Kiani, the FirstEnergy Solutions chairman whose company financed a big portion of the fight against the repeal. Kiani was a hard-charging executive and Cespedes believed that once he learned of the spying effort, he would press the operatives relentlessly.
However, Cespedes said, Borges told Kiani about it, and it seems Cespedes’s worries were well founded.
In an Aug. 31, 2019 text, Kiani asked “what happened to the black ops?” in a reference that Cespedes said was to the spying effort. Then, in a Sept. 2, 2019 text, Cespedes told Borges that Kiani, “reiterated to do whatever it takes to get this information.”
It appears that Fehrman was paid, but it’s unclear what he was paid for.
In taped conversations played earlier in the trial, Borges discussed paying Fehrman, but he claimed to Fehrman that it was for work Fehrman might do some time in the future. But Borges made other statements that seemed to show that he knew the two were doing something wrong.
“It would be bad for both of us if the story came out,” he told Fehrman in a recording that Fehrman made with the help of the FBI. “But it would be worse for you.”
On Tuesday, Cespedes testified that he roughed out a budget at the time of the repeal campaign. He made an entry in it to pay $25,000 to an “employee.” Cespedes said the money was intended for Fehrman.
Asked why he used “employee” to label the entry, Cespedes said, “I wasn’t going to write ‘bribe.’ I wasn’t going to write anything nefarious.”
Prosecutors displayed a photograph of what they said was a contemporaneous budget that Borges roughed out in a notebook that Cespedes had photographed. Cespedes testified that when he asked Borges why a payment to Fehrman wasn’t in it, Borges “simply said it wasn’t something he wanted to write down.”
Cespedes testified that Fehrman later went quiet on Borges and Cespedes assumed that their deal had fallen through. But after the repeal campaign had failed, an accounting showed that the $15,000 had been paid, Cespedes said.
When he asked Borges about it, “He said, ‘I just wanted to keep him quiet,’” Cespedes testified.
Earlier in the HB 6 fight, Borges and Cespedes were struck by Kiani’s connections to Enron, which ceased to exist after one of the biggest corporate scandals to that point in American history.
“The shocking thing last night was learning that Kiani came from Enron,” Borges said in a text.
Kiani went from there to work as a hedge fund manager and then he made his way onto the FirstEnergy Services board as an activist investor. Cespedes testified that a Kiani aide told him that Kiani would make $100 million from the sale of FirstEnergy Solutions’ nuclear plants.
Regardless of whether that’s accurate, Kiani clearly was willing to spend lots of corporate money to win subsidies for them. To fund a statewide, eight-week media campaign for the bailout, bankrupt FirstEnergy Solutions approved a $15 million budget, Cespedes testified.
That amount would grow after the bill passed and the repeal fight got underway.
Kiani continues to be executive chairman of Energy Harbor, the new name for FirstEnergy Solutions after it emerged from bankruptcy. His company bio credits him with “the successful operational and financial turnaround of Energy Harbor into a leading, carbon free power infrastructure and energy supply company.”
In October 2019, as a battle raged over an attempt to repeal a $1.3 billion utility bailout, a FirstEnergy executive worked to keep the name of a senior aide to Gov. Mike DeWine off of a $10 million infusion of corporate cash into the fight.
The executive, Vice President Michael Dowling, did so even after an assistant told him it would violate IRS rules to not list the DeWine aide on the transaction, according to text messages presented Tuesday in the federal corruption trial of former Ohio House Speaker Larry Householder and lobbyist Matthew Borges. The men are accused of racketeering in a scheme to use $61 million from FirstEnergy in exchange for the massive bailout, most of which went to prop up the company’s failing nuclear and coal plants in order to make them attractive to buyers.
The governor appointed as chairman of the Public Utility Commission of Ohio a former FirstEnergy consultant who was paid $4.3 million by the utility just before taking his seat on the commission. Even though he was supposed to be regulating the utility, the official, Sam Randazzo, played a role in writing the bailout legislation, according to documents released by the Ohio House.
In early 2019, DeWine also appointed FirstEnergy lobbyist Dan McCarthy to be his legislative affairs director, meaning McCarthy was in charge of representing DeWine’s interests before the General Assembly.
Just after that, McCarthy formed a 501(c)(4) group called Partners for Progress. Also known as a “dark money” group, it received $5 million from FirstEnergy within a few weeks of when McCarthy founded it.
In an affidavit supporting Householder’s arrest, FBI Special Agent Blane Wetzel said Partners for Progress was “designed to conceal the nature, source, ownership, and control of the payments” from FirstEnergy and associated companies. Through the rest of 2018, McCarthy continued as president of Partners for Progress as it pumped FirstEnergy money into a Householder-controlled dark money group and funded the effort to make Householder speaker.
The following year, McCarthy resigned that role to work for DeWine in the legislature as Householder shepherded the bailout legislation, House Bill 6. When a final version passed in July 2019, DeWine signed it the same day.
But opponents quickly started a campaign to circulate petitions to put a repeal on the ballot. That prompted FirstEnergy to pump even greater sums into a “decline to sign” campaign aimed at thwarting the petitions.
It funded xenophobic mailers and broadcast ads claiming without evidence that the repeal effort was a Chinese plot.
“Who is knocking at your door?” began a mailer read in court Tuesday. “Foreign enemies have infiltrated our energy grid,” it added and said, ominously, that circulators of repeal petitions “are asking for your information.”
In October 2019, executives with FirstEnergy and its generation-owning subsidiary seemed panicked that the repeal effort might succeed and they were planning to pump $10 million more into the effort to stop it — through Partners for Progress, the dark money group started by McCarthy, who was now a DeWine aide.
Dowling, the FirstEnergy vice president, seemed to think it wouldn’t be a good look for the name of a DeWine official to show up on paperwork accompanying the huge transaction.
“Please make sure Dan McCarthy’s name is not on the filing,” Dowling said in a text message to Partners for Progress Treasurer Michael Vanburen that was presented in court Tuesday.
Vanburen replied that even though McCarthy was no longer president of the dark money group, IRS rules required that his name be on the filing. Dowling didn’t accept that.
“There must be a creative way to handle this,” he said. “It’s important that (McCarthy’s) name not be listed.”
Asked if DeWine asked that McCarthy’s name not be used in paperwork regarding the money transfers, Press Secretary Dan Tierney in an email said, “No. Dan McCarthy resigned from Partners for Progress in December 2018. Dowling’s comments, as you have relayed them to me, do not match the timeline of McCarthy’s affiliation with Partners for Progress.”
DeWine seems to have been in touch with FirstEnergy executives around the time of the repeal effort. Later in October 2019, FirstEnergy CEO Jones texted Vice President Dowling to say, “DeWine’s on board. I talked to him on Wednesday.”
According to Jones, they talked about whether the repeal HB 6 effort would gather enough valid signatures to get the measure on the ballot.
“He said their valid rate was less than 30%,” Jones said of DeWine.
For his part, Tierney said, “The Governor does not have any recollection of such a conversation.”
In a later text conversation, Jones said he’d received similar assurances from Secretary of State Frank LaRose.
After arrests were made in the House Bill 6 scandal, DeWine staunchly defended McCarthy and kept him in his administration for more than a year, until Sept. 24, 2021.
In another trial-related matter, U.S. District Judge Timothy Black on Tuesday said that he had released a second juror, this time for testing positive for COVID. An earlier juror had been released for refusing to wear a mask.
That brings the number of alternate jurors to two for a trial that is expected to last into early March.
Gov. Mike DeWine and his administration played a hands-on role passing an allegedly pay-for-play nuclear bailout and appointing an industry-friendly regulator who has since been accused of taking a $4.3 million bribe, documents and messages show.
Calendar records show DeWine, a Republican, met repeatedly to discuss energy policy with FirstEnergy Corp. officials and at least once with GOP House Speaker Larry Householder, who has been criminally accused of taking a separate, multimillion-dollar bribe from the company to pass the bailout.
Despite a cautionary letter from environmental groups and a 198-page dossier from his former campaign staffer warning against the move, DeWine appointed Sam Randazzo in 2019 to the head of the Public Utilities Commission of Ohio. FirstEnergy last summer admitted it paid Randazzo a $4.3 million bribe. Randazzo has not been charged with a crime and denies wrongdoing.
Newly released text messages show FirstEnergy executives describing an open line with the administration on the selection and inside support from Ohio’s chief executive.
“When the Gov Elect asked me about attributes, I listed integrity, work ethic, creativity, thick skin, circumspection in public statements,” FirstEnergy’s then CEO texted Randazzo about the open PUCO seat in December 2018, just before DeWine took office.
“You fit all of those.”
Former FirstEnergy CEO Charles “Chuck” Jones. Source: FirstEnergy, via Flickr
In one text, FirstEnergy executive Mike Dowling credits DeWine and Lt. Gov. Jon Husted with performing “battlefield triage” to save Randazzo’s appointment before a key vote. Both DeWine and Husted have previously denied that a redacted version of the text message that appeared in criminal documents referred to them.
Federal prosecutors accused House Speaker Larry Householder of secretly controlling a nonprofit that took $60 million from FirstEnergy. He allegedly used the money to enrich himself personally and politically and to ensure the passage of House Bill 6, which provided a massive bailout to two nuclear plants owned at the time by FirstEnergy. Householder was charged with racketeering and awaits trial. Two alleged conspirators pleaded guilty.
FirstEnergy admitted last summer to the $60 million payment as well as a separate $4.3 million bribe to Randazzo just before he started as Ohio’s top utility regulator. The payment topped off $22 million in consulting fees to Randazzo since 2010 from the company.
Court documents from prosecutors reveal no focus on DeWine, who has not been charged with any crime. However, a review of records turned over in subpoenas, public records requests for his official calendars by the Energy and Policy Institute, text messages attached to regulatory filings, and others show DeWine and his staff repeatedly influencing and shepherding HB 6 into law.
On the campaign trail in July 2018, DeWine visited one of the nuclear plants that would receive a bailout, his official calendar shows. A month later, he met with FirstEnergy executives at their Akron headquarters. In October of that year, DeWine met with FirstEnergy at a fundraiser for Republican governors.
FirstEnergy contributed about $1 million in total to DeWine’s campaign, political organizations supporting it, and to another nonprofit supporting his daughter’s campaign for county prosecutor, according to the Dayton Daily News.
After winning a close race, DeWine, Husted, Jones and Dowling celebrated over dinner at The Athletic Club in Columbus. The next day, Jones sent Randazzo the text message (above) indicating they discussed the open PUCO seat.
In January of 2019, the FirstEnergy officials texted one another trying to fill not just one but two open PUCO seats, all the while mentioning phone calls with “DeWine guys” about it.
“That’s their plan but nothing certain until Sam’s [Randazzo’s] meeting [with DeWine],” Jones texted Dowling. “Four people in DeWine world, you, Sam, and I know about this.” The PUCO seats would eventually be filled by Randazzo with another commissioner renewed.
Dowling relayed to the other two men a message from Josh Rubin — a DeWine 2018 campaign adviser and a FirstEnergy lobbyist. He said once Randazzo takes office, DeWine will “lean on him on everything.”
Several texts focus on HB 6. The bill (and eventual law) would bail out FirstEnergy’s nuclear plants, subsidize two coal plants owned by other Ohio utility companies, and create a “decoupling” mechanism that effectively put ratepayers on the hook to guarantee certain revenue streams of FirstEnergy’s. Prosecutors estimate the bill as worth about $1.3 billion to the company.
Two days before the bill was introduced, DeWine’s calendar shows a slot for an “Energy Discussion” at the governor’s residence. Later that month, after the bill was repeatedly criticized during an opponent testimony hearing at the statehouse, DeWine, Husted, Randazzo and various staffers all met up at 5 p.m. for what the governor’s calendar calls a “Nuclear Bailout Bill Discussion.”
Over the next month, DeWine’s calendars show two entries for energy policy meetings, plus a call with Householder about HB 6, and another call on the bill.
On June 9, 2019, DeWine showed signs of wavering.
“Sam, what do we know about whether nuclear plants need this boost?” DeWine, using his personal email, wrote to Randazzo. “One editorial suggested testimony was not conclusive.”
Dowling paid a visit to the governor’s residence the next day. Randazzo responded to DeWine’s email on June 11, casting doubt on the studies referenced in the editorials.
On July 1, Dowling texted Jones.
“Just had a long conversation with JHusted just now,” he said, going on to explain that Husted sought to extend the length of the bailout. “All is well.”
Court records contain another text from Jones stating that “State Official 2,” later confirmed to be Husted, joined with others in “fighting to the end” for a beefier bailout.
After a long slog, lawmakers passed HB 6 on July 23, 2019. DeWine signed it into law mere hours later.
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.
Loyalty to staff and HB 6
As the FBI made its first arrests, DeWine began a pattern of defending HB 6 on the merits and showing unflinching loyalty to his staffers, some of whom have ties to FirstEnergy.
Householder, his political strategist, a prominent GOP lobbyist, and two FirstEnergy lobbyists were arrested and charged with racketeering in connection with HB 6 on July 21, 2020. The next day, DeWine stood by the law he signed.
“Because people did bad things does not mean that the policy is not a good policy,” he said.
He reversed himself the next day and called for a repeal of the bill.
In October, FirstEnergy fired Jones, Dowling, and fellow executive Dennis Chack as it waged an internal investigation. The company fired another two executives days later “due to inaction and conduct that the Board determined was influenced by the improper tone at the top.”
At this point, the public remained unaware of the multimillion-dollar financial arrangement between the embattled FirstEnergy and Randazzo. However, on Nov. 16, 2020, FBI agents were seen raiding Randazzo’s condo and removing boxes of material from inside. The next day, FirstEnergy submitted a little-noticed securities filing outlining the $4.3 million payment.
Despite the images of FBI agents entering Randazzo’s condo, DeWine publicly defended his appointee.
“We have no indication he’s under investigation or he’s the target of an investigation. We’ll wait until we find additional facts,” he said in a Nov. 17, 2020 news conference. “Look, the FBI many times will indicate if someone is a target. They have not indicated he’s a target. I have no reason to think he’s a target. I don’t know. So, we’re waiting for additional information, quite candidly. I hired him. I think he’s a good person. If there is evidence to the contrary, then we’ll act accordingly, but not going to act without facts.”
Randazzo would resign three days after that statement.
Mid-summer 2021, FirstEnergy signed a deferred prosecution agreement with the U.S. Department of Justice. The company agreed to pay a $230 million penalty and cooperate with investigators to avert a charge of honest services wire fraud.
The agreement contained a lengthy set of facts from the company, stating it paid the $64 million in bribes in exchange for official action from Householder and Randazzo.
Days after the agreement was announced, DeWine held a press conference on anti-hazing legislation. Reporters asked questions afterward about the agreement, including a line that refers to “State Official 1” and “State Official 2” lobbying to ensure Randazzo’s appointment. DeWine said he’s “not aware” of anyone in his administration, including himself, appearing in the document. Husted, in a statement, said he too “does not believe” he’s referenced in the document.
Texts obtained by the Ohio Consumers’ Counsel from FirstEnergy and attached to a regulatory filing contain the unredacted version of the text, identifying DeWine and Husted by name.
In 2017, a lobbyist named Dan McCarthy created a nonprofit entity called Partners for Progress to engage in “advocacy in support of nuclear power,” tax records show. FirstEnergy would later admit to paying $25 million to Partners for Progress, some $15 million of which went to Householder’s nonprofit.
DeWine hired McCarthy as his legislative director in 2019, around the time McCarthy stepped down from the organization’s board. In February 2021, after media reports identified McCarthy’s role with Partners for Progress, DeWine defended McCarthy.
“As far as I know, Dan McCarthy has been well-respected for many, many years, long before he started working for me as our legislative director, and I have faith in his integrity,” DeWine said.
McCarthy resigned in September 2021.
DeWine response
In a phone interview, DeWine spokesman Dan Tierney said the OCC-obtained text messages and meetings listed by the Ohio Capital Journal contain no new information.
The texts, he said, in fact show the lack of a role from DeWine and Husted within the scandal. He said prosecutors have not subpoenaed him or any of his employees.
“This all along has been a Larry Householder scandal and a FirstEnergy scandal,” he said.
When asked whether DeWine, a former prosecutor and attorney general, detected any sense of impropriety during all his contacts with Householder and FirstEnergy leading up to the passage of House Bill 6, he declined comment.
Husted offered a similar comment through a spokeswoman, stating that “there is nothing new here” in the texts, emails and meetings.
“This kind of advocacy is well within his responsibilities as a public official, and, as we know, the bill was ultimately passed with bipartisan support,” he said.
Make no mistake – the $61 million came from Company A’s ratepayers and ultimately extorted from every residential and commercial electrical utility user in Ohio. The racketeering scheme of lies and deception corrupted Ohio citizen’s ability to overturn corrupt legislation at the ballot box. – David Miller, Loveland Magazine Publisher
By Marty Schladen The Ohio Capital Journal and David Miller/LovelandMagazine
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Cincinnati, Ohio – Ohio House Speaker Larry Householder, four political operatives and a dark-money group were charged Tuesday in a criminal complaint that an Ohio energy company paid them $61 million to get a $1.5 billion nuclear bailout from taxpayers.
Read the Press Release issued by the Department of Justice
Neil Clark, a lobbyist who owns Grant Street Consulting – Photo from Grant Street Consulting who exclaim, “Clark’s decades of experience and role in shaping Ohio’s political landscape makes him an indispensable resource to Ohio’s elected leaders, to whom he often serves as a trusted and highly sought after campaign advisor.”
All are charged with racketeering, which carries a prison sentence of up to 20 years.
David M. DeVillers, U.S. Attorney for the Southern District of Ohio
The alleged conspiracy, which revolved around the bailout of two failing nuclear plants in Northern Ohio, is “likely the largest bribery and money-laundering scheme ever in the state of Ohio,” David M. DeVillers, U.S. Attorney for the Southern District of Ohio, said at a Tuesday afternoon press conference.
Shortly after the press conference, Ohio Gov. Mike DeWine called on his fellow Republican to step down.
“I am deeply concerned about the allegations of wrongdoing in the criminal complaint issued today by the U.S. Attorney’s Office,” DeWine, who last year signed the bailout into law, said in a written statement. “Every American has the presumption of innocence until proven guilty. Because of the nature of these charges, it will be impossible for Speaker Householder to effectively lead the Ohio House of Representatives; therefore, I am calling on Speaker Householder to resign immediately. This is a sad day for Ohio.”
The criminal complaint says that “Company A,” the former FirstEnergy Solutions of Akron, worked to save its failing nuclear plants by funneling $61 million into Generation Now, a 501(c)(4) “dark money” group controlled by Householder.
On September 9, 2019, President Donald Trump nominated DeVillers for the United States Attorney in the Southern District of Ohio. The Senate confirmed the nomination in October, and DeVillers took his oath on November 1, 2019.
“Make no mistake, this is Larry Householder’s 501(c)(4),” the U.S. attorney said.
The money was used for three general purposes, the complaint said. First it was used to build “Team Householder” through campaign contributions and other measures that helped Householder win the speakership in 2019.
“In exchange for payment from Company A, Householder’s enterprise helped pass House Bill 6, legislation described by an enterprise member as a billion-dollar ‘bailout’ that saved from closure two failing nuclear power plants in Ohio affiliated with company A,” the complaint said
The money was also used for the personal benefit of Householder and the other conspirators, DeVillers said. Householder got about $500,000, he said.
Despite the companies claims of poverty, the interests behind the bailout spent millions — much of it in the form of hard-to-trace dark money on campaign contributions, a xenophobic ad campaign and then on an aggressive effort to stymie a petition drive to repeal the bailout DeWine signed into law a year ago.
And the money was used to fend off a petition effort to repeal HB6, going so far as to buy plane tickets for and pay $1,000 each to people circulating it to get out of town, DeVillers said.
The federal prosecutor said that it was crucial to keep the investigation secret until Tuesday. Now it begins a new phase that might be causing some lawmakers, energy executives and some others to lose sleep.
“We are not done with this case,” he said. “There were things we couldn’t do before. People we couldn’t interview. People we couldn’t subpoena. Documents and search warrants we couldn’t execute.
“As of this morning there are a lot of FBI agents knocking on a lot of doors asking a lot of questions, serving lots of subpoenas. That’s going to go on for days.”
“It takes courage for citizens to assist law enforcement in the ways detailed in the affidavit,” U.S. Attorney David M. DeVillers said. “We are grateful to those who felt a moral duty to work together with agents in bringing to light this alleged, significant public corruption.”
House Bill 6 is adding $1.5 billion in additional taxpayer bailouts to the $10.2 billion that Akron-based FirstEnergy Solutions and its former parent company, FirstEnergy Corp, have received from taxpayers since 1999. Most of the funds have gone to prop up the Davis-Besse and Perry nuclear power plants in Northern Ohio.
The company that owns the plants was renamed Energy Harbor after emerging from bankruptcy earlier this year.
Despite the companies claims of poverty, the interests behind the bailout spent millions — much of it in the form of hard-to-trace dark money on campaign contributions, a xenophobic ad campaign and then on an aggressive effort to stymie a petition drive to repeal the bailout DeWine signed into law a year ago.
The interests behind the nuclear bailout also contributed heavily to the effort at the beginning of 2019 to elect Householder speaker. He ended up winning the support of 26 Republicans and 26 Democrats, His opponent, Ryan Smith, R-Bidwell, got the votes of 34 Republicans and 12 Democrats.
The Ohio Republican Party didn’t respond Tuesday to requests for comment.
The Ohio Democratic Party didn’t respond when asked about the fact that Householder wouldn’t have worn the speakership without Democratic votes. However, the party chairman, David Pepper called on Householder to step down as speaker.
“As the U.S. attorney indicated, this investigation is ongoing, and we will wait to hear all the facts as they emerge. However, given what was revealed in today’s complaint and the taint of corruption over Ohio legislative activity, we believe Speaker Householder should step down from leadership immediately as he avails himself of his due process rights,” Pepper said in a written statement.
House Bill 6, which passed 51-38, was quickly signed into law by Gov. Mike DeWine. Under the bill, from 2021 until 2027, every Ohio electricity customer will have to pay a new monthly surcharge that ranges from 85 cents for residential customers to $2,400 for large industrial plants. Ratepayers around the state would also have to chip in up to $1.50 monthly (and up to $1,500 per month for commercial and industrial users) to subsidize coal plants in Ohio and Indiana run by the Ohio Valley Electric Corporation.- cleveland.com
Starting next January, ratepayers around the state would also have to chip in up to $1.50 monthly (and up to $1,500 per month for commercial and industrial users) to subsidize coal plants in Ohio and Indiana run by the Ohio Valley Electric Corporation.
This isn’t Householder’s first encounter with federal law enforcement.
In 2006, the Justice Department told the FBI that it wouldn’t pursue charges against Householder. The FBI had been told two years earlier that Householder had used his post as head of the House Republican Campaign Committee to overpay some vendors in exchange for kickbacks from them.
Nor is Householder, 61, of Glenford, the first Ohio House speaker to find himself in the FBI’s crosshairs. In 2018, Speaker Cliff Rosenberger, a Republican, resigned amid an FBI probe of his overseas travel. He has not been charged, but the investigation remains open.
