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Tag: ratepayer bailout

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

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

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

    BY:  AND  Ohio Capital Journal

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

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

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

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

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

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

    The House Bill 6 scandal

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

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

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

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

    Until Monday, only federal indictments had been handed out.

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

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

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

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

    Monday’s indictments

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

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

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

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

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

    Reactions

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    ________________

    Marty Schladen
    MARTY SCHLADEN

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

    Morgan Trau
    MORGAN TRAU

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

  • Multiple signs that federal corruption investigation in Columbus heating up — again

    Multiple signs that federal corruption investigation in Columbus heating up — again

    Getty Images

    BY:  – Ohio Capital Journal

    After two former Republican officials in June were sentenced for their roles in a massive racketeering conspiracy, U.S. Attorney Kenneth Parker said the investigation was continuing. At least two signs emerged last week that the proceedings might be intensifying.

    Former Ohio House Speaker Larry Householder was sentenced to 20 years in federal prison on June 29 and former state GOP Chairman Matt Borges was sentenced to five years a day later. Both played roles in a scandal in which Akron-based FirstEnergy and other utilities paid more than $61 million to pass a $1.3 billion ratepayer bailout that was mostly intended for a subsidiary that FirstEnergy was spinning off that owned two Northern Ohio nuclear plants.

    In addition to Householder and Borges, two others who were arrested in July 2020 have pleaded guilty and a third died by suicide.

    But on March 10, just after a jury convicted Householder and Borges, a reporter asked Parker an obvious question: What about the people who paid the bribes? Would they be charged? Parker would only say that the investigation was continuing.

    Attorneys for the men who were FirstEnergy’s top executives at the time of the conspiracy — former CEO Chuck Jones and former Vice President Michael Dowling — have already said in court filings that they believe federal investigators are looking at their clients.

    This month brought two more pieces of evidence that federal investigators are considering further prosecutions in the bribery and money laundering scandal.

    On Aug. 4, Hilary M. Williams, who is representing FirstEnergy, submitted a filing in a massive class-action case against the company over the bailout scandal. She informed the scores of lawyers for the pension and investment funds suing the company that they’re not the only ones who want to see the emails and text messages the FirstEnergy executives sent as the bribery scheme was taking place.

    “Counsel… we confirmed this morning that we may disclose to the parties that certain governmental authorities have requested the production of the entire contents of iPad and iPhone devices used by Mr. Jones or Mr. Dowling from January 1, 2016 through December 31, 2020,” Williams wrote. “In keeping with the protocol in this matter, those documents will be produced to all parties, and we expect to do so at approximately the same time that production is made to the requesting governmental authorities.”

    She added. “Mr. Dowling and Mr. Jones used more than a dozen devices during the relevant time period, and processing and reviewing the contents of those devices requires substantial processing time and then time to review for confidentiality and privilege. We are working to complete the review as quickly as possible, and expect to make these productions on or about September 15, 2023.”

    A spokeswoman for the U.S. attorney’s office didn’t comment on whether the “governmental authorities” Williams referred to worked for Parker, whose office prosecuted Householder and Borges.

    However, Parker last week sent a letter to the Public Utility Commission of Ohio asking the regulator to further postpone its investigation into the racketeering scandal.

    “The PUCO proceedings involve issues related to the U.S. Department of Justice of the United States’ investigation, and the United States believes that continued discovery in the PUCO proceedings may directly interfere with or impede the United States’ ongoing investigation,” the letter said. “For that reason, the United States respectfully requests that PUCO stay the PUCO proceedings for a period of six months from the date of this letter. The United States reserves the right to request that the stay be extended beyond this time.”

    Among those the feds may be investigating are Jones, Dowling and Sam Randazzo, whom Gov. Mike DeWine nominated to chair the PUCO in early 2019.

    In a deferred prosecution agreement, FirstEnergy said it paid Randazzo a $4.3 million bribe just before his nomination in exchange for favors the ostensible regulator did for the company. Randazzo denies wrongdoing, but in the Householder trial, witnesses testified that Randazzo played a key role in drafting the corrupt bailout legislation.

    Plaintiffs in the class-action suit earlier this month filed texts and emails between Jones, Dowling and Randazzo. They indicate that the three met in Randazzo’s Columbus condo in December 2018 and arranged to pay the soon-to-be regulator $4.3 million and made it clear that they expected something in return. They also appear to indicate that in addition to his work on the the bailout, Randazzo helped exempt FirstEnergy from a 2024 rate review it had been required to undergo.

    The class-action plaintiffs are accusing FirstEnergy of violating securities law by concealing its illegal conduct from investors. Last week, they filed a transcript of an earnings call from July 23, 2020 — days after Householder, Borges and three others were arrested in the racketeering conspiracy. In it, Jones appeared to mislead analysts about his and his company’s role in it.

    “I believe that FirstEnergy acted properly in this matter, and we intend to cooperate fully with the investigation to, among other things, ensure our company and our role in supporting House Bill 6 is understood as accurately as possible,” said Jones, who would be fired months later. “In the meantime, we wanted to share our preliminary perspective on this issue and reinforce the values with which we operate our company.”

    Jones also claimed that he and his subordinates followed “the highest standards of conduct.”

    “This is a serious and disturbing situation,” he said. “Ethical behavior and upholding the highest standards of conduct are foundational values for the entire FirstEnergy family and me personally. These high standards have fostered the trust of our employees, our customers and the financial community. We strive to apply these standards in all business dealings including our participation in the political process.”

    Jones sat for a sworn deposition in the class-action case in July. Last week, U.S. Magistrate Judge Kimberly Jolson ordered Dowling to sit for one in October.

    Marty Schladen
    MARTY SCHLADEN

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

    MORE FROM AUTHOR