Borges, charged in scheme and once Ohio GOP leader, owed and paid off IRS debts
UD professor: If he used dark money to pay, it would be a problem.
In late August 2019, Republican Matt Borges had a heavy weight lifted off his financial shoulders: The Internal Revenue Service released him from a $493,624 tax lien, according to Franklin County Recorder records.
Weeks before the lien was released, Borges incorporated 17 Consulting Group. Then a dark money group — a 501(c)(4) nonprofit that does not have to disclose where it gets its money — wired $400,000 into the new firm’s account, according to an FBI affidavit filed in a criminal case against Borges and others. Over the following few months, Generation Now — the dark money group — wired another $1.2 million to 17 Consulting Group, the document says.
By late December 2019, two other IRS liens against Borges totaling $ 98,958 were also released, records show.
Through his criminal defense attorney, Borges said the liens were released when he completed an IRS payment plan that he had been on for a number of years.
Borges, the former chairman of the Ohio Republican Party, is charged in U.S. District Court in what U.S. Attorney David DeVillers has called the largest public bribery case in Ohio history.
Borges pleaded not guilty to a racketeering charge in U.S. District Court. He is not charged with any crimes related to paying off his tax liens.
It is unclear where Borges got the money to pay off the liens but if it came from the dark money funds, it’s a problem, said University of Dayton Law Professor Thaddeus Hoffmeister. “You can’t use that money for personal gain. You can’t do that.”
He added, “Anytime you use ill-gotten gains, they can try to do a forfeiture.”
A 43-page federal indictment filed in the case alleges that between Oct. 23, 2019, and Jan. 27, 2020, Borges spent the balance of the 17 Consulting Group account largely on “personal expenses.” The indictment also says the government will seek forfeiture upon conviction.
State Rep. Larry Householder, R-Glenford, who is also charged in the case, is accused of spending $518,000 in Generation Now money on personal expenses, including paying legal fees and a settlement in a lawsuit, costs associated with a condo in Florida, campaign expenses and credit card debt.
Federal prosecutors used pseudonyms in the criminal complaint for companies involved in the $60 million bribery scheme, but the descriptions reveal Company A and Company A-1 to be Akron-based FirstEnergy
Corp. and FirstEnergy Solutions. The companies separated, and FirstEnergy Solutions emerged from bankruptcy in February with a new name: Harbor Energy, which now owns two nuclear power plants in Ohio.
Federal prosecutors allege that FirstEnergy and its subsidiaries funneled cash into Generation Now to run ads and donate to state candidates with the goal of positioning State Rep. Larry Householder, R-Perry County, to return as speaker of the Ohio House. Householder then worked to get a bill passed through the state legislature that added a surcharge to most
Ohio residential and business electric bills that is projected to bring $1.3 billion to the companies. Borges, Householder and others then worked together to thwart a referendum campaign that threatened to overturn the bill, the criminal complaint claims. The scheme involved nearly $61 million, according to the complaint.
When asked if federal prosecutors are investigating whether Borges used Generation Now money to pay off personal tax liens, Department of Justice spokeswoman Jennifer Thornton said, “We cannot comment outside of what’s detailed in the current court documents.”
A turning point in the FBI investigation of the case came in September 2019 when Borges allegedly tried to bribe Tyler Fehrman, a Columbus man, who managed signature collectors for the referendum campaign. Borges wanted information on how many signatures the referendum campaign was collecting, federal prosecutors say. But Fehrman turned down Borges’ bribe offer and then called the FBI, according to the criminal complaint.
Fehrman, who is identified in the complaint as CHS1 — confidential human subject 1 — then re-established talks with Borges, feigning interest in the offer after all. He wore a recording device for his meetings with Borges and also turned over text messages to the FBI.
On Sept. 13, 2019, Borges handed Fehrman a check for $15,000 and told him it was for his help planning a reunion of former staff. But the two never talked again about a reunion; instead, Borges peppered Fehrman for insider information on the petition collection efforts, according to the 81-page affidavit authored by FBI Special Agent Blane Wetzel.
The criminal complaint alleges that the $15,000 came from Generation Now.
Fehrman declined to comment on the case.
Some of the federal tax liens that Borges owed date back to 2005. An FBI affidavit filed in the criminal case alleges that Borges paid himself more than $350,000 out of the money FirstEnergy paid into Generation Now.
Additionally, FirstEnergy Solutions, which is now known as Energy Harbor Corp., hired Borges to lobby for House Bill 6, the bailout bill, on May 10, 2019.
Borges, 48, got into politics shortly after he graduated Ohio State University in 1994. In 1998, he ran Hamilton County Republican Joe Deters’ successful campaign for state treasurer and Borges was chief of staff for Treasurer
Deters.
But in July 2004, Borges pleaded guilty to a misdemeanor over giving preferential treatment to some brokers who made political contributions. That record has since been expunged.
In the intervening years, Borges rehabilitated his political career. He worked as an advance staffer for the White House, worked on John McCain’s 2008 presidential campaign, ran Republican Dave Yost’s 2010 successful run for state auditor, joined Roetzel Consulting Solutions in early 2011 and worked on Yost’s 2018 campaign for attorney general.
Borges became a trusted ally to Gov. John Kasich. Kasich engineered a takeover of the Ohio Republican Party state central committee to oust Kevin DeWine as chairman and install Borges.
In April 2013, DeWine stepped down and Borges took over the chairmanship, a role he served in until 2017 when he was ousted by supporters of Jane Timken of Stark County.
While the IRS released Borges’ federal tax liens last year, records show he still owes $360 to the state of Ohio in back income taxes.