The Morning Journal (Lorain, OH)
What’s next in corruption probe after guilty verdicts?
The largest corruption case in Ohio history culminated last week with guilty verdicts for ex-House Speaker Larry Householder and lobbyist Matt Borges, the former head of the Republican Party. But the state’s attorney general said it’s “only the beginning of accountability” for the now-tainted $1 billion bailout of two aging nuclear power plants.
Householder, 63, and Borges, 50, could spend up to 20 years in prison for their racketeering conspiracy convictions.
The jury agreed with prosecutors that Householder orchestrated a $60 million bribery scheme, secretly funded by Akron-based FirstEnergy Corp., to secure his power, elect his allies and pass the bailout bill — and that Borges took part in a dirty-tricks campaign to protect the bailout law from referendum.
The investigation remains open, and additional lawsuits and regulatory actions remain unresolved.
Here’s a look at where things stand:
Could the sentences be appealed?
It’s likely. Householder and Borges are out on bond. They have until next Thursday to file any motions, including for a new trial. They’ll be sentenced once those motions are resolved and the probation office’s pre-sentence investigation is complete, which could take weeks. They will then have 14 days to appeal their sentence to the U.S. Court of Appeals for the Sixth Circuit, the U.S. Attorney’s Office said.
These were the last of the parties arrested in July 2020. Political strategist Jeffrey Longstreth, who worked on Householder’s election campaign, and lobbyist Juan Cespedes pleaded guilty and testified in the seven-week trial. The government will likely recommend reduced sentences for them.
Generation Now, a “dark money” group that was used to funnel FirstEnergy’s millions to Longstreth, Householder and others, also pleaded guilty for its role. A fifth individual charged, longtime Statehouse lobbyist Neil Clark, died by suicide in March 2021.
Who else might be charged?
As the government’s investigation continues, a number of other names have surfaced.
In a deal to avoid prosecution, FirstEnergy admitted paying a $4.3 million bribe for favorable treatment to Sam Randazzo, the state’s former top utility regulator, who had ties to the company. Randazzo resigned a day after the FBI searched his home. Randazzo has denied wrongdoing and hasn’t been charged.
There also have been no charges against the FirstEnergy executives fired after Householder and others were arrested. Those executives include former CEO Chuck Jones and former Vice President for External Affairs Michael Dowling, whose texts, emails and travel itineraries factored heavily into the case against Householder.
Prosecutors say the executives met with Householder to hatch the scheme over a fancy dinner in Washington — which Householder refuted on the stand. Jones says neither he nor any other FirstEnergy employee engaged in “unlawful activities in their dealings with government officials,” speaking through a New York-based public relations firm.
Individuals with ties to Republican Gov. Mike DeWine have also come up through investigations or lawsuits.
Lt. Gov. Jon Husted was considered an ally by the FirstEnergy executives in their fight for the bailout bill.
Dan McCarthy was a former FirstEnergy lobbyist and Husted confidante who formed another dark money group involved, then worked as a lobbyist on the governor’s behalf.
Mike Dawson was a onetime consultant to FirstEnergy. His wife Laurel Dawson was the governor’s chief of staff, and she helped vet Randazzo for the utility regulator chairmanship and approved sending a state plane to pick up lawmakers for the bailout vote. The flight ultimately never happened.
The governor’s office says all its employees’ actions were above board — and notes that no staff have been questioned.
What’s happening in other lawsuits?
Republican Ohio Attorney General Dave Yost asked a Franklin County judge last week to lift the stay on discovery in the state’s separate civil racketeering case. That would let him continue collecting documents and deposing witnesses, which he said could “reveal an expanded number of defendants.”
One group of lawsuits by FirstEnergy shareholders was settled last year. A deal required the company to reform its corporate governance, transparency and ethics. However, a shareholder wants the settlement reconsidered, and that’s still pending.
Additional corporate governance requirements were included in FirstEnergy’s prosecution deferral agreement. To avoid prosecution, the company must satisfy those requirements by July 2024.
FirstEnergy still faces shareholder lawsuits alleging the company committed securities violations. Defendants include both Jones and his successor, former CEO and President Steven Strah, who abruptly retired in September. A class certification hearing is scheduled before a federal judge in that case on Friday.
What regulatory actions are possible?
FirstEnergy has faced scrutiny from state and federal utility regulators as well as the U.S. Securities and Exchange Commission.
Four investigations by the Public Utilities Commission of Ohio were paused last week for an additional six months, as the federal probe continues.
Those efforts target FirstEnergy’s political and charitable contributions, its compliance with corporate separation laws, and whether details brought to light by the Householder case were properly disclosed as the company sought past rate and capital recovery adjustments.
The Ohio Consumers’ Counsel, which represents residential utility customers, was subpoenaing documents and deposing witnesses when the reviews were halted.
Meanwhile, FirstEnergy “fully resolved” matters with the Federal Energy Regulatory Commission in a consent agreement signed in January. The regulatory commission found FirstEnergy failed to disclose nearly $94 million in lobbying for the bailout bill. It was fined $3.9 million. The SEC’s review continues.
What solutions are proposed?
Legislation containing the bailout gave FirstEnergy a guaranteed-profit subsidy, but that was nixed by a settlement agreement last year. The nuclear bailout provisions of the bill also were repealed. Some lawmakers are fighting to repeal other energy subsidies included in the sweeping measure, which ratepayers are still paying for.
Different groups of House Republicans and Democrats introduced anticorruption legislation this session. They say the proposed laws could address gaps in campaign finance law highlighted by the case — gaps that allow uncontrolled raising and spending of money through dark money groups.
Others are calling for more transparency under Ohio’s lobbying laws, which required few to no details be made public about the plane trips, wining and dining, sports tickets and other perks Householder testified to receiving. Those bills’ prospects are unclear.