The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
Five have been charged and four have been convicted in a massive bribery and money-laundering scandal, but there were more signs this week that the federal criminal investigation is continuing.
In court documents filed in a separate case on Monday, a special master said that a major player in the conspiracy — Akron-based FirstEnergy — continues to cooperate with federal prosecutors. The same documents order the major beneficiary of the conspiracy, a former FirstEnergy subsidiary, to do more to cooperate in a federal class-action suit.
Former House Speaker Larry Householder, R-Glenford, and former GOP Chairman Matt Borges in June were respectively sentenced to 20 and five years in federal prison for their roles in the conspiracy. Two others have pleaded guilty and await sentencing, while a third who was charged died by suicide.
In the conspiracy, FirstEnergy and its then-subsidiary paid more than $60 million from 2017 to 2019 to make Householder speaker so he could pass and protect a $1.3 billion bailout. Of that sum, the vast majority was intended to prop up two nuclear plants owned by the subsidiary, then called FirstEnergy Solutions.
Over the course of a six-week trial in Cincinnati early this year, prosecutors put on evidence that FirstEnergy found itself in a precarious state because its heavy investments in coal and nuclear-powered generation were being undercut by cheap natural gas. Top executives with the company — including then-CEO Chuck Jones and Vice President Michael Dowling — desperately sought a ratepayer bailout to prop up the nuclear plants so they could spin them off and get most of the liability associated with closing and cleaning them up off their books.
In 2019, as Householder was shepherding the bailout through the legislature, FirstEnergy Solutions was in bankruptcy and emerged in February 2020. It had a new name, Energy Harbor, and it was no longer a subsidiary of FirstEnergy.
Five months later, the FBI arrested Householder and the others. Then large pension and investment funds sued FirstEnergy, saying the reckless, undisclosed conduct of its top executives caused investors to lose billions when that conduct hit the public fan.
FirstEnergy signed a deferred prosecution agreement admitting wrongdoing and agreeing to pay a $230 million penalty to the government. But that didn’t get it off the hook in the multiple civil suits it’s faced, including the class action filed in the Southern District of Ohio by large investors.
As part of the suit, those investors have been battling FirstEnergy for communications and other information that might implicate officials other than Jones and Dowling, who were fired.
They’re also battling Sam Randazzo. He isn’t named in the suit, but FirstEnergy said he took a $4.3 million bribe from Jones and Dowling just as Gov. Mike DeWine nominated Randazzo to chair the Public Utilities Commission of Ohio at the beginning of 2019. The class-action plaintiffs say Randazzo might be sitting on text messages and other communications relevant to the conspiracy.
Jones, Dowling and Randazzo deny criminal wrongdoing in the scandal, but U.S. Attorney Kenneth L. Parker in June said that the investigation was continuing. On Monday, Special Master Shawn Judge also said in a court filing that the investigation continues — and that FirstEnergy is cooperating.
“During this jury trial, the government highlighted Jones’s and Dowling’s purported relationships with Householder and involvement in the conspiracy,” Judge wrote, referring to the criminal trial earlier this year. “And multiple representations before the Court suggest that FirstEnergy’s cooperation with government investigations is ongoing.”
Judge is helping to referee the numerous discovery disputes in the class-action case. In this instance, he ordered Energy Harbor to provide almost everything the FirstEnergy investors wanted.
As a now-independent company, Energy Harbor said it’s not a defendant in the civil case, so it shouldn’t be put to the trouble and expense to provide the information the pension and investment funds are demanding.
But Judge noted that while it was still a FirstEnergy subsidiary, the company “contributed $43 million of the $60 million paid to Householder and his affiliates in exchange for the official action of passing (the bailout law) and defending it from a repeal referendum.”
In addition, Judge wrote, the subsidiary’s lobbyist, Juan Cespedes, helped direct some of those funds and pleaded guilty to his role in the racketeering conspiracy.
Judge then ordered Energy Harbor to provide the plaintiffs with the information they requested, but reduced the time period the required documents span by several months.
