The U.S. Securities and Exchange Commission is investigating FirstEnergy, the Ohio electric utility tied to a bribery scheme that allegedly helped state Rep. Larry Householder become the state’s Speaker of the House in exchange for a bailout of two nuclear plants.
Securities and Exchange Commission (SEC) investigations are typically done behind closed doors, but the probe was disclosed in filings made by the company in a lawsuit it filed against former consultant Michael Pircio earlier this month.
Pircio worked for Clearsulting, a consulting firm hired by FirstEnergy in February, to help the utility company’s finances become compliant with the Sarbanes-Oxley Act, according to the suit. The act, enforced by the SEC, was introduced in 2002 in response to major securities scandals involving companies such as Enron to protect investors from fraudulent corporate accounting.
Clearsulting terminated Pircio on July 30, the same day Householder was indicted for his alleged involvement in a $60 million racketeering conspiracy that allegedly involved FirstEnergy. Shortly after his termination, Pircio downloaded nearly 60 files containing sensitive financial information about the company and refused to return them, the suit says.
Letters included in the filings from Pircio’s attorney H. Vincent McKnight, who represents whistleblower cases in Washington, confirm Pircio shared “a number of Clearsulting documents that potentially show a violation of law” with his counsel. McKnight said in the letter, addressed to FirstEnergy’s counsel a day after the suit was filed, that the firm then shared the documents with the SEC in early August.
When FirstEnergy filed the letters as part of its complaint, making public the then-private SEC investigation, “we were all surprised,” McKnight told Weapons Complex Morning Briefing Tuesday in a phone interview. He said “everything about the case” was “unusual and groundbreaking.”
Northern Ohio District Judge Pamela Barker granted FirstEnergy an injunction barring Pircio from “using, disclosing, or misappropriating” the files allegedly downloaded after his termination on Sep. 9. But he can still cooperate with the SEC, she wrote.
Pircio has until Oct. 21 to respond to FirstEnergy’s complaint, Barker ordered Tuesday.
FirstEnergy declined to comment on why its legal defense made the private investigation public record, and McKnight declined to comment on why and when the SEC started its investigation.
The utilities company is also being probed by the Public Utilities Commission of Ohio for potentially charging ratepayers for its alleged lobbying spending. According to a criminal complaint filed against Householder in July, the former Ohio House speaker funneled millions of dollars from FirstEnergy into a 501(c)(4) that he used to prop up the 2018 house campaigns of more than 20 state candidates who later supported his house speaker appointment. Pircio ran for an Ohio House seat in the same election but lost to incumbent Democratic state Rep. John Patterson.
In return for the support from the candidates he helped elect, Householder pushed a bill through the state legislature that helped bail out two plants owned by a FirstEnergy subsidiary that has since separated from the company, increasing utility fees for all ratepayers across the state, the complaint alleged. FirstEnergy wasn’t indicted with Householder.
Editor’s note, 09/23/2020, 2:56 p.m. Eastern time. The story was updated to clarify that FirstEnergy Corp. was not indicted as part of the federal case against Householder, and that the company’s former subsidiary now operates the plants that allegedly benefited from the bill Householder sponsored.
