By John Stang
The Ohio Legislature’s speaker of the House and four others have been charged with funneling roughly $60 million in bribes and illegal contributions to a three-year secret campaign to subsidize two financially struggling nuclear power plants in the state.
The new criminal case puts the future of the 2019 bailout bill in question, with Gov. Mike DeWine (R) late in the week calling for it to be repealed and replaced.
House Speaker Larry Householder (R), a political adviser, and three lobbyists face federal charges of racketeering conspiracy, which carries a maximum penalty of 20 years in prison and a $250,000 fine. Also charged was a 501(c)(4) social welfare entity named Generation Now through which money from an entity cited as Company A was allegedly laundered.
Householder was the main decision-maker for Generation Now, according to an 81-page FBI affidavit filed July 17 and unsealed Tuesday in federal court.
Local reporting identified Company A as Akron-based FirstEnergy Corp., former parent of FirstEnergy Solutions Corp., which owned the nuclear plants. While they did not use the names, federal law-enforcement officials on Tuesday left little question of the companies involved in providing the money for the bribes and laundering.
“All forms of public corruption are unacceptable,” said FBI Cincinnati Special Agent in Charge Chris Hoffman in a federal press release. “When the corruption is alleged to reach some of the highest levels of our state government, the citizens of Ohio should be shocked and appalled.”
The racketeering case revolves around the Davis-Besse Nuclear Power Station in Oak Harbor and the Perry Nuclear Power Plant in Perry. FirstEnergy Solutions — which declared bankruptcy 2018 and split from FirstEnergy Corp. in 2019 to become Energy Harbor — has owned the reactors.
In brief statements, both FirstEnergy and Energy Harbor said they are fully cooperating with the federal probe. They also acknowledged they are the subjects of the investigation.
“We intend to cooperate fully with the Department of Justice investigation involving the Ohio Speaker of the House, and we will ensure our company’s involvement in supporting HB 6 is understood as accurately as possible,” FirstEnergy CEO Chuck Jones said Thursday in the company’s second-quarter earnings release. “I believe that FirstEnergy acted ethically in this matter. At no time did our support for Ohio’s nuclear plants interfere with or supersede our ethical obligations to conduct our business properly. I believe the facts will become clear as the investigation progresses.”
The FBI affidavit suggests 84 phone contacts between Householder and Jones from February 2017 to July 2019, along with contacts with two other executives, Cleveland.com reported Friday.
FirstEnergy Solutions had planned to retire the reactors, respectively by May 2020 and May 2021, because it did not have the money to operate them economically. But it reversed course after the Ohio Legislature in July 2019 passed House Bill 6 to provide a $150 million annual financial bailout to the power plants, starting in 2021. It will be paid with an $0.85 monthly increase in the electric bill for each Ohio residential utility customer, regardless of whether that home is a FirstEnergy customer.
The suspects worked to ensure the bill made it through the legislature, then “worked to corruptly” ensure its survival against a voter referendum intended to undo the legislation, the FBI said.
The affidavit shows the federal investigation was already underway when the bill passed.
The document indicates Company A’s plan had been to bribe Householder, and support election of 21 new representatives in 2018 who would ensure Householder’s selection as House speaker. Householder would then ensure the state’s ratepayers would subsidize the two reactors with a rate hike.
Householder originally served in the Ohio House from 1997 to 2004, including as House speaker from 2001 to 2004. A federal money-laundering investigation from that time did not result in charges. He returned to the House in the 2016 election and was elected speaker again in 2019.
The affidavit says Company A approached Householder in early 2017 about returning him to the post of speaker of the House. The lawmaker took a flight on a corporate plane in January of that year, and in March received the first quarterly payment of $250,000 via a bank account for Generation Now, an entity established to launder money for eventual creation and passage of House Bill 6. The document lists numerous donations to Generation Now from Company A and two subsidiaries, from $100,000 to $10 million, that eventually tallied close to $60 million.
Authorities charged four others joined Householder in laundering money through Generation Now with the goal of passing House Bill 6: Jeffrey Longstreth, Householder’s campaign and political strategist, plus lobbyists Mathew Borges, Neil Clark, and Juan Cespedes. Borges is the former chairman of the Ohio Republican Party. All five were arraigned electronically on Tuesday and released without bail. A preliminary hearing is scheduled for Aug. 6 in U.S. District Court.
Generation Now in 2018 provided at least $2 million to the campaigns of 15 primary candidates for the Ohio House, and later an extra six candidates during the general election — freshmen who said they would support Householder for speaker, according to the affidavit. Nearly $1.5 million was allocated for the general election. The affidavit does not say if any legislators beyond Householder are being investigated.
Meanwhile, Generation Now provided at least $400,000 to Householder to settle a personal lawsuit, to help pay for a house in Florida, and to pay off his credit-card debt, according to the FBI.
Householder-beholden freshmen representatives sponsored House Bill 6. The bill was sent to a special subcommittee, of which the majority were freshmen allied with Householder. The House speaker created the panel solely to handle House Bill 6 prior to a floor vote, and the subcommittee has not handled any other bills since, according to the affidavit.
Generation Now budgeted $15 million to shepherd House Bill 6 through the Ohio Legislature, much of it spent on mailers targeting districts of senators and representatives who opposed the measure, or at least were not firmly in support.
Clark, one of the indicted lobbyists, allegedly told one unidentified state representative that if he did not vote for House Bill 6, Householder to strip him of a committee chairmanship and make sure he would never get any of his bills passed. That representative contacted the FBI.
The House passed the bill 51-38, and the Senate approved it 19-12.
In 2019, the nongovernmental group Ohioans Against Corporate Bailouts tried to gather signatures to set up a public referendum to repeal the bill. The effort fizzled in late 2019 amid court battles. Generation Now allocated $23 million to fight the proposed referendum, including an advertisement campaign that claimed repealing the bill would allow China to take over Ohio’s electric grid, the affidavit says.
Generation Now spent $15,000 to bribe one initiative staff member to provide inside information on the anti-House Bill 6 campaign. The staffer went to the FBI about the bribe attempt, the affidavit says.
While he called on Householder to resign, DeWine initially told local news organizations this week he would not seek a repeal of House Bill 6. However, state lawmakers from both parties began preparing legislation toward that end, Cleveland.com reported. On Thursday, DeWine said the Legislature should “very quickly” eliminate and replace House Bill 6, the Cincinnati Enquirer reported.
Meanwhile, the FBI investigation appears ongoing.
“Anyone with information regarding public corruption related to the case involving Ohio House Speaker Householder & others is encouraged to contact @FBICincinnati at 614-849-1777,” the U.S. Attorney’s Office for the Southern District of Ohio tweeted on Wednesday.
