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FirstEnergy charged, agrees to pay $230 million penalty in connection to HB 6 bribery scheme

The company was charged federally with conspiring to commit honest services wire fraud.

COLUMBUS, Ohio — FirstEnergy Corp. has agreed to pay a $230 million penalty in connection to a $60 million alleged bribery scheme involving HB 6 and former House Speaker Larry Householder. 

The company was charged federally with conspiring to commit honest services wire fraud, and admitted to conspiring to pay public officials in exchange for “specific official action” that would benefit the company. 

The U.S. Attorney’s Office said in part, “The company signed a deferred prosecution agreement that could potentially result in dismissal of the charge.” 

The settlement agreement comes just over one year after Householder and four associates were arrested in connection to the scandal, which then-U.S. Attorney David DeVillers has described as the largest corruption scandal in the state's history. 

The U.S. Attorney's Office in Cincinnati and the FBI held a news briefing Thursday morning to address the updates.

FirstEnergy President and CEO Steve Strah released a video statement regarding the agreement.

You can read a full breakdown of that scandal, provided by the Associated Press, below: 

THE PLAYERS

Householder, a Republican, has pleaded not guilty and maintains his innocence. He was removed from the speakership last year, reelected to office in November despite the felony racketeering charges he faces, then expelled from the chamber last month in an historic vote.

His longtime political adviser Jeff Longstreth, lobbyist Juan Cespedes and Generation Now, a dark money group accused of taking millions in bribes, have pleaded guilty and await sentencing.

Former Ohio Republican Chair and lobbyist Matt Borges has pleaded not guilty, admitting in a separate campaign finance probe that he spent the money but insisting legally so. Longtime Statehouse lobbyist Neil Clark died by suicide in Florida in March.

DeVillers, an appointee of Republican former President Donald Trump, resigned in February to allow the new president to pick a successor. Democratic President Joe Biden has yet to nominate DeVillers’ permanent replacement.

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THE POLICY

The legislation at the heart of the scandal, House Bill 6, included a $1 billion bailout for two nuclear power plants operated at the time by a wholly-owned subsidiary of Akron-based FirstEnergy Corp. The federal criminal complaint said the conspiracy to pass the bill had partial roots on a flight FirstEnergy provided to Householder and his son to Trump’s January 2017 inauguration.

Soon after the trip, $1 million from FirstEnergy began flowing to Generation Now, controlled by Householder, in $250,000 increments. That cash and more were used to elect Householder-backed candidates and win him the speakership, prosecutors say.

Step two was passing the bill, titled the Ohio Clean Air Program, in July 2019. Ohio Gov. Mike DeWine signed it within hours. Step three was FirstEnergy spending around $38 million to finance a campaign to prevent a repeal referendum from reaching the ballot.

State lawmakers have since rescinded the nuclear bailout and another provision of HB 6 guaranteeing FirstEnergy’s three Ohio utilities revenue equal to what they earned in 2018, a year of weather extremes. Majority Republicans blocked calls to repeal the entire bill, which they said was voluminous and contained some good energy policy.

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THE POWER COMPANIES

FirstEnergy has undergone a reckoning since DeVillers’ announcement. Company officials say FirstEnergy is cooperating with investigations by the Justice Department, U.S. Securities and Exchange Commission and the Federal Energy Regulatory Commission. 

Six top executives have been fired, including CEO Chuck Jones.

The company faces two sets of consolidated lawsuits by shareholders, one that seeks a court compelling the company’s board of directors to implement reforms. The other set of lawsuits claims the company defrauded investors.

FirstEnergy’s CEO and President Steven Strah, who succeeded Jones, has said the company has made significant reforms in the last year.

Officials from Columbus-based electric utility AEP in June disclosed U.S. Securities and Exchange Commission enforcers have subpoenaed documents related to subsidies it has received from the energy bill for two aging coal plants partly owned by the company.

AEP officials initially testified against the bill but later added its support when the coal plant subsidy was added to the legislation. The bill requires nearly all electric customers in the state to subsidize the coal plants. Previously, only Ohio customers of the AEP, Duke and AES paid the subsidy, which amounted to $114 million last year.

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THE PUCO

The dismissal of Jones, who initially denied any wrongdoing by the company, appeared to be tied to a $4.3 million payment that FirstEnergy made in January 2019, purportedly to end a longstanding consulting contract with a person soon to be appointed Ohio’s top utility regulator.

There has been no dispute the regulator was Sam Randazzo, a seasoned utility lawyer and lobbyist, who DeWine appointed chair of the Public Utilities Commission of Ohio in February 2019.

Randazzo resigned from the commission in November after FBI agents searched his Columbus townhome, the same day FirstEnergy revealed the payment. Language in a separate lending document filed by the company that month suggested Randazzo helped the company after he became PUCO chair.

DeWine appointed former Franklin County Common Pleas Court Judge Jenifer French, a Republican, to succeed Randazzo as chair in March. French has pledged to restore public trust in the commission through improved transparency.

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THE POLITICS

DeWine, up for reelection next year, has faced some political pushback for disregarding cries of alarm from consumer and environmental advocates and a group of fellow Republicans over Randazzo’s deep ties to FirstEnergy.

The governor has defended his decision to appoint the utility law expert.

DeWine reassigned Laurel Dawson, the chief of staff who oversaw the Randazzo selection process, in a May staff shuffle described as unrelated. The governor’s top lobbyist, Dan McCarthy, is a former FirstEnergy lobbyist who was president of one of the dark money groups implicated in the alleged bribery scheme. McCarthy has said his actions were legal and he has no indication he is a target of the probe.

Still, Ohio Democrats have seized on the ongoing investigation in their efforts to reverse Republicans’ dominance in state politics next year, which is complete. The party controls every statewide office, both chambers of the state Legislature and the Ohio Supreme Court, with many of those seats up for grabs.

In May, Democratic state Reps. Allison Russo and Bride Rose Sweeney re-introduced an anti-corruption bill aimed at shedding light on dark money and other political spending in the state.

The next month, Democratic gubernatorial candidate Nan Whaley, the mayor of Dayton, unveiled a four-point plan to “combat corruption and restore ethics in Ohio.”

Within weeks and with political pressure mounting, a months-long legislative stalemate over whether to remove Householder was broken. The effort to expel Householder was ultimately championed by two Republicans.

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