Statehouse bribery scheme: FirstEnergy $230M penalty historic

Federal authorities called the agreement that mandates FirstEnergy pay $230 million in penalties for its role in an alleged bribery scheme a historic event for corporate accountability in Ohio.

“That’s the largest criminal penalty ever collected as far as anyone can recall in the history of this office,” said Acting U.S. Attorney for the Southern District of Ohio Vipal Patel.

FirstEnergy, an Akron-based utility company, admitted and accepted responsibility for its role in what prosecutors called the largest bribery and money laundering scheme ever perpetrated against the state of Ohio. The company was charged federally with conspiring to commit honest services wire fraud and signed a deferred prosecution agreement that could be dismissed in the future if it continues to cooperate with investigators.

“FirstEnergy Corp., through the acts of its officers, employees and agents, conspired with public officials and other individuals and entities to pay millions of dollars to and for the benefit of public officials in exchange for specific official action for FirstEnergy Corp.’s benefit,” the statement of facts filed in court says.

Of the $230 million penalty payment, $115 million will be paid to the United States Treasury. The remainder will be paid to the Ohio Development Service Agency’s Percentage of Income Payment Plus Plan, a program that assists Ohioans in paying utility bills.

The court document says FirstEnergy’s primary goal was the passage of nuclear legislation and House Bill 6. Investigators allege FirstEnergy donated nearly $61 million that went through nonprofits and helped Former Ohio House Speaker Larry Householder and his political allies.

Householder is not named in the agreement, but “Public Official A” is described as representing Ohio’s 72nd District and serving as Speaker of the House between Jan. 7, 2019, and July 30, 2020.

“FirstEnergy Corp. paid millions of dollars to Public Official A through his 501(c)(4), Generation Now, in return for Public Official A pursuing nuclear legislation for FirstEnergy Corp.’s benefit in his capacity as a public official. Use of 501(c)(4) entities was central to the scheme because it allowed certain FirstEnergy Corp. executives and co-conspirators to conceal from the public the nature, source, and control of payments to and for the benefit of Public Official A,” the statement of facts says.

Householder has pleaded not guilty to a federal charge of racketeering conspiracy. The case’s docket says the next court date is Sept. 2. A request for comment from his attorney wasn’t immediately responded to Thursday.

He was expelled from the Ohio House in June.

The prosecution agreement also mentions a Public Official B, who was chairman of the Public Utilities Commission of Ohio between April 2019 and Nov. 21, 2020. That description matches Samuel Randazzo.

“FirstEnergy Corp. paid $4.3 million to Public Official B through his consulting company in return for Public Official B performing official action in his capacity as PUCO chairman to further FirstEnergy Corp.’s interests relating to passage of nuclear legislation and other specific FirstEnergy Corp. legislative and regulatory priorities, as requested and as opportunities arose,” the statement of facts says.

Randazzo has not been charged.

Donald Misheff, FirstEnergy’s non-executive board chairman, said in a statement the prosecution agreement builds on steps the company already has underway, including regaining trust with its stakeholders.

FirstEnergy stock rose more than 4 percent after the announcement of the settlement.

The utility said in a statement the use of nonprofit groups was central to its efforts to influence the legislative process.

“FirstEnergy Corp. used the 501(c)(4) corporate form as a mechanism to conceal payments for the benefit of public officials and in return for official action,” the company’s statement says. “FirstEnergy Corp. used 501(c)(4) entities in this way because the law does not require disclosure of donors to a 501(c)(4) and there is no ceiling that limits the amount of expenditures that can be paid to a 501(c)(4) entity for the purpose of influencing the legislative process. This effort would not have been possible, both in the nature and volume of money provided, without the use of a 501(c)(4) entity.”

Common Cause Ohio called Thursday for more transparency of corporate political spending.

“Transparent decision-making by corporate boards and timely disclosure of political spending can help shareholders determine whether their corporation’s political activities advance the goals of the company or not. With full and transparent information, shareholders can see and decide if the corporation’s political giving is on the up-and-up, and citizens can see if elected officials are ‘in the pocket’ of — and doing the bidding of — their large corporate donors,” the organization said.

Patel said Thursday that the agreement does not prevent prosecutors from charging employees who may have broken the law. He also said the company is not allowed to pass the costs of the penalty to its customers.

“Criminal monetary penalties are meant to hurt. We can’t put corporations in jail,” Patel said. “The principle here is to try to come up with a number that stings but doesn’t annihilate. Because if we annihilate, then ... what about the innocent employees and customers? So what’s enough to sting and meant to hurt, it’s not to be a slap on the wrist but not enough to drive them out of business and drive innocent employees and force them to start looking for new jobs.”

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