Two defendants in $60M public corruption case take plea deals

Credit: DaytonDailyNews

The push to repeal House Bill 6 – a controversial energy law at the center of an alleged $60 million bribery scheme - is on hold at the Ohio Statehouse.

Credit: DaytonDailyNews

Both pleaded guilty to racketeering

Two men in the alleged $60 million bribery scheme pleaded guilty in U.S. District Court, signaling federal prosecutors are making progress in the largest public corruption case in Ohio history.

Jeff Longstreth, a longtime aide to former Ohio House speaker Larry Householder, and Juan Cespedes, who lobbied for an Akron-based utility, each signed plea agreements earlier this month. The men appeared before U.S. District Court Judge Timothy S. Black on Thursday and entered guilty pleas to racketeering, which carries a penalty of up to 20 years in prison.

Also, charged with racketeering in the case are former Ohio GOP chairman and lobbyist Matt Borges, lobbyist Neil Clark, and Householder. They have pled not guilty.

Householder, R-Glenford, declined comment and directed calls to his attorneys, who could not be reached. Previously, Householder said he is innocent and will be vindicated in court.

ExploreFight over energy bailout law delayed

On July 21, federal prosecutors outlined their case in an 82-page affidavit authored by FBI Special Agent Blane Wetzel. Prosecutors used pseudonyms for the utility companies involved in the scheme but descriptions identify them as FirstEnergy Corp., FirstEnergy Solutions and FirstEnergy Services.

Prosecutors say that from March 2017 to March 2020, the companies paid Householder’s Enterprise nearly $60.9 million in secret payments in exchange for a billion-dollar bailout known as House Bill 6. Much of the millions was funneled through dark money groups, including Generation Now.

ExploreWhat is House Bill 6?

Longstreth’s plea agreement says he organized Generation Now at Householder’s direction and to Householder’s benefit. He acknowledges managing the Generation Now bank accounts.

Longstreth managed messaging to get HB6 passed as well as defeat the referendum, was a point of contact for FirstEnergy, and was a signatory on Generation Now accounts, according to federal prosecutors.

The enterprise used the money to elect pro-Householder legislators, position Householder to be speaker, pass the bailout bill and campaign against a referendum effort against HB6, prosecutors say.

“The millions paid are akin to bags of cash — unlike campaign or PAC contributions, they were not regulated, not reported, not subject to public scrutiny — and the Enterprise freely spent the bribe payments to further the Enterprise’s political interests and to enrich themselves,” according to the 82-page criminal complaint signed by Wetzel.

Cespedes lobbied for FirstEnergy Solutions, which emerged from bankruptcy this year under the name Energy Harbor.

In the plea deal signed by Cespedes on Oct. 6, Cespedes admitted that he orchestrated payments to Generation Now to benefit the defendants in exchange for Householder taking official action to help keep open two nuclear power plants in Ohio. (Energy Harbor owns the two nuclear power plants in Ohio.)

Cespedes also admitted to participating in a plan to thwart the HB6 referendum campaign.

The referendum campaign failed to gain enough valid voter signatures to qualify for the statewide ballot.

Cespedes is described by prosecutors as a key middleman in the Householder Enterprise and was an essential player to getting HB6 passed. He was paid $600,000 in Generation Now money and another $227,000 from FirstEnergy Solutions, according to the criminal complaint.

“The plea deal is not going to be a good sign for the remaining defendants because they’re likely going to cooperate and give information to the prosecution to assist in the prosecution of Mr. Householder,” said University of Dayton Law Professor Thaddeus Hoffmeister. “I would be a little nervous if I were in the shoes of Mr. Householder or other people that were affiliated with the management of Generation Now … If these guys are testifying, they’ll probably present well.”

Householder, who is running unopposed for re-election, was removed as speaker on July 30 but remains a state lawmaker. He is accused of using the dark money on personal expenses, including $300,000 in legal fees, $101,825 for a Florida condo and $20,000 in credit card debt.

ExploreHouseholder uses $920K in campaign money for legal fees

Separately, Householder faces allegations of misusing his campaign funds. In August, Ohio Secretary of State Frank LaRose referred 162 campaign finance issues to the Ohio Elections Commission. In October, Ohio Attorney General Dave Yost referred a complaint to the commission over Householder using $920,000 in campaign funds to pay his legal fees.

The Yost and LaRose referrals may be put on hold until the federal case is resolved, said Phil Richter, commission director. While the federal criminal case is pending, Householder is likely unable to give a response to the commission to allegations that he violated campaign finance laws, Richter said.

The Dayton Daily News submitted public records request to the Public Utilities Commission of Ohio and all statewide officeholders, asking for any federal subpoenas or search warrants they’ve received this year.

Yost’s office produced a federal subpoena for records it received on HB6. PUCO and the offices of governor, treasurer and auditor reported they haven’t received any subpoenas or search warrants.

Ohio Secretary of State Frank LaRose’s legal team responded to the records request on Thursday, indicating the office received a federal subpoena for records related to HB6.

Efforts to repeal HB6 in the Ohio General Assembly have been put on hold until at least after Election Day.

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