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This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network.

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Parties are in the home stretch of trial preparation in the federal government’s criminal case against former Ohio House Speaker Larry Householder and others. The case charges the defendants with bribery and a conspiracy related to House Bill 6, Ohio’s nuclear and coal bailout law. Developments include:

  • Motions in the federal government’s criminal case against Householder and lobbyist Matt Borges shed light on the parties’ legal strategies.
  • Pretrial fact-finding in shareholder cases could unearth more information from a dark money group linked to FirstEnergy, as well as an industry group that was a longtime client of former regulator Sam Randazzo.
  • American Electric Power wants to stop the Office of the Ohio Consumers’ Counsel from getting copies of subpoenas the company received from federal securities regulators.
  • The Public Utilities Commission of Ohio produced more documents responsive to federal subpoenas served last year, but it still has not provided all documents sought by the Energy News Network and Eye on Ohio.

Co-conspirator statements

Jury selection in the federal government’s case against former Ohio House Speaker Larry Householder and lobbyist Matt Borges is still scheduled to begin on Jan. 20. Trial could then start as soon as Jan. 23, confirmed spokesperson Jennifer Thornton of the U.S. District Attorney’s Office for the Southern District of Ohio. Three other co-defendants pled guilty but have not yet been sentenced, including the dark money organization Generation Now.

Lobbyist Neil Clark, another co-defendant, was found dead from an apparent suicide last year. Among other things, Householder has asked the court to keep recordings of statements Clark made to undercover federal agents out of evidence.

But statements by a co-conspirator are admissible evidence, and evidence will prove the conspiracy existed, the government responded. The alleged goals included preserving and expanding Householder’s political power through secret payments, plus enriching and benefitting the criminal enterprise, its members and associates.

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Join us in Columbus! 

Join Eye on Ohio and the Energy News Network on Jan. 18 for Shining a Light on Dark Money, a Columbus Metropolitan Club forum, featuring Kathiann Kowalski, Ashley Brown, David DeVillers and Jo Ingles. Registration opens soon for this virtual and in-person event.

FirstEnergy’s admissions

Householder has also asked the court to block the government from introducing FirstEnergy’s deferred prosecution agreement or presenting evidence about the company’s alleged bribery of Sam Randazzo. Neither FirstEnergy nor Randazzo are defendants in the case. Among other things, FirstEnergy has admitted it paid $4.3 million to a company controlled by Randazzo shortly before Gov. Mike DeWine appointed him chair of the Public Utilities Commission of Ohio.

The government responded that it doesn’t currently plan to introduce evidence about payments to Randazzo. Similarly, the government said it doesn’t plan to use the deferred prosecution agreement as an exhibit, although it may be referred to at trial. Presumably, the government will call one or more witnesses from FirstEnergy to testify.

Meanwhile, the government has asked the court to exclude testimony from an expert witness for Householder, who is expected to talk about what is “commonplace” in raising money for politics. However, the case is about an alleged racketeering conspiracy involving bribery, the government argued.

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The Trump card

The government has also asked the court to bar evidence and arguments about selective prosecution, ignorance of the law and other claims by lobbyist Matt Borges, a former head of the Ohio Republican Party. Borges has alluded to some of those arguments in prior court filings. A Borges website also suggested the criminal charges were brought against him as retaliation for not supporting Donald Trump for president. “I know why they came after me in the first place,” Borges asserted.

Borges’ response to the government’s motion claimed he doesn’t plan to introduce evidence of selective prosecution, “but, even so, he just cannot understand why he was charged.” Also, the response suggested Borges’ lawyers might question the motivations and biases of the government investigators at trial.

“The idea that Trump is somehow behind the federal House Bill 6 investigation in Ohio is bonkers,” said Dave Anderson, policy and communications manager for the Energy and Policy Institute.

Earlier this year, an assistant controller for FirstEnergy indicated that Trump was “Federal Official 1” in the company’s deferred prosecution agreement. And FirstEnergy’s deferred prosecution agreement admitted paying $5 million to a dark money group, which now appears to have been pro-Trump.

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Consumers’ counsel seeks subpoenas

The Office of the Ohio Consumers’ Counsel has asked the Public Utilities Commission of Ohio to make American Electric Power provide copies of two federal subpoenas relating to HB 6. The Securities and Exchange Commission issued the first subpoena in 2021. The company revealed the existence of the second subpoena in its third-quarter SEC filing this fall.

The consumers’ counsel argued that the subpoenas could lead to the discovery of admissible evidence in a pending case about charges for the two 1950s-era coal plants subsidized by HB 6.

AEP’s Nov. 29 response argued the subpoenas are irrelevant to the agency’s audit case. Alternatively, AEP wants any production to be confidential. That treatment would prevent news outlets, shareholders and others from finding out what the SEC asked for.

The materials could also shed light on AEP’s oversight of its corporate and political donations to Empowering Ohio’s Economy, a dark money group that in turn gave $700,000 to Generation Now. Without HB 6’s coal plant bailouts, AEP, AES Ohio and Duke Energy Ohio remain committed to pay for shares of those plants’ costs until 2040.

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Procrastination on public records

The PUCO waited until Wednesday afternoon before Thanksgiving to produce a fourth batch of documents covered by Department of Justice subpoenas issued a year and a half ago.

The documents largely reinforce the role that Randazzo and his staff played in shaping HB 6 and stalling any repeal. The delayed release came weeks after the materials might have been relevant to Ohio’s elections this fall.

The PUCO still has not produced numerous public records from after Randazzo resigned in November 2020. Those materials relate to communications between PUCO commissioners and staff, on the one hand, and representatives in DeWine’s administration on the other. The governor’s office has not yet provided those public records, either.

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In abeyance

The PUCO also has not ruled on a September filing in which the Office of the Ohio Consumers’ Counsel argued that the commission went beyond the six-month stay on discovery sought this summer by U.S. Attorney Kenneth Parker of the Southern District of Ohio. The PUCO’s order is essentially a total freeze until sometime in February.

A Nov. 18 status report by FirstEnergy’s utilities indicates the company continues to view the stay very broadly, halting even the production of documents it was supposed to have turned over months ago.

The consumers’ counsel, Northeast Ohio Public Energy Council and the Ohio Manufacturers’ Association Energy Group have argued that rolling document production should continue, especially since the materials have already been produced in other litigation. The groups also want the PUCO to deal with FirstEnergy’s confidentiality claims, as well as other objections relating to the disclosure of materials that have already been produced.

The longer the PUCO delays acting on the issues raised in the Nov. 18 filings, the more time it will take for the regulatory cases to move ahead once the stay is lifted.

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Shareholder litigation

Cases continue in which shareholders claim they lost money due to FirstEnergy’s actions related to House Bill 6. One Nov. 18 order calls for the dark money group Partners for Progress to diligently search for and produce various non-privileged documents by Dec. 7.

Partners for Progress objected to the order, claiming it has no control over and no duty to produce documents from its former director, Dan McCarthy. The objection by Partners for Progress begs the question of why McCarthy might have kept material that arguably should have stayed with the organization. A November filing said the lead plaintiff in the litigation had so far been unable to serve a separate subpoena on McCarthy.

McCarthy was a FirstEnergy lobbyist before becoming DeWine’s director of legislative affairs. FirstEnergy and its affiliates allegedly gave millions to Partners for Progress, which then funneled funds to Generation Now and other organizations.

The documents would likely shed light on how Partners for Progress allegedly funneled money from FirstEnergy to groups in the alleged Householder conspiracy, along with efforts to keep FirstEnergy’s funding secret.

A separate court order deals with Industrial Energy Users–Ohio, which was a longtime client of Randazzo’s before DeWine appointed him to the PUCO. The court told IEU–Ohio and Randazzo’s former firm to do a more thorough search and produce documents sought by FirstEnergy’s former CEO, Chuck Jones, who is a defendant in the case.  

The PUCO said last year that it would expand one of the FirstEnergy regulatory cases to investigate a purported side agreement that allegedly led Randazzo to drop IEU–Ohio’s opposition to an earlier bailout for FirstEnergy. The investigation hasn’t moved forward, however. Instead, the PUCO split off that part of the case and put it on hold.

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Ohio’s civil court case

The Supreme Court of Ohio has not yet said if it will rule on the Ohio attorney general’s effort to keep millions of dollars’ worth Sam Randazzo’s assets frozen until the state’s civil corruption case concludes.

FirstEnergy disclosed in November 2020 that it had paid $4.3 million to one of his companies shortly before Gov. Mike DeWine appointed him chair of the PUCO. In July 2021, FirstEnergy admitted the money was meant as a bribe. Randazzo has denied liability.

The rest of the state’s civil corruption case remains frozen until after the trial of Householder and Borges. That stay could potentially be extended further if the federal government brings criminal charges against Randazzo or former FirstEnergy executives Chuck Jones and Michael Dowling, who are also defendants in the civil case, Ohio Attorney General Dave Yost said at a legal education seminar last month.

The U.S. attorney’s office hasn’t said when such charges, if any, might be filed against individuals. 

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Correction: An assistant controller for FirstEnergy indicated that Trump was “Federal Official 1” in the company’s deferred prosecution agreement. A previous version referred to an incorrect document.

Kathi is the author of 25 books and more than 600 articles, and writes often on science and policy issues. In addition to her journalism career, Kathi is an alumna of Harvard Law School and has spent 15 years practicing law. She is a member of the Society of Environmental Journalists and the National Association of Science Writers. Kathi covers the state of Ohio.