How FBI says Larry Householder plotted return to power with utility company’s support

Source: By Amanda Garrett, The Columbus Dispatch • Posted: Monday, August 3, 2020

How FBI says Larry Householder plotted return to power with utility company’s support

Editor’s note: This is part one of a four-part series examining the FBI’s criminal complaint against former Ohio House Speaker Larry Householder and four others described as the Householder Enterprise. All five men and the group Generation Now were indicted Thursday on federal racketeering charges.

The vehicle rolled up outside a Worthington library last September amid an ugly battle to repeal House Bill 6.

Matt Borges, a lobbyist and former Ohio Republican Party chairman, was at the wheel. Executives for an Ohio public utility company that pushed for the legislative $1.3 billion energy subsidy were passengers.

The group was headed to an airport but detoured to the library because company brass wanted to see one of the people gathering signatures to put the fate of H.B. 6 in the hands of Ohio voters — an effort that could kill the bailout that energy companies ultimately spent more than $60 million to secure.

When the group spied a guy with a clipboard outside the library, one of the executives wanted to talk to him, Borges would later recall during a taped conversation obtained by the FBI.

“It was the CEO of the company,” Borges said, emphasizing CEO.An FBI agent’s affidavit released July 21 following the arrests of House Speaker Larry Householder, Borges and three others on racketeering charges doesn’t explain what happened next outside the library.

Yet the incident illustrates how closely that company — referred to throughout the affidavit as “Company A” — worked with Householder and the others indicted with him to make sure H.B. 6 became law, and stayed law, the affidavit said.

Details and quoted materials in the affidavit leave no doubt that Company A is Akron-based FirstEnergy Corp. and its subsidiaries, including what would become independent spinoff Energy Harbor. FirstEnergy has said it did nothing wrong.

None of the companies or any of their employees have been charged in what has been characterized as one of the largest public corruption cases in Ohio history.

The affidavit sometimes reads like a mash-up between “The Sopranos” and “House of Cards.”

The FBI agent who wrote it, Blane Wetzel, works for the agency’s public corruption squad in Columbus. Before joining the FBI, Wetzel served as policy director for a member of the Michigan House of Representatives and points out in the affidavit that in that job he became familiar with rules, regulations and norms of campaign finance.

Wetzel uses the affidavit to unfurl a three-year road map to H.B. 6: It starts with Householder’s reelection, continues through his consolidation of power via money and pressure, and ultimately concludes with a multiple-front attack that sank the ballot initiative that could have ruined it all.

Borges, the affidavit said, was caught on tape calling the relationship between Householder and Company A “an unholy alliance.”

If the FBI is right, Ohioans more likely will call it an unholy betrayal.

The affidavit appears to be based on bank records and other documents obtained through search warrants or subpoenas, interviews and recordings by at least one person who wore a wire for the FBI.

This is the story the affidavit tells, combined with Ohio newspaper reporting that delved into Householder, his return to power and the unusual path H.B. 6 followed to secure the $1 billion bailout for two nuclear power plants.

Larry Householder was angling for a political comeback in 2016.

The Perry County Republican served as Ohio House speaker from 2001-2004 and left due to term limits amid reports that he was involved in corrupt activity.

At the time, an anonymous nine-page memo accused Householder and two others of bribery, fundraising irregularities and kickback schemes, which triggered an FBI probe, The Dispatch reported.

Householder never was charged, but he left the money and power of Columbus amid the allegations and returned home to his farm in rural Perry County, a place that once helped fuel Ohio’s energy supply through coal mining.

After serving as Perry County auditor, in 2016 Householder began strategizing his second rise to power as the future of another Ohio energy supply — nuclear power — looked grim.

About 140 miles to the north, Akron-based FirstEnergy Corp. officials fretted over the future of its two aging nuclear power plants, Davis-Besse near Port Clinton and Perry near Ashtabula, both on Lake Erie’s shore.

In its annual report to shareholders, FirstEnergy reported a weak energy market, poor forecast demands and hundreds of millions in losses, particularly from its nuclear energy affiliate, the affidavit said.

FirstEnergy President and CEO Charles Jones said during a 2016 fourth-quarter conference call that the company was talking with its fellow utilities and legislators about solutions to help ensure Ohio’s energy future.

“Our top priority is the preservation of our two nuclear plants in the state, and legislation for a zero-emission nuclear program is expected to be introduced soon,” Jones said.

Back in Perry County, as the November 2016 election approached, Householder apparently was so confident he’d win back his House seat that he and others were already planning to parlay that victory into a takeover of the Ohio House speakership in 2019, the affidavit said.

Why? In part, because they knew there would be an opening.

In Ohio, members of the House of Representatives serve two-year terms and are limited to four consecutive, elected two-year terms.

Householder knew that the speaker in place in 2016 — Cliff Rosenberger — would be term-limited at the end of 2018 and that the legislature would have to elect a new speaker to begin 2019.

To retake the speakership, Householder began to surround himself with a team of like-minded strategists, whom the FBI would later call the “Enterprise.” Besides Householder, it would come to include Borges, longtime political strategist Jeff Longstreth and lobbyists Neil Clark and Juan Cespedes, the affidavit said.

In the fall of 2016, the Enterprise began to map out a strategy to get Householder reelected speaker. They called it “Game plan 2018,” according to a document recovered by the FBI.

It appeared to lay the foundation for what would unfold in coming years.

“Hit the ground running with C4 working as the recruitment and fundraising arms,” Game plan 2018 said. The affidavit said “C4” is likely a reference to a 501(c)(4), a type of nonprofit organization that is supposed to promote social welfare causes but is often used for politics, which is OK as long as it spends less than half its money on politics.

Donors to a 501(c)(4) are not publicly disclosed, making political donations untraceable, earning them the nickname “dark money.”

Game plan 2018, the affidavit showed, also asked a key question: Who would provide financial backing for Householder’s plan?

It’s not entirely clear how Householder’s quest for power soon became intertwined with FirstEnergy’s desire for legislative help to save its nuclear power plants.

But by January 2017, Householder had won the race for House District 72 and, the affidavit said, Householder’s Enterprise was working with FirstEnergy on a plan that would give everyone involved what they wanted.

Company A, the affidavit said, “funded Householder’s speakership in exchange for a legislative fix for its nuclear power plants.”

Altitude climbing

In January 2017, the month Householder stepped back into the Ohio House as a member, he and a son took a ride on a private jet belonging to “Company A,” the affidavit said. At the time, The Dispatch reported that Householder and his son used a FirstEnergy Corp. plane to attend President Donald Trump’s inauguration.

A couple of weeks later, on Feb. 6, 2017, a 501(c)(4) organization called Generation Now was incorporated in the state of Delaware and two bank accounts were opened at Fifth Third Bank.

This type of nonprofit didn’t exist when Householder left the House, lobbyist Clark explained to Householder in an undated transcript included in the affidavit. Clark told Householder “what’s interesting is that there’s a newer solution” that allows donors to “give as much or more to the [501(c)(4)] and nobody would ever know. So you don’t have to be afraid of anyone because there’s a mechanism to change it.”

Generation Now, the FBI contends, would serve as a primary mechanism to move millions of dollars from FirstEnergy to the Householder Enterprise, money that was used for everything from advertising and campaigns to bribes, payoffs and personal enrichment, the affidavit said.

Bank records subpoenaed by the FBI show Longstreth was signatory on the Generation Now accounts, but the affidavit repeatedly asserts that it was Householder who controlled Generation Now.

Soon after Generation Now launched, money started to flow in from FirstEnergy — initially with quarterly payments of $250,000, the affidavit said.

In the months to follow, lawmakers in the Ohio House and Senate introduced several bills to create a “Zero-Emissions Nuclear Resource Program,” including a rider on electric customers’ bills that would subsidize the Davis-Besse and Perry nuclear power plants.

FirstEnergy’s Jones told an Ohio Senate panel that both plants could close without a subsidy.

But the three bills ultimately stalled, in part because then-Republican Gov. John Kasich opposed a bailout. At the same time, however, the Enterprise was quietly working on a way to push a different subsidy through, the affidavit shows.

Its first step, it appears, was ensuring that Householder was elected speaker of the House.

Between March 2017 and 2018, FirstEnergy funneled more than $2.9 million to Generation Now and other entities the Enterprise controlled, the affidavit said.

As 2018 unfolded, the FBI says the Enterprise would use the money for its “own personal benefit and to gain support for Householder’s political bid to become speaker.”

Read the indictment here:

Householder indictment by Jessie Balmert on Scribd

To be continued.