Ohio State Legislator Is Arrested in $60 Million Corruption Scheme

Source: By Giulia McDonnell Nieto del Rio, New York Times • Posted: Thursday, July 23, 2020

The House speaker was connected with a conspiracy to enact a $1.3 billion bailout of an energy company, the F.B.I. said.

Federal agents on Tuesday arrested one of the most powerful officials in Ohio state government, the Republican House speaker, along with a former state Republican Party chairman and three other people in what law enforcement officials described as a $60 million scheme to bail out a foundering energy company.

In a criminal complaint, the F.B.I. described a wide-ranging conspiracy in which the energy company helped finance the election of the House speaker, Larry Householder, in 2018. It then allegedly bankrolled an effort led by Mr. Householder to pass a $1.3 billion bill subsidizing two troubled nuclear power plants and a campaign to defeat a 2019 referendum to repeal that bill.

Along the way, the company also put $500,000 into Mr. Householder’s personal accounts, including more than $100,000 to pay for costs related to a home he owned in Florida, according to the complaint. Millions more were paid in bribes to Mr. Householder’s co-conspirators, the complaint said.

The conspiracy was “likely the largest bribery, money-laundering scheme ever perpetrated against the people of the state of Ohio,” the United States attorney for the Southern District of Ohio, David M. DeVillers, said in a news conference.Though the criminal complaint did not name the energy company, the two nuclear power plants were owned by FirstEnergy Solutions, a former subsidiary of FirstEnergy Corp.

FirstEnergy Solutions is now known as Energy Harbor, a separate corporate entity from FirstEnergy Corp. Energy Harbor owns the two nuclear plants that Mr. Householder helped bail out, according to the Energy and Policy Institute. The institute said that the criminal complaint indicates that three entities — FirstEnergy Corp., FirstEnergy Solutions and FirstEnergy Service Co., another subsidiary of FirstEnergy Corp. — together provided the $60 million for the scheme.

FirstEnergy Corp. said in a statement on Tuesday that it had received subpoenas “in connection with the investigation surrounding Ohio House Bill 6,” and intended to cooperate with investigators. Energy Harbor said they are reviewing the complaint and will cooperate with the investigation.

Mr. Householder, 61, who was arrested on his farm east of Columbus on Tuesday morning, faces a maximum sentence of 20 years in prison and a $250,000 fine, officials said. He is the second recent Ohio House speaker to be ensnared in a federal investigation, following Cliff Rosenberger, who resigned in 2018 but has yet to be charged with a crime.

The speaker, a mainstay of Ohio politics who is up for re-election this year, previously served as House speaker until stepping down in 2004 amid reports of possible corruption, the complaint said. He was never charged, however, and successfully reclaimed his old seat in 2016 before being elected speaker in 2019.

Also arrested in the conspiracy was Matt Borges, a former chairman of the Ohio Republican Party and ally of John Kasich, a former Ohio governor who sought the Republican presidential nomination in 2016. After Donald J. Trump won the presidency in 2016, he intervened to oust Mr. Borges. Last month, Mr. Borges started a super PAC aimed at convincing Republicans to vote against Mr. Trump in November.

The other people charged in the scheme were Jeff Longstreth, a political strategist for Mr. Householder; Juan Cespedes, a lobbyist also close to Mr. Householder; and Neil Clark, a lobbyist.

Dave Anderson, the policy and communications manager for the Energy and Policy Institute, a nonprofit organization that supports clean energy, said FirstEnergy Solutions needed Mr. Householder’s help because its coal and nuclear plants could not generate electricity cheaply enough to compete with newer and cleaner forms of energy. The bailout legislation, House Bill 6, helped support two of the company’s nuclear plants and several coal plants, Mr. Anderson said.

“Once he was elected,” Mr. Anderson said of Mr. Householder, “he made passing this bill a top priority of his.” It was signed by Gov. Mike DeWine in 2019.

On Tuesday, Mr. DeWine called for Mr. Householder’s resignation. “This is a sad day for Ohio,” the governor said in a statement.

FirstEnergy Solutions filed for bankruptcy in 2018, and after restructuring became known as Energy Harbor in February.

Funds from FirstEnergy financed the successful campaigns of what Mr. DeVillers called “Team Householder” — 21 candidates who subsequently supported Mr. Householder as speaker. All but one voted for House Bill 6.

Much of the company’s money went to a nonprofit organization called Generation Now that supported political and lobbying campaigns. A major portion, as much as $38 million, was spent defeating a referendum to repeal the bailout bill. The complaint described the payments as “akin to bags of cash” that were “not regulated, not reported, not subject to public scrutiny.”

Ohio’s secretary of state, Frank LaRose, said he had referred 19 possible violations of Ohio campaign finance laws relating to the conspiracy to the Ohio Elections Commission.

House Republicans issued a statement on Tuesday saying they were “shocked” to learn about the charges against Mr. Householder. “To our knowledge, no other member of the Ohio General Assembly is under investigation in connection with these allegations. We have not been in contact with Speaker Householder today,” the statement says.

Mr. DeVillers said the investigation was continuing.

Reid J. Epstein contributed reporting.