FirstEnergy to pay $ 230 million fine in deal with federal government

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Akron-based FirstEnergy accepted a $ 230 million fine for bribing former House Speaker Larry Householder and former Ohio Utilities Commission chairman Sam Randazzo, according to the charges released Thursday.

According to federal investigators, FirstEnergy and its affiliates had several goals: to adopt a billion dollar bailout for two nuclear power plants owned by FirstEnergy Solutions, to secure the money for FirstEnergy Corp. thanks to a decoupling provision and avoid a tariff distribution file scheduled for 2024.

Legislation pushed by the head of the household, House Bill 6, solved the first two problems. In November 2019, the PUCO under Randazzo’s leadership ended the requirement that FirstEnergy subsidiaries file a new tariff case in 2024.

FirstEnergy, its subsidiaries and its directors are accused of having concealed millions to achieve these ends. FirstEnergy fired several executives in October 2020, including CEO Chuck Jones. None were charged on Thursday.

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Acting US attorney Vipal Patel called the $ 230 million settlement “the biggest criminal sanction anyone can ever remember in the history of this office.”

Charges against FirstEnergy

Between 2017 and March 2020, FirstEnergy Corp. and FirstEnergy Solutions, now called Energy Harbor, donated $ 59 million to Generation Now, a black money group controlled by Householder, which is described as Public Agent A in federal documents on Thursday.

“FirstEnergy Corp. made payments to public official A through 501 (c) (4) from public official A, Generation Now, in exchange for official action from public official A through l adoption and enactment of nuclear legislation for FirstEnergy Corp. “S benefit as a public official A as a public official”, indicates the file.

Lawyers for Householder, in a statement, said FirstEnergy’s donations were not bribes or bribes, but rather legal donations protected by the First Amendment. The company struck a deal on Thursday to protect its share price.

“Our client Larry Householder has pleaded not guilty for a simple reason: because he is not guilty. He did not have a quid pro quo deal with FirstEnergy and he was never bribed. We wait. looking forward to our day in court to defeat the government allegations.

Read the Deferred Prosecution Agreement below

FirstEnergy is also accused of influencing Public Agent B, who is former PUCO chairman Sam Randazzo, through a payment of $ 4.3 million. The executives of FirstEnergy Corp. pushed Randazzo as a choice of PUCO so that he could promote the interests of the company, according to the filing.

Federal investigators say Randazzo helped FirstEnergy create language in Bill 6 and pass business-friendly legislation.

After the bill was passed, Executive 1, reportedly Jones, sent a photoshopped image of faces on Mount Rushmore, including that of Randazzo. The caption read: “HB 6 F *** ANYBODY WHO WE ARE.” Randazzo replied that his photo was smaller than the others and then replied: “funny”.

To achieve its ends, FirstEnergy created a black money group called Partners for Progress in February 2017, forming it in the state of Delaware to avoid scrutiny. FirstEnergy executives selected the three directors of Partners for Progress, two of whom were lobbyists for the company.

Current Gov. Mike DeWine Chief Executive Officer Dan McCarthy was named President of Partners for Progress in 2017 and 2018. At the time, he was a lobbyist for FirstEnergy.

Partners for Progress executives have indicated where the money has been spent, according to the federal narrative. Between 2017 and 2019, FirstEnergy funneled $ 25 million through Partners for Progress, of which $ 15 million went to Generation Now.

FirstEnergy also attempted to influence federal officials, transferring $ 5 million to a black money group in May 2017 to influence regulations from the Department of Energy or the Federal Energy Regulatory Commission. This ultimately failed and FirstEnergy set its sights on a state solution to bail out nuclear power plants.

501 (c) (4) nonprofit organizations are known as “welfare organizations” which cannot spend more than 49% of their resources on political causes.

“Do you all see a lot of welfare going on? I’m not doing it, “Patel said.” We can do better. We don’t need to obscure the names of our 501 (c) (4) organizations. “

The rule

The $ 230 million fine will be split 50-50 between the federal and state governments. Ohio’s $ 115 million will go to a program that helps Ohioans pay their utility bills.

Federal prosecutors want FirstEnergy to lose nearly $ 6.5 million in Partners for Progress accounts.

“This resolution and the actions we have agreed to take build on the substantial steps we have taken over the past few months to strengthen our leadership team, ensure we have a world-class compliance program and change our approach to political engagement significantly as we work to regain the trust of our stakeholders, ”said Donald T. Misheff, Non-Executive Chairman of the Board of FirstEnergy.

House Bill 6 case explained

The development comes a year and a day after Householder and four others were arrested for racketeering.

Headquarters of FirstEnergy Corp.  at Cascade Plaza in downtown Akron

Federal investigators say FirstEnergy and its affiliates donated most of the $ 61 million that was funneled through black money groups and spent to fuel Householder’s business. FirstEnergy was listed as Company A in an 80-page criminal complaint published in July 2020.

Since then, there had been little news about the federal prosecutors case.

Bill 6, enacted by DeWine in July 2019, would have charged Ohio residents a fee on their electricity bills to keep the two nuclear plants open. The law also guaranteed FirstEnergy’s profits and continued subsidies for the Ohio Valley Electric Corp. coal-fired power plants, one of which is in Indiana.

Within a year of the arrests, Ohio lawmakers dismantled some of those charges.

FirstEnergy and Energy Harbor have said they are cooperating with federal investigators.

In October 2020, FirstEnergy fired Jones and Senior Vice Presidents Michael Dowling and Dennis Chack for payment to Randazzo. Randazzo resigned shortly after the FBI raided his home.

FirstEnergy also terminated its lobbyists and other key employees following the publication of the case.

The head of the family and former Ohio Republican Party Chairman Matt Borges have pleaded not guilty to racketeering charges in U.S. district court. Lobbyist Juan Cespedes and political strategist Jeff Longstreth signed guilty pleas in October. Lobbyist Neil Clark, who pleaded not guilty, committed suicide in March near his Florida home.

FirstEnergy distributes electricity to 6 million customers and employs 12,000. It owns 10 power companies that distribute electricity in five states. It is listed at No.294 on the Fortune 500 list in 2020.

FBI Special Agent Chris Hoffman issued a stern warning to officials who might want to “sell their integrity.”

“I would challenge them to practice corporate responsibility on your own, now or in the future,” Hoffman said. Or you will face this fierce responsibility later from our office and the US attorney’s office. “

This story is developing and will be updated.

Jessie Balmert and Laura Bischoff are reporters for the USA TODAY Network Ohio Bureau, which serves Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.


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