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An Energy Company Behind A Major Bribery Scandal In Ohio Will Pay A $230 Million Fine

In this April 4, 2017, file photo, plumes of steam drift from the cooling tower of FirstEnergy Corp.'s Davis-Besse Nuclear Power Station in Oak Harbor, Ohio.
In this April 4, 2017, file photo, plumes of steam drift from the cooling tower of FirstEnergy Corp.'s Davis-Besse Nuclear Power Station in Oak Harbor, Ohio.

FirstEnergy Corp. has agreed to pay a $230 million fine for its central role in a bribery scheme — the goal of which was to get legislation passed that included a $1 billion bailout for two of its power plants in Ohio.

Federal prosecutors charged FirstEnergy, based in Akron, Ohio, with conspiring to commit honest services wire fraud.

On Thursday, the Justice Department announced the utility company agreed to pay the multimillion-dollar penalty as part of a deferred prosecution agreement. In return, the government will drop the charge against the company if it complies with the deal over the next three years.

Acting U.S. Attorney Vipal Patel said Thursday that the fine is the "largest criminal penalty ever collected, as far as anyone can recall, in the history of this office."

But it's far less than the more than $1 billion the company made just last year, according to The Cincinnati Enquirer. According to the company, it is considered one of the nation's largest investor-owned electric systems, made up of 10 regulated distribution companies that serve 6 million customers in the Midwest and Mid-Atlantic regions.

Patel dismissed the notion that the fine wasn't enough.

"The principle here is trying to come up with a number that stings but doesn't annihilate," Patel said.

FirstEnergy's bribery scheme entangled several Ohio lobbyists and political officials, most notably now-former Ohio House Speaker Rep. Larry Householder, who the government alleges did the company's bidding in return for money.

The case, which is still unfolding, has had far-reaching implications for Ohio politics and business.

According to federal indictments, from 2017 to March 2020, FirstEnergy Corp. funneled $60 million to Householder, a 501(c)(4) group controlled by Householder, his aides, and other political officials.

Householder, who was federally indicted in relation to the ploy last year, maintains his innocence.

Charges go beyond House speaker

Acting U.S. Attorney Vipal J. Patel, center, accompanied by FBI Special Agent in Charge Chris Hoffman, speaks during a news conference announcing FirstEnergy Corp.'s prosecution agreement in Cincinnati on July 22, 2021.
Farnoush Amiri / AP
Acting U.S. Attorney Vipal Patel, accompanied by FBI Special Agent in Charge Chris Hoffman, said Thursday of the fine imposed on FirstEnergy: "The principle here is trying to come up with a number that stings but doesn't annihilate."

FirstEnergy funneled $60 million through Householder's tax-exempt organization, Generation Now, created just for this purpose. Householder took $500,000 of that for personal use, the Justice Department alleges. The company also admits to funneling money to additional dark money groups.

In return for the money, Householder and others allegedly worked to pass a bill that contained a $1 billion ratepayer-funded rescue package for FirstEnergy power plants. It would have added a new fee to every electricity bill in Ohio. House Bill 6 passed in July 2019.

Householder also received funds to kill a ballot initiative that aimed to defeat the legislation, according to the Justice Department.

Aides and others close to Householder were also involved in the scandal.

Mathew Borges, a lobbyist who previously served as chairman of the Ohio Republican Party; Jeffrey Longstreth, Householder's longtime campaign and political strategist; Neil Clark, a lobbyist who owned and operated Grant Street Consultants and previously served as budget director for the Ohio Republican Caucus; Juan Cespedes, a Columbus-area lobbyist, have been charged in relation to the case.

Longstreth, Borges, Clark, and Cespedes are accused of using the bribe money to build Householder's political power while enriching themselves.

The bribery scandal's aftermath

Longstreth and Cespedes pleaded guilty to racketeering in October 2020. Generation Now pleaded guilty in February to one count of participating in a more than $60 million racketeering conspiracy.

Before his death in March, Clark pleaded not guilty and denied any wrongdoing. Borges also pleaded not guilty to charges and continues to dispute the allegations against him.

Following revelations that alleged House Bill 6 passed using bribery and other illegal means, lawmakers worked to repeal two major pieces of the legislation. A separate bill removed the more than $1 billion financial bailout.

In June of this year, the Ohio House expelled Householder from the state legislature.

FirstEnergy also fired its CEO and several top company executives in the wake of the scandal.

The company's new president and chief executive officer, Steven E. Strah, said in a statement Thursday, "Moving forward, we are intently focused on fostering a strong culture of compliance and ethics, starting at the top, and ensuring we have robust processes in place to prevent the type of misconduct that occurred in the past."

Half of FirstEnergy's penalty will go to the U.S. Treasury. The other $115 million will go to an Ohio program that provides assistance to residents in paying their regulated utility bills.

The company also agreed to assist the government in its case against others involved in the scheme.

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