Ohio Nuclear Plant Bailout at Risk Over Bribery and Money Laundering Arrests
- Jul 24, 2020 3:02 pm GMT
Ohio House Speaker, Four Others, Charged in $60M Bribery, Money Laundering Scheme for Legislation to Save Two Ohio Nuclear Plants
Five people, including Larry Householder, the Speaker of Ohio’s House of Representatives, have been charged in a federal racketeering conspiracy involving $60M spent to pass legislation last year to provide financial support to two nuclear power plants.
The bill provides $150M annually to financially bailout First Energy’s Davis-Besse and Perry nuclear power plants. Newspapers in Oho called it a “textbook case of how big money influences politics” in the state. Others called it a classic example of “pay for play.”
According to the charges brought by the US Attorney’s Office for the Southern District of Ohio, it is alleged that Speaker Larry Householder “conspired to violate the racketeering statute through wire fraud, receipt of millions of dollars in bribes, and money laundering.”
Approximately $60 million was paid to a 501(c)(4) entity to pass and uphold a billion-dollar nuclear plant bailout.
The 80-page criminal indictment contains extensive details of the scheme to elect Householder speaker and to pass the bailout legislation. The money was also used to cover some of the personal expenses of the five men named in the indictment. Generation Now, a corporate entity registered as a 501(c)(4) social welfare organization, was also charged. The Enterprise received approximately $60 million into Generation Now from an energy company, presumably First Energy and its affiliates, during the relevant period.
In short, Householder and his indicted co-conspirators, didn’t care about whether saving the two nuclear power plants would reduce global warming. Instead, they saw HB6 as a legislative vehicle to obtain and hold political power in the Ohio House and to have their rising influence paid for by one of Ohio’s largest firms in the electric utility and energy industry.
Four other individuals were also arrested and charged. They include:
- Mathew Borges, 48, of Bexley, a lobbyist who previously served as chair of the Ohio Republican Party;
- Jeffrey Longstreth, 44, of Columbus, Householder’s longtime campaign and political strategist;
- Neil Clark, 67, of Columbus, a lobbyist who owns and operates Grant Street Consultants and previously served as budget director for the Ohio Republican Caucus; and
- Juan Cespedes, 40, of Columbus, a multi-client lobbyist.
According to the criminal complaint, from March 2017 to March 2020, the enterprise received millions of dollars in exchange for Householder’s and the enterprise’s help in passing House Bill 6, a billion-dollar bailout that saved the Davis-Besse and Pery nuclear plants from closing.
The defendants then also allegedly worked to ensure that HB 6 went into effect by defeating a statewide ballot initiative to overturn the legislation. The enterprise engaged in so-called “dirty tricks” by paying professional firms that gather signatures for initiated referendums to not work for the recall effort. In one incident, an employee of one of the firms was paid $15,000 to not work for the recall effort. He notified the FBI of the payment.
As alleged, in February 2017, Longstreth incorporated Generation Now as a 501(c)(4) social welfare entity to promote energy independence and economic development. However, the organization was secretly controlled by Householder. As Clark stated in a wiretap, “Generation Now is the Speaker’s (c)(4).”
In March 2017, Householder began receiving quarterly $250,000 payments from the related-energy companies into the bank account of Generation Now. The defendants allegedly spent millions of the company’s dollars to support Householder’s political bid to become Speaker, to support 21 other House candidates they believed would back Householder, and for their own personal benefit. When asked how much money was in Generation Now, Clark said, “it’s unlimited.”
Additional Charges May Be Pending
The FBI said it is continuing to investigate the case. According to the U.S. Attorney’s office, in 2018, the enterprise spent energy company-to-Generation Now money on approximately 21 different state candidates – 15 (including Householder) in the primary, and six additional candidates in the general election. It is unclear whether any of the other Ohio legislators have any legal exposure as a result of receiving the money from Generation Now.
The Enterprise spent more than $1M in fall 2018 alone to flood the airways with negative ads against enterprise opponents. Most of these candidates won the 2018 general election. All who won voted for Householder as Speaker.
Householder received more than $400,000 in personal benefits as a result of the payments into Generation Now, including funds to settle a personal lawsuit, to pay for costs associated with his residence in Florida, and to pay off thousands of dollars of credit card debt.
FirstEnergy Solutions’ former parent company, FirstEnergy Corporation, confirmed it has received subpoenas in connection with the investigation. “We are reviewing the details of the investigation and we intend to fully cooperate,” the company said.
So far no charges have been brought by the US Attorney’s office against the firm or any of its employees. However, the news site Cleveland.com has posted the names of senior First Energy executives who are referenced by their titles in the 80 page complaint.
Ohio Gov Mike DeWine Calls for Repeal of Nuclear Bailout Bill
(Crains Cleveland) Ohio Gov. Mike DeWine has called on the state Legislature to “repeal and replace” House Bill 6, the nuclear bailout legislation behind the arrest of House Speaker Larry Householder and four others.
“It is clear that no matter how good this policy is, the process is simply not acceptable,” DeWine said. He added that “the process has forever been tainted.”
DeWine maintained his support of the policy laid out in the bailout. He said it’s needed to preserve jobs at the Davis-Besse and Perry nuclear plants and keep carbon-free sources of energy.
Also, DeWine called for Householder to resign as speaker previously, but did not withdraw his support for the bill. He said that he did not know of the involvement by anyone in his administration in the alleged corruption scheme.
“I’m asking the Legislature to revisit this and come back with an alternative,” DeWine said. “It needs to happen in the open and needs to happen rather quickly.”
Crains Cleveland reported that the fallout in Ohio has been swift, with Democratic and Republican lawmakers calling for the nuclear bailout law to be repealed immediately. Shares of FirstEnergy, which received a subpoena related to the investigation, plunged the most on record, 21%. Taken together, the two scandals could undermine future efforts by utilities to seek support from lawmakers.
“Fairly or not, these events add a level of regulatory risk,” said Karl Rabago, founder of consulting firm Rabago Energy LLC and a former regulator on the Public Utility Commission of Texas. “That is, more questions, more time, more cynicism, more covering one’s exposure.”
The newspaper reported that State Rep. Laura Lanese, R-Grove City, Sen. Stephanie Kunze, R-Hilliard, and Rep. Rick Carfagna, R-Genoa Township, held a joint news conference announcing they are introducing legislation to repeal the law.
“We’re up to 33, bipartisan co-sponsors — I think that’s an important thing to note,” Carfagna said.
“Leadership is talking about this right now and we are in the process of organizing,” Lanese said. “I expect in the next day or two you’ll see a lot more on it.”
Statement from the American Nuclear Society
ANS Executive Director/CEO Craig Piercy on Ohio bribery scandal:
The American nuclear professional community is deeply disturbed by alleged political corruption in Ohio related to the passage of House Bill 6. If the allegations are true, they represent a breach of public trust that should be prosecuted to the fullest extent of the law.
Sadly, the shameful conduct of a few have put the Perry and Davis-Besse nuclear power plants, and the hundreds of men and women who work there, into the crossfire.
Ohio’s nuclear plants currently provide 87% of the states zero carbon electricity in a highly reliable, 24/7 manner, and are critical assets needed to ensure Ohio’s clean energy future.
We urge Governor DeWine and members of the Ohio state legislature to work together in a bipartisan way to ensure their continued operation.
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