Ohio Lawmaker Arrested in Alleged $61 Million Bribery Scheme

Federal officials said they charged Ohio House Speaker Larry Householder and four political associates in a racketeering conspiracy involving almost $61 million in bribes to secure a $1.5 billion bailout of two nuclear power plants now owned by Energy Harbor Corp.

U.S. Attorney David DeVillers, during a press conference Tuesday in Columbus, called the case “likely the largest bribery, money-laundering scheme ever perpetrated against the people of the state of Ohio,” with the Republican speaker and his associates funneling millions to themselves through a nonprofit entity.

The investigation is related to Ohio’s passage last year of a law that bailed out two nuclear power plants and the defeat of a ballot referendum to overturn the law, DeVillers said. A company that wasn’t identified paid almost $61 million over three years to the non-profit Generation Now to help elect candidates who would support Householder for House speaker, pass the bailout law and stop a proposed ballot initiative to overturn the law, DeVillers said.

“Everyone in this room knows who company A is,” DeVillers said, but the name wasn’t being disclosed because the company and no one from it “has as of yet been charged.”

The bailout benefited the nuclear plant owner, FirstEnergy Solutions, a former FirstEnergy Corp. subsidiary, which changed its name to Energy Harbor when it emerged from Chapter 11 earlier this year.

First Energy shares fell about 17%.

While First Energy no longer owns the nuclear plants in the Ohio case, the probe will likely be a drag on the company’s shares in the near term as the market digests the potential implications, KeyBanc Capital Markets analyst Sophie Karp said in a research note.

FirstEnergy said in a statement Tuesday it had received a subpoena related to investigation of the case and intends to cooperate. Officials at Energy Harbor didn’t immediately respond to emails and phone calls requesting comment.

DeVillers said the investigation continues and “as of this morning, there are a lot of FBI agents knocking on a lot of doors, asking a lot of questions, serving a lot of subpoenas, executing a lot of search warrants.”

The arrests in Ohio come less than a week Exelon Corp.’s Commonwealth Edison unit admitted to bribery in connection to lobbying practices in Illinois.

A complaint unsealed Tuesday said Householder, 61, received millions of dollars from March 2017 to March 2020 as Company A sent money to Generation Now, a social-welfare nonprofit that doesn’t need to disclose its donations. The Ohio law, which Householder championed, was enacted in 2019 and carved out $150 million annually for the Davis-Besse and Perry plants, which the company had said it would close without aid.

Ohio funded the measure by cutting support for wind and solar, which was unprecedented. While New York, New Jersey and Illinois have all subsidized nuclear power as part of their clean-energy strategies, Ohio was the first to do so by directly yanking support from renewable sources of energy.

Also arrested and charged were Matthew Borges, 48, a lobbyist and former chairman of the Ohio Republican Party; Jeffrey Longstreth, 44, described as Householder’s longtime campaign and political strategist; Neil Clark, 67, a longtime Columbus lobbyist; and Juan Cespedes, 40, a lobbyist called a “key middleman” in the complaint. Also charged was Generation Now.

Debate over the bill spilled far beyond the state’s borders. An adviser to President Donald Trump’s re-election campaign, Bob Paduchik, urged Ohio lawmakers to support the legislation and stressed that the president backed it, too. The measure drew opposition from groups as diverse as the Sierra Club and billionaire Charles Koch’s political organization, which blasted it as a corporate “bailout.”

After it passed, environmentalists and others tried unsuccessfully to gather enough signatures for a referendum to repeal it. Their effort was attacked in a television ad that aired in Ohio, contending they were circulating the petition on behalf of China.

Borges led the Right Side PAC with a group of Republicans opposed to Trump to mobilize disaffected GOP voters to back the president’s Democratic opponent, Joe Biden. Skybridge Capital founder Anthony Scaramucci, who served for 10 days as Trump’s White House communications director, is advising and donating to the effort.

Householder was also Ohio House speaker from 2001-2004 but left office amid media reports of corruption allegations that were referred to the FBI and didn’t produce charges, the complaint said. He was elected to the House in 2016 and became speaker last year.

Ohio Governor Mike DeWine said in a statement he is “deeply concerned about the allegations of wrongdoing” in the complaint and called on Householder to resign immediately.

“This is a sad day for Ohio,” DeWine said.

©2020 Bloomberg L.P.

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