Federal prosecutors charge FirstEnergy with conspiracy over House Bill 6 scandal

CLEVELAND, Ohio -- FirstEnergy Corp. has agreed to pay a $230 million fine for its role in bankrolling the House Bill 6 scandal, according to documents unsealed Thursday.

Federal attorneys filed a deferred-prosecution agreement against the company in U.S. District Court in Cincinnati. FirstEnergy is charged with conspiracy to commit honest services fraud involving what authorities called the largest bribery scandal in Ohio history.

“We have been waiting a really long time for Company A to be held accountable,” said Catherine Turcer, the executive director of Common Cause Ohio, referring to how federal authorities have identified FirstEnergy in court documents during the past year. “A lot of us wondered, ‘Is FirstEnergy going to get away with it again?’ FirstEnergy has run the Statehouse for years. But $230 million isn’t a slap on the wrist.”

The agreement means the company will pay the fine and cooperate with the federal investigation. The charge will be dismissed in three years if the Akron utility meets its obligations.

Court filings allege the company paid bribes to then-Ohio House Speaker Larry Householder and Samuel Randazzo, the former chairman of the Public Utilities Commission of Ohio.

Neither is named, though the descriptions from the document make it clear Householder and Randazzo are the officials involved in the case. The agreement calls for the company to pay $115 million within 60 days to the U.S. Treasury.

It also must pay $115 million to a program the Ohio Development Service Agency runs for low-income utility users.

If the state program “is unable or unwilling to accept the funds, FirstEnergy Corp. shall pay the $115 million to the United States Treasury,” the document says. Prosecutors also are seeking to seize $6.4 million through forfeiture from a nonprofit called Partners for Progress, which was used to hold FirstEnergy funds before the money was funneled elsewhere in the scheme.

Coincidentally, FirstEnergy is hosting its second-quarter earnings call Friday morning.

In April, the company announced that it was working with federal prosecutors in the House Bill 6 case. Last year, federal prosecutors accused FirstEnergy of paying more than $60 million in bribes to Householder and four allies to pass the legislation, which offered a $1 billion bailout of two aging nuclear plants off Lake Erie that were once owned by a FirstEnergy subsidiary.

Householder, his strategist Jeffrey Longstreth and lobbyists Neil Clark, Juan Cespedes and Matthew Borges were indicted on racketeering charges. Cespedes and Longstreth have pleaded guilty. Clark died March 15 of suicide.

Householder and Borges have denied the charges, and they are scheduled to go to trial next year.

Federal authorities said FirstEnergy and an affiliate funneled the $60 million through a nonprofit prosecutors said Householder secretly controlled. The money went toward helping Householder gain his leadership position and to help push the bill into law. The nonprofit, Generation Now, has pleaded guilty to racketeering and forfeited $1.5 million to federal authorities.

Prosecutors alleged that FirstEnergy paid a $4.3 million bribery payment to Randazzo via a company he controlled in exchange for helping the utility pass House Bill 6 and other measures.

Randazzo, who resigned from the PUCO last November after the FBI raided his Columbus home and news of the $4 million payment became public, has not yet been charged with any crime.

But under documents filed in federal court Thursday, the U.S. attorney’s office asserted that in exchange for the money, Randazzo, referred to as “Public Official B,” would “further FirstEnergy Corp.’s interests” relating to House Bill 6.

A spokesman for Gov. Mike DeWine did not immediately return a phone call seeking comment on the accusations against Randazzo. Attempts to reach Randazzo and his attorney, Roger Sugarman, were unsuccessful.

Householder’s attorney, Mark Marein, could not be reached for comment.

The agreement hits at dark money and its role in FirstEnergy’s push for House Bill 6. The company and its affiliate funneled the $60 million in payments to Generation Now and another nonprofit. Under federal law, payments to a nonprofit are not disclosed.

It calls for FirstEnergy to “ensure that all contributions made to [nonprofits] and all payments to entities operating for the benefit of a public official, either directly or indirectly, are reviewed and approved by a compliance officer trained to ensure such payments comport with company policy and U.S. law.”

Documents filed by prosecutors said FirstEnergy Corp. used the nonprofits “as a mechanism to conceal payments for the benefit of public officials and in return for official action.” The documents stressed “this effort would not have been possible, both in the nature and volume of money provided, without the use of a [nonprofit].”

In a statement, Steven E. Strah, FirstEnergy’s president and chief executive officer, said the company is “m “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.”

The company said the fine will not be recovered in rates or charged to customers. It has stressed that it removed several top officials, including Charles Jones, the former chief executive officer, and Michael Dowling, the former senior vice president of external affairs.

It’s not uncommon for corporations facing criminal charges to enter into deferred prosecution agreements to avoid criminal charges. Commonwealth Edison Co., an Illinois utility, entered into one in 2020 to settle bribery allegations, agreeing to pay a $200 million fine.

The Justice Department filed a single criminal charge against ComEd, agreeing to dismiss it after three years if the company fully cooperated with its investigation.

Stephen Sozio and James Wooley, two partners with Jones Day in Cleveland and former organized-crime prosecutors, represent FirstEnergy. Sozio declined to comment on the agreement.

Emily Glatfelter and Matthew Singer, the federal prosecutors handling the House Bill 6 investigation, also dealt with the FirstEnergy agreement. Prosecutors and the FBI are expected to detail the charge in a press conference later this morning.