COLUMBUS, Ohio — A down-and-out state lawmaker who needed money to bankroll a political comeback. Powerful Columbus lobbyists. And a utility company with “Monopoly money” to spend on a plan to push through a bailout for two failing nuclear power plants.
Federal charging documents unsealed Tuesday describe how the company, FirstEnergy, spent $60 million to get House Speaker Larry Householder and his favored candidates elected, securing in return a $1.3 billion bailout, paid for by Ohio ratepayers. The morning arrest of Householder, an aide and three lobbyists who helped him sent shock waves through Ohio political circles.
“It is a shocking day: The only thing that is clear to me is that pay-to-play is rampant in Ohio,” said Catherine Turcer of the government watchdog group, Common Cause Ohio. “Utility money is the grease of the machine of the Statehouse.”
The scheme, federal agents wrote, was “the essence of a corrupt exchange.” It played out in three chapters.
The complaint lays out a political playbook designed by Householder and Jeff Longstreth, a top aide who helped plot the political strategy that allowed him to take the speaker’s gavel. Neil Clark, a prominent Columbus lobbyist, also said he played a key role in developing and executing the strategy.
Ohio House members are forced by term limits to leave the chamber every eight years, while speakers are chosen by their colleagues. At the time, then-Speaker Cliff Rosenberger was set to leave office at the end of 2018, but quietly backed a different candidate, state Rep. Ryan Smith, as his replacement. That left an opening for Householder to recruit his own slate of candidates to fill a dozen seats that would be open in 2018.
Under the heading “Building Team Householder,” the complaint described how Longstreth and Householder set up Generation Now, a secretive political nonprofit that could raise and spend unlimited amounts of money.
In 2017, Householder and Longstreth strategized what it would take to get elected. A “game plan” developed by Longstreth asked who would be Team Householder’s main financial backer. The group needed $2 million to pay staff, wage legal challenges and fund advertising for candidates.
FirstEnergy Corp., which wasn’t explicitly identified in charging documents but clearly referenced throughout, meanwhile was seeking legislation to grant subsidies to two Ohio nuclear plants, one near Toledo and the other east of Cleveland. Rosenberger and Smith didn’t support the legislation.
FirstEnergy ended up paying $2.4 million to Generation Now, plus another $500,000 to another campaign group supporting Householder, either directly or through a pass-through affiliate. Most of Householder’s favored candidates won their primaries, and eventually, most of them won their November elections.
“Ultimately, the Enterprise’s ‘Game plan 2018’ worked. By coordinating and financially backing the Team Householder candidates using Company A (FirstEnergy) money, the Enterprise helped elect a group of representatives loyal to Householder,” the complaint reads. “All of the candidates who were financially supported by the Enterprise and won in their 2018 general election voted to make Householder, instead of Representative 1 (Ryan Smith) as Speaker. With their votes, Householder secured the Speakership in 2019. And as described in the next section, two of the Team Householder candidates carried the Company A (FirstEnergy) legislative bailout for him.”
“Having secured Householder’s power as Speaker, the Enterprise transitioned quickly to fulfilling its end of the corrupt bargain with Company A — Passing nuclear bailout legislation,” the complaint reads.
Householder picked two freshman legislators he helped elect, state Reps. Jamie Callender, of Lake County, and Shane Wilkin, of Highland County, to carry the legislation. In April 2019, House Bill 6 was introduced. The legislation would raise more than $1 billion for two nuclear plants owned by FirstEnergy Solutions, a former FirstEnergy subsidiary. He argued the money would save the jobs of the plants’ thousands of workers, and secure Ohio’s diversity of energy sources.
As far back as May 2018, Juan Cespedes, a lobbyist for FirstEnergy Solutions, had written in a Word document that Householder was “willing to work on energy legislation” and was “traditionally close” to FirstEnergy. In a September 2018 document, Cespedes wrote that FirstEnergy should continue to support the “Householder caucus” because “Householder has a history of favorably rewarding those who provide both early and late money into his efforts.”
Cespedes wrote in the document that FirstEnergy CEO Chuck Jones had spoken with Householder “where (Jones) suggested that we (FirstEnergy Solutions) would/should independently support him” as well.
The complaint documents how Householder and his team pressured reluctant lawmakers to vote “yes.” In one instance, an FBI agent was interviewing a representative when Householder texted them.
The lawmaker had been telling the agent that Clark, the lobbyist supporting Householder, had warned him to vote “yes.” They weren’t sure whether to take it as advice from a friend or a threat.
The representative then received a text from Householder that said: “I really need you to vote yes on HB 6, it means a lot to me. Can I count on you?”
The representative showed the text to the FBI agents. After reiterating he would vote “no,” Householder responded: “I just want you to remember — when I needed you — you weren’t there. twice.”
The next day, House Bill 6 passed. Later, an intermediary told the unnamed representative Householder wanted the texts deleted.
Shortly after the bill got to the Senate, FirstEnergy sent $7.3 million more to Generation Now, which used the money on polls and advertising. Clark also began whipping support for the vote, calling state senators and reporting the results to Longstreth, who regularly reported back to Householder.
All the while, FirstEnergy and FirstEnergy Solutions were in touch with Longstreth, through Cespedes. Also while the bill was pending, FirstEnergy CEO Chuck Jones and other company officials spoke with Householder more than 300 times, the complaint says.
In one recorded meeting between Clark and FirstEnergy, Clark complained that another public official who got financial support from FirstEnergy had backed away from the legislation. But Householder “went to war for them.”
Clark said he wants to be around politicians who “will go to the wall, but those guys that go to the wall can only do it once a year because if they do it all the time everybody knows they’re pay to play.”
In another recorded conversation, Clark described FirstEnergy’s support for the bill.
“…On HB6, [FirstEnergy] got $1.3 billion in subsidies, free payments so what do they care about putting in $20 million a year for this thing, they don’t give a (expletive.)”
Clark called FirstEnergy the campaign’s “bank. Generation Now’s money was “unlimited,” he said.
Defend the bill
After Gov. Mike DeWine signed the bill in July 2019, opponents, allied with natural-gas and environmental interests in the state, got to work trying to repeal it. They cleared an initial hurdle, collecting 1,000 valid signatures from voters, at the end of the following month. They had until Oct. 21 to gather hundreds of thousands more signatures.
In June, Cespedes described to Longstreth a conversation with Matt Borges, a former Ohio Republican Party chairman turned lobbyist who was working to defend the bailout: “Borges mentioned this morning that the opposition has engaged signature gatherers. Not sure who or if it’s real. Just want u to be aware.”
The next week, Longstreth and Cespedes exchanged texts, agreeing to work to hire signature-gathering companies.
“I was hoping that we could take out all the big players and limit their chances,” Cespedes wrote. “It’s impossible to referendum proof imo. We can make it tougher.”
After media outlets connected the dots between Generation Now and the House Bill 6 campaign, the Householder group used a different company, Ohioans for Energy Security, to defend the bill against the repeal effort.
At a Sept. 23 meeting, Clark said allowing the bill to be repealed would set a bad precedent. An unnamed staffer added: “it’s the beginning of your Speakership: it sets a bad precedent for the next six years, what we need to make them realize is that you (Householder) can’t be (expletive) with.”
FirstEnergy and FirstEnergy Solutions sent $38 million to Generation Now, which sent $23 million to Ohioans for Energy Security. In a conversation, Borges referred to the influx of funds “Monopoly money.”
The campaign spent millions on mailers and ads discouraging Ohioans from signing the petitions, falsely tying the repeal effort to the Chinese communist government. It also hired petition firms to prevent them from working for the repeal side.
“For example,” the complaint reads,” in a meeting on July 24, 2019, which was recorded, Clark stated that he wired about $450,000 today hiring signature collections people to not work.”
Some of the petitioners worked as “blockers,” disrupting the other side’s signature gathering efforts by following them around and making possible signers uncomfortable.
All the while, Borges reached out to an unidentified person working as a supervisor for the repeal campaign, offering to pay them for inside information. The person was “upset by Borges’ solicitation and contacted the FBI after meeting with Borges in early September.”
Afterward, the person recorded his conversations with Borges. At first, he told Borges he wasn’t interested. He explained he couldn’t “sell this team down the river,” concluding, “So. It may not land me in the car, house, job or financial situation I want to be in — but I couldn’t face myself if I did anything but work for this and do it honestly.” Borges responded he understood, but said: “No matter what — don’t ever tell anyone about our conversation from earlier.”
Later, the FBI encouraged the person to re-connect with Borges to inquire about the offer. Borges responded later with an offer to buy out the unnamed repeal worker’s contract. In a meeting, which was recorded, Borges gave the repeal worker a $15,000 check, funded by Generation Now.
“Although in initial conversations Borges had indicated that the money was an advance for insider information to defeat (the) ballot campaign, when Borges handed the check to (the repeal worker), he said it was Borges’ own money, that no one knew about the transaction, and that it was for the (repeal worker’s) help in planning a reunion amongst former staffers,” the complaint reads.
The HB6 campaign also bribed signature collectors, offering them $2,500 and plane fare to stop collecting signatures and to provide inside information related to the referendum. Clark outlined the strategy to Householder and others during the Sept. 23 meeting.
The efforts were successful: on Oct. 21, the repeal campaign missed their deadline. Householder celebrated the victory with a press release, stating: “I am pleased that House Bill 6 will go into effect at midnight tonight and am confident it will produce positive results for Ohio.”
The next day, according to the complaint, a FirstEnergy / FirstEnergy Solutions affiliate sent $3 million to Generation Now. On Jan. 13, 2020, Longstreth wired $1 million into his brokerage account. And between September and December, Householder used $101,825 in FirstEnergy-funded Generation Now payments to pay for costs associated with his house in Florida. In 2020, Householder spent $20,000 in Generation Now money to pay off credit card debt.
In May 2020, FirstEnergy Solutions, now renamed Energy Harbor, announced it would spend $300 million of its own stock, boosting its share price and cashing out investors.