CINCINNATI — A series of text messages displayed in federal court Thursday showed close consultation between executives of an electric utility and a lawmaker after the utility made huge contributions to make him Ohio House speaker. The consultations occurred as the lawmaker and the utility worked furiously to pass a huge bailout favoring the company.
The evidence could be key because prosecutors have to show that the lawmaker, Larry Householder, took the contributions in exchange for ramrodding the bailout, which mostly benefited Akron-based FirstEnergy.
The text messages also show that Householder and FirstEnergy officials at least expected help from Gov. Mike DeWine in passing the legislation, House Bill 6, through the Ohio Senate. DeWine has denied any wrongdoing in the case, but he signed the bill into law on the same day in 2019 that it passed out of the legislature.
HB 6 was titled the “Ohio Clean Air Act,” but federal prosecutors have said it was likely the biggest bribery and money laundering scandal in Ohio history. They allege that $61 million in utility money was plowed into an effort to make Householder, a Republican from Glenford, speaker in exchange for a $1.3 billion bailout that mostly benefited FirstEnergy’s failing nuclear and coal plants.
FirstEnergy has fired its top executives and it admitted to much of its conduct in a deferred prosecution agreement. In addition, two of Householder’s co-defendants have pleaded guilty and a third died by suicide.
But Householder and another defendant, former Ohio Republican Party Chairman Matt Borges, are fighting the racketeering charges. Householder’s lawyers are arguing that there was nothing untoward about the FirstEnergy contributions and that he wanted to save the generating plants because that meant saving Ohio jobs and funding for public schools.
But the evidence introduced Thursday showed meticulous coordination to pass the massive bailout bill in the days after Householder took up the speaker’s gavel.
During earlier days of the trial, prosecutors used subpoenaed bank records, text messages and wiretaps to show that in 2017 Householder and FirstEnergy set up two 501(c)(4) dark money groups and even though it was losing money, FirstEnergy funneled millions into them. Householder used that money to recruit and support Republican House candidates who would vote to make him speaker in January 2018, the evidence indicated.
Then on Thursday, Assistant U.S. Attorney Emily Glatfelter introduced text and phone messages showing that once Householder was speaker, efforts turned to passing the bailout.
When the Householder-led House passed the first version of the bill on May 29, 2019, there was an obvious sense of euphoria. Jeff Longthreth, a co-defendant who has since pleaded guilty, texted FirstEnergy lobbyist Ty Pine and said, “I have 10-12 reps in the back room at Mitchell’s (Steakhouse) having dinner. They’re all ‘yes’ votes.”
Pine replied, “Headed there now.”
It’s unclear who footed the bill for that dinner, but two of FirstEnergy’s top executives were exultant.
“Boom! Congrats. This doesn’t happen without CEO leadership,” Vice President Mike Dowling texted FirstEnergy CEO Chuck Jones.
“We made a big bet and it paid off,” Jones replied.
“We made a big double bet and it paid off,” Dowling texted and later added, “Now we can go back for more.”
To which Jones responded, “No party tonight. We need to plan one with the speaker.”
But it wasn’t smooth sailing for the bailout after its initial passage. The measure still had to get through the Ohio Senate and there was debate over the size and duration of the portion of the bailout that benefitted FirstEnergy’s money-losing coal plants.
Called a “decoupling” subsidy, it was guaranteed revenue for the plants even if electricity usage went down. It might seem ironic for a “clean air” bill to keep coal plants burning when ratepayers use less electricity, but that was the effect of the subsidy.
As Householder worked to get a bill to FirstEnergy’s liking through the Senate, he asked Jones for help with the governor.
“This would be a very good time for the governor to show support for HB 6,” Householder texted Jones.
“I will work on it,” Jones replied.
To that, Householder said, “He’s made supportive statements, but he’s been fairly reserved.”
Four days later, on June 27, 2019, Jones texted Householder that he’d had what was from FirstEnergy’s perspective a positive influence on HB 6 as it made its way through negotiations in the Senate.
“Ten years of decoupling back in,” he said, while also grousing negotiations handled by John Judge, CEO of FirstEnergy Services, the subsidiary that owned the failing coal plants. Jones didn’t believe the six-year subsidy Judge was asking would be enough to enable the company to sell the plants.
“That will be $600 million,” Householder texted, referring to the new, larger subsidy Jones had put in play.
On July 15, 2019, amid growing worries that the utility bailout was stalling in the Senate, Jones texted Householder to say he was still trying to enlist the help of DeWine.
“We are trying to get the governor to make a call to Obhof,” Jones said, referring to then-Senate President Larry Obhof, R-Medina.
“K,” Householder replied.
Testimony will resume on Friday in the case, which is expected to last until early March.
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