FirstEnergy to pay $ 230 million in Ohio corruption case

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CINCINNATI (AP) – The energy giant at the center of a $ 60 million corruption program in Ohio admitted on Thursday to using black money pools to fund the effort, and agreed to pay $ 230 million and other conditions so that prosecutors do not go ahead with a criminal case against the company.

Authorities have accused Akron-based FirstEnergy Corp. of conspiring to commit honest services wire fraud, alleging gains to officials to support a billion-dollar grant that would have enabled taxpayers to help l company to support two aging nuclear power plants.

That charge could be dropped in three years if the company sticks to the terms of the deal, such as continuing to cooperate with investigators looking at bribes to officials, which included the Ohio House speaker and a lobbyist who would become the primary regulator of state utilities. .

The deal, signed by FirstEnergy President and CEO, comes in a scandal that has affected business and politics across Ohio since the arrest a year ago of Ohio President House Larry Householder and four partners. Government officials say Householder orchestrated a plan to accept corporate money for personal and political gain in exchange for passing a nuclear bailout law and scuttling an effort to repeal the bill.

“I hope today’s announcement serves as a stern warning to other companies and business leaders who sell their integrity to a public official, a group of public officials,” the agent said. Special FBI Chris Hoffman, calling the investigation historic public corruption. investigation which “deserves historical remedies”.

Acting US Attorney Vipal J. Patel called the $ 230 million penalty probably the largest ever won by his office.

FirstEnergy is one of the largest investor-owned power systems in the country, with annual revenue of $ 10.8 billion last year. Patel rejected suggestions that the sum was too lenient.

“So the main thing here is trying to find a number that stings, okay, but doesn’t annihilate,” Patel said, saying decimating the company’s finances would hurt employees and customers and decrease business. urging FirstEnergy to cooperate.

Half of the $ 230 million penalty will go to the federal government and the other half will go to a program that benefits customers of Ohio’s regulated utilities, Patel said. FirstEnergy is also to confiscate about $ 6 million seized from the accounts of one of the black money groups, Partners for Progress.

Under the agreement, FirstEnergy is also required to make public any new corporate payments of which it is aware that were intended to influence a public official and pursue an internal overhaul of its ethical practices. He is also due to issue a public statement describing that he intentionally used black money groups to cover up the scheme.

Prosecutors said the company used the groups “as a mechanism to conceal payments for the benefit of public officials and in return for official action.”

The settlement gives the public some fairness, said Ohio consumer lawyer Bruce Weston.

“But justice is also a longer road that requires state reforms to reduce the political influence of utilities that costs Ohioans money on their utility bills,” he said.

New details in court records on Thursday said Partners for Progress appeared to be independent while in fact controlled by FirstEnergy. FirstEnergy admitted to handpicking the organization’s three executives, including Republican Gov. Mike DeWine’s lead lobbyist Dan McCarthy, and funneling $ 15 million in FirstEnergy cash through the nonprofit to Generation Now , who also pleaded guilty in the case.

This was part of the $ 60 million that FirstEnergy now admits to paying to Generation Now, which it also knew was not independent but rather controlled by Householder, according to the narrative.

This statement of facts filed Thursday also indicated that Householder approached FirstEnergy officials in February 2020 to fund a voting initiative to increase the tenure of public officials. If passed, the measure could potentially have added up to 16 more years to the Perry County Republican tenure. FirstEnergy paid Partners for Progress $ 2 million the following month, which the black money group transferred to owner-controlled Generation Now.

Patel has refrained from saying whether any of the black money group’s activities detailed in documents filed by the government on Thursday were illegal, although the statement prosecutors are demanding from FirstEnergy was clearly intended to shed light on the vast political influence that such entities are able to keep secret. .

“They were a tool and they were used as part of a game,” Patel said. “It wouldn’t be any different if you wrote Partners for Progress on a kitchen paper bag, stuffed a bunch of cash in it, and slipped it on the table. “

FirstEnergy’s non-executive board chairman Donald Misheff said in a statement that the settlement builds on measures already underway, including to “dramatically change our approach to political engagement as we work to regain the trust of our stakeholders “.

Patel said the settlement does not prevent prosecutors from prosecuting anyone whose actions are detailed in the settlement documents, but are not named.

The company also paid $ 4.3 million to a public official through his consulting firm to promote the interests of the company while he worked as the main utility regulator in the ‘Ohio, “regarding the passage of nuclear legislation,” according to the prosecutor’s statement of facts. This official is known to be the former chairman of the public services commission, Sam Randazzo.

Randazzo resigned from the commission in November after FBI agents searched his Columbus townhouse and FirstEnergy revealed payment to end a consultancy deal with his company.

He said in a statement issued through his lawyer that he had exercised his duties as chairman of the commission “in a conscientious, legal manner and anxious to strike the right balance between competing interests”.

“At no time before or after my appointment to the PUCO have I been asked or accepted to exercise authority as a public official or to take official action in my capacity as president to promote FirstEnergy’s legislative, regulatory or other interests, ”he said. .

In the past year, FirstEnergy fired six senior executives, including then-CEO Chuck Jones.

Messages for comment were left with Jones and Householder.

DeWine, who appointed Randazzo to the utilities commission, reiterated in a statement Thursday that his office knew Randazzo had worked for FirstEnergy.

“If, as stated in court documents, Sam Randazzo committed acts for the improper benefit of FirstEnergy, his motives were not known to me or my staff,” he said.

Neither Randazzo nor Jones have been charged with criminal charges.

DeWine also announced that his re-election campaign will donate to the Boys and Girls Club the amount that FirstEnergy has donated over the years to his campaign. He did not disclose the amount.

In a statement Thursday, FirstEnergy President and CEO Steven Strah said, “Going forward, we are intensely focused on fostering a strong culture of compliance and ethics, starting with the summit and making sure we have strong processes in place to prevent this type of misconduct. that has happened in the past. He also detailed the agreement in a video message to employees.

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This story was first published on July 22, 2021. It was updated on July 23, 2021 to make it clear that FirstEnergy Corp. has been charged with Conspiracy to Commit Fair Service Wire Fraud, which means there is a charge of service fraud, not property. or money.

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Gillispie reported from Cleveland and Carr Smyth reported from Columbus. Farnoush Amiri is a member of the Associated Press / Report for America Statehouse News Initiative corps. Report for America is a national, nonprofit service program that places reporters in local newsrooms to cover undercover issues.

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