Here’s how feds say largest bribery scheme in Ohio was orchestrated

Larry Householder leaves U.S. District Court

In what federal prosecutors describe as the largest bribery scheme in state history, Ohio House Speaker Larry Householder and four other men are accused of taking $60 million in exchange for pushing through a controversial energy bailout bill that cost Ohioans more than $1 billion.

Householder faces a federal racketeering charge, alleging that he took $60 million in bribes from an unidentified Akron-based utility in exchange for getting House Bill 6 passed into law last year.

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U.S. Attorney for the Southern District of Ohio Dave DeVillers called it the largest bribery and money laundering scheme ever perpetrated against the state of Ohio.

Law enforcement and members of the media are shown near Ohio House Speaker Larry Householder's farm in Perry County, where federal officials responded on Tuesday morning. DENNIS FISHER/CONTRIBUTING PHOTOGRAPHER
Law enforcement and members of the media are shown near Ohio House Speaker Larry Householder's farm in Perry County, where federal officials responded on Tuesday morning. DENNIS FISHER/CONTRIBUTING PHOTOGRAPHER

“These allegations are bribery, pure and simple,” he said. “This was quid pro quo. This was pay to play.”

Ohio Gov. Mike DeWine hasn’t been implicated in the investigation, DeVillers said, but he declined to say if any other lawmakers were under investigation.

“Our state deserves to have an honest system of government that isn’t hijacked by greed or corruption,” said FBI Special Agent in Charge Chris Hoffman at a Tuesday news conference in Columbus.

FirstEnergy Corp. issued a statement Tuesday that said it had received subpoenas in connection with the investigation.

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“We are reviewing the details of the investigation and we intend to fully cooperate,” the statement says.

DeWine and elected officials called on Householder to resign immediately. “This is a sad day for Ohio,” DeWine said in a written statement.

Federal officials on Tuesday morning went to Ohio House Speaker Larry Householder's property in rural Perry County, where he was taken into custody. DENNIS FISHER/CONTRIBUTING PHOTOGRAPHER
Federal officials on Tuesday morning went to Ohio House Speaker Larry Householder's property in rural Perry County, where he was taken into custody. DENNIS FISHER/CONTRIBUTING PHOTOGRAPHER

The two federal officials described the scheme as a “sophisticated criminal conspiracy” and a “shameful betrayal.”

Also charged with conspiracy to participate in racketeering are: Householder’s political strategist Jeff Longstreth; former Ohio GOP chairman Matt Borges, who formerly lobbied for Akron-based FirstEnergy Solutions; and lobbyists Neil Clark and Juan Cespedes. Generation Now, a 501(c)4 is also named in the criminal complaint.

The five men made their initial appearance in federal court before U.S. District Court Magistrate Judge Stephanie K. Bowman, who released them on bond with conditions. They did not enter pleas.

Attorney Karl Schneider, who represents Borges, said the allegations came as a surprise to his client.

Schneider said he has not yet read the 80-page court document, but said he will be “vigorously defending” Borges.

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Attorney Mark Collins, representing Cespedes, said he’s “thankful ... that the government agreed to the release of my client,” but said it’s too early to go into detail.

“We’re going to delve into the 81-page complaint,” Collins said. “Allegedly there’s probable cause and we’re going to examine that over the next few days.”

Lawyers for the others didn’t respond to requests for comment or declined to comment.

Here is how the feds described the conspiracy:

⋅ Longstreth created Generation Now in February 2017, but it was secretly controlled by Householder.

⋅ The unidentified energy company money flowed into Generation Now, which in March 2017 started receiving $250,000 quarterly payments.

⋅ The money was spent to help elect 21 pro-Householder Republicans into legislative seats to support his quest to become House speaker. In the fall of 2018 alone, the entity spent more than $1 million on negative ads against opposing candidates.

⋅ The money flowed through Generation Now to pay Householder’s campaign staff.

Ohio GOP Chairman Matthew Borges leaves U.S. District Court on Tuesday, July 21, 2020, in Columbus after an appearance on charges he participated in a racketeering conspiracy.
Ohio GOP Chairman Matthew Borges leaves U.S. District Court on Tuesday, July 21, 2020, in Columbus after an appearance on charges he participated in a racketeering conspiracy.

Credit: David Jablonski

Credit: David Jablonski

⋅ Householder received more than $400,000 in personal benefits, including money to settle a personal lawsuit, pay for renovations to his home in Florida and pay off thousands of dollars in credit card debt.

⋅ The enterprise paid $15,000 to an insider in the campaign to overturn House Bill 6 and offered to pay signature collectors $2,500 cash and plane fare to abandon the referendum campaign.

The 81-page federal complaint, which was unsealed Tuesday, represents allegations that the federal government must prove in court.

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The Racketeer Influenced and Corrupt Organizations Act is a federal law that allows leaders of a syndicate to be tried for crimes they ordered others to commit or helped them in carrying out. Hoffman said this marks the first time the federal RICO statute has been used to charge a public official in the southern district of Ohio, which includes 44 counties.

DeVillers said “Company A” paid $61 million to Generation Now so that Householder could line his pockets and build his power base and in exchange, Householder championed House Bill 6, which delivered a $1.5 billion bailout to utility companies.

Juan Cespedes, facing federal racketeering charge along with Ohio House Speaker Larry Householder and others.
Juan Cespedes, facing federal racketeering charge along with Ohio House Speaker Larry Householder and others.

House Bill 6 is a controversial law that impacts 4.8 million electric ratepayers across Ohio. The fight over the bill involved allegations of bribes and buyouts, millions of dollars in provocative ads, squads of high-powered lawyers and lobbyists and competing petition drives.

In the end, backers of the bill got it passed and DeWine signed it into law a year ago. Efforts to put it up for a statewide referendum vote fell short.

At stake was more than $1.5 billion slated to go to Ohio Valley Electric Corp. and FirstEnergy Solutions, an Akron-based utility that later emerged from bankruptcy under a new name, Harbor Energy.

The fight over HB6 involved multiple dark money political action committees, including Generation Now, which is not required to disclose its donors.

But on July 5, 2019, FirstEnergy Solutions paid $1.88 million to Generation Now Inc., according to bank records filed by Harbor Energy on its investor relations page.

Householder, who first served as speaker in 2001-2004, recaptured the political post after a bitter fight within the Ohio GOP caucus. Former speaker Cliff Rosenberger resigned in April 2018, days after telling the Dayton Daily News that he hired a criminal defense attorney to deal with an FBI investigation. Rosenberger denies all wrong-doing and although agents searched his home two years ago, he has not been charged.

Rosenberger’s sudden departure triggered a fight for speaker. Republican Ryan Smith, R-Gallipolis, won it briefly in June 2018 but was defeated by Householder in January 2019.

After campaigning to put his own supporters into legislative seats, Householder clinched the deal when he won support from House Democrats.

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In December 2014, the Union Bank in Alabama won a $1.89 million judgment against Householder, D&E Mining LLC, Lakeridge Energy USA LLC, Householder Ltd., and Hernando Posada, public records say. The bank put a claim against property Householder owns at 226 Belville Blvd in Naples, Florida. It released that claim in 2018, Florida property records show.

In October 2019, Householder began renovations on a condo in Naples, according to Collier County property records.

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Householder is the vice chairman of the Joint Legislative Ethics Committee, which oversees lobbying activities, legislators financial disclosures and matters of legislative ethics.

He served as House speaker 2001 to 2004 but was forced out due to term limits. As he left Columbus, though, he was hounded by allegations of political corruption. In 2006, the Public Integrity Section of the U.S. Department of Justice announced that its investigation concluded with no charges being filed. Householder returned to the Ohio House in 2017.