DeWine aide’s organization was link to now-guilty dark money group

By: - February 15, 2021 12:55 am

Davis-Besse Nuclear Power Station with electricity pylons, Ohio

Dan McCarthy, a top aide to Gov. Mike DeWine, hasn’t explained what he thought the point was of the millions funneling through a dark money group he founded and into another at the heart of a huge corruption scandal that has rocked Ohio. He did say, however, that he had no reason to believe it was anything improper.

But the fact that the other dark money group has now pleaded guilty to its role in the corrupt scheme raises questions about what McCarthy did believe the purpose was, if not to conceal the fact that an Ohio utility was financing a scheme to make ratepayers bail out two nuclear reactors it began spinning off a year earlier.

Generation Now, a 501(c)(4) group, was incorporated in early 2017 under a part of the federal tax code that protected it from disclosing its contributors. 

Even so, it pleaded guilty earlier this month after federal prosecutors accused it of illegally taking $60 million from Akron-based FirstEnergy and associated groups. It funneled the money into an effort to make Rep. Larry Householder, R-Glenford, speaker and pass a $1.3 billion bailout that mostly went to prop up two nuclear power plants that FirstEnergy began spinning off in 2016.

Last summer, as he announced the arrests of Householder and four associates, U.S. Attorney David DeVillers said it was “likely the largest bribery and money-laundering scheme ever in the state of Ohio.”

Two of Householder’s associates — Jeffrey Longstreth and Juan Cespedes — pleaded guilty in October. 

On Feb. 5 so, too, did Generation Now, when it admitted to its role in obscuring the origins of the money used to fuel the corrupt scheme to pass House Bill 6. A virtual hearing on the matter will be held on Friday.

Among the bad acts to which Generation Now admitted was that it “engaged in financial transactions that were designed to conceal the nature, source, ownership and control of the payments made by Company A (FirstEnergy) to Generation Now.”

When he was still a lobbyist for FirstEnergy, McCarthy started another dark money group that formed a link in the money chain between FirstEnergy, Generation Now and the effort to pass House Bill 6, the nuclear bailout.

McCarthy named his group Partners for Progress Inc., but in an affidavit accompanying the arrests of Householder and the others, federal prosecutors referred to it as “Energy Pass-Through.” It said the group “was incorporated in Ohio on Feb. 8, 2017 — two days after Generation Now was incorporated in Delaware.”

Within a week, FirstEnergy wired $5 million into a bank account controlled by McCarthy’s dark money group, the affidavit said. Through 2018, while he was still president, it wired $1.2 million of that to Generation Now, it added. 

In early 2019, McCarthy resigned as president of the dark money group and stopped lobbying for FirstEnergy. That’s when he joined the DeWine administration as legislative affairs director and registered to lobby on the governor’s behalf for the FirstEnergy-supported bailout, HB 6. 

DeWine signed it into law on July 23, 2019. 

On Oct. 10, 2019, in the midst of a bitter, xenophobic battle to beat back a citizen initiative to overturn the controversial bailout, the dark money group McCarthy’s founded took $10 million from FirstEnergy and immediately wired it to Generation Now, the affidavit said.

On July, 23, 2020 — the day after Householder and the others were arrested — DeWine condemned corruption, but said the nuclear bailout was too important to be scrapped. He reversed himself a day later, calling to “repeal and replace” the bill.

McCarthy continues to lobby the legislature on DeWine’s behalf and HB 6 hasn’t been repealed.

Meanwhile, in November, another DeWine appointee, former FirstEnergy lobbyist Sam Randazzo, was forced to resign and chairman of the Public Utility Commission of Ohio amid even more scandal. The FBI raided his home after revelations that FirstEnergy paid $4 million to an entity he controlled just before DeWine appointed him to be the state’s top utility regulator. 

Randazzo hasn’t been charged and DeWine said he was unaware of the huge FirstEnergy payment when he appointed Randazzo. But recently released emails show that at the same time he was the state’s top regulator, Randazzo played a role in shaping the HB 6 bailout that DeWine signed into law.

The revelations about Randazzo make it even more urgent that DeWine and McCarthy fully explain McCarthy’s role in the HB 6 effort, one critic said.

“Given the magnitude of the HB 6 scandal and the questions surrounding a $4 million dollar payment from FirstEnergy to a PUCO commissioner alleged to be former Chairman Randazzo, the governor needs to be completely transparent regarding his Legislative Affairs Director Dan McCarthy,” said Rob Kelter, senior attorney with the Environmental Law Policy Center, which has been critical of HB 6. “That means answering each and every question the public has regarding Mr. McCarthy’s actions related to FirstEnergy before and after Governor DeWine took office.”

So far, most of those questions have gone unanswered.

Days after Householder’s arrest, The Cincinnati Enquirer broke the news that McCarthy had formed Partners for Progress, the dark money group that served as a cash conduit between FirstEnergy and Generation Now. 

At the time, McCarthy didn’t explain why he formed the group almost simultaneously with Generation Now. Nor did he explain his understanding of what the FirstEnergy money his group was handling was meant for. 

McCarthy said he was unaware of “anything illegal or unethical” about it.

Last week, in the wake of the Generation Now plea, he had nothing to add when asked if he intended to use his dark money group to conceal the fact that FirstEnergy money was fueling the fight for the billion-dollar bailout the company supported.

“His previous statement (from July 2020) he issued addresses this topic, including the fact he has not been contacted” by federal authorities, DeWine Press Secretary Dan Tierney said on McCarthy’s behalf.

On behalf of DeWine, Tierney didn’t have much to add, saying, “the information shared is not new information…”

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Marty Schladen
Marty Schladen

Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He's won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.

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