FirstEnergy’s headquarters in Akron. Source: Google Maps.
It has been nine months since FirstEnergy Corp. admitted to federal prosecutors that it bribed Ohio’s top utility regulator and the speaker of the Ohio House.
Investors in the electric utility may soon get the chance to ask a few follow-up questions about how the $64 million operation came together.
Besides the criminal allegations against former speaker Larry Householder and four alleged conspirators, some investors in the company filed a lawsuit alleging company executives defrauded the shareholders. Now they’re seeking answers from a company representative on one specific subject: the deferred prosecution agreement, which FirstEnergy entered with the U.S. Department of Justice last summer.
The agreement called for FirstEnergy to admit to a lengthy statement of facts outlining the bribery operation, cooperate with federal prosecutors, and pay a $230 million penalty. In return, the company can avoid a charge of honest services wire fraud.
On March 29, the lead plaintiff for the shareholders’ lawsuit filed notice to depose a FirstEnergy representative on April 27. FirstEnergy — which has fought to limit outside investigations into its conduct from other shareholders and a state utility watchdog — insists it needs more time to prepare its official and wants to delay the deposition for four to nine weeks. Shareholders say in such a complex case (it includes 25 defendants and 17 entities), there’s no time to waste.
Attorneys for FirstEnergy’s former CEO Chuck Jones and former top lobbyist Mike Dowling — both of whom were outed in similar shareholder litigation as the principal architects of the bribery scheme and were fired in October 2020 — sided with FirstEnergy in seeking the later date.
The shareholders say besides costing them money in lost value, the political scandal cheated the public out of hundreds of millions through their electric bills. House Bill 6, legislation passed in 2019 at the center of the criminal cases, was worth an estimated $1.3 billion to FirstEnergy. Among other provisions, it charged hundreds of millions from ratepayers to cover FirstEnergy’s losses on two nuclear plants. It also forced ratepayers to guarantee FirstEnergy’s revenue levels at a high baseline, which Jones said at the time would “essentially recession-proof” a sizable chunk of company operations.
The shareholders say FirstEnergy shouldn’t be able to get away with dragging its feet now, especially regarding questions about conduct the company admitted to in court nine months ago.
“The public and investors have suffered enough from FirstEnergy’s above-the-law attitude,” the shareholders said. “It is a confessed criminal enterprise, based not on one isolated crime, but rather a years-long crime spree targeting the public and its investors. Most such criminals languish in prison for years. FirstEnergy refuses to be inconvenienced.”
Jones and Dowling also have a broader range of questions for FirstEnergy than the shareholders. FirstEnergy and the two former executives said they’re open to consolidating the depositions. The shareholders refused, accusing them of “hijack[ing]” their interview.
All the parties laid out their positions on the matter in a status report for U.S. District Judge Algenon Marbley, who will likely need to resolve the matter.
“It would be difficult to exaggerate the significance of this case and importance of the light Lead Plaintiff can shine on defendants’ corruption, especially after FirstEnergy bought its way out of a criminal conviction and the government has yet to charge Jones, Dowling, or any of the other FirstEnergy executives and officers who orchestrated this scheme,” the shareholders argued. ‘Lead Plaintiff just needs a full and fair opportunity to complete its investigation.”
Through a spokeswoman, FirstEnergy declined to comment. Attorneys for the shareholders and the former executives did not respond to inquiries.
The federal prosecution has remained fairly quiet since FirstEnergy entered into the deferred prosecution agreement. A judge scheduled a trial for Householder, who has pleaded not guilty, for January 2023.
Sam Randazzo, Ohio’s former top utility regulator who FirstEnergy said was paid a $4.3 million bribe shortly before his appointment, has not been charged with a crime. Jones and Dowling, also implicated by the facts of the agreement, have not been criminally charged.
In a related case, U.S. District Judge John Adams threatened other shareholders’ lawyers with a contempt finding last month until they answered his questions as to which FirstEnergy executives ordered payment of the bribes. He lamented that Jones, FirstEnergy’s former CEO, earned $55 million in compensation during the three years of the admitted bribery operation, and has yet avoided any criminal or civil penalties.
Adams demanded answers after the parties brought him a proposed settlement, brokered as the case’s depositions were scheduled to begin. It would have called for FirstEnergy’s insurers to pay the company $180 million in damages in connection with the bribery scandal. He has not yet approved any settlement.
The company has fought various efforts to shine light on the scandal. It has fought to add months of delay to investigatory cases at the Public Utilities Commission of Ohio. FirstEnergy also sided with the shareholders in opposition to answering Adams’ questions of who ordered the bribes.
The deposition question awaits a ruling from Marbley.
GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
SUPPORT NEWS YOU TRUST.
Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.