Householder defense in racketeering trial previewed in fight over campaign finance experts

A fight over expert testimony in the felony racketeering trial of former Republican Ohio House Speaker Larry Householder offers a window into the ex-legislative leader’s defense strategy over his alleged role in the $1.3 billion First Energy bailout, political bribery scandal.

U.S. attorneys filed a response this week the U.S. Southern District of Ohio court pushing back against Householder’s objection to testimony on campaign finance and political spending from a law professor in California, as well as an Ohio State professor who specializes in energy policy. Prosecutors have also pushed back on a campaign finance attorney Householder disclosed he plans to call in his defense.

The two sides haggling over each other’s proposed campaign finance experts used mirrored arguments against each other, both alleging that the trial is about racketeering, not campaign finance, and that the dueling expert testimony would be duplicative.

Householder’s attorney wrote that the prosecutor’s campaign finance expert testimony should be limited as duplicative and unnecessary.

“Householder and the other defendants are not charged with violating campaign finance laws. They are charged with racketeering through bribery,” he wrote. “As a result, (the prosecution’s expert) testimony is irrelevant; it will not help the jury decide any fact of consequence.”

Prosecutors wrote that Householder’s campaign finance expert testimony should be limited as irrelevant and inadmissible.

“To be clear, the defendants are not charged with any campaign finance or regulatory violations. Rather, this is a racketeering case,” prosecutors wrote, “ where the grand jury charged the defendants with conspiring to conduct and participate in the affairs of an enterprise through a pattern of racketeering activity.”

In a response filed Monday to Householder’s pushback against their proposed experts, prosecutors called Householder’s arguments meritless, alleging, “At bottom, he simply does not like (the experts’) opinions.”

Householder’s defense claimed the same in their filing: “At bottom, the government’s dislike of Householder’s expert’s opinions is not a reason to exclude them.”

Prosecutors emphasized that their experts were there to provide background information and context, as outlined in their proposal. Objecting to Householder’s expert, prosecutors said the defense proposes to use their expert witness testimony beyond background and context.

“(His) proposed testimony will go farther, and stray into irrelevant and legally inadmissible areas, including impermissible testimony about how other politicians raise money or what is ‘commonplace,’” they wrote. “The fact that other politicians might raise money through a PAC consistent or inconsistent with campaign finance law is irrelevant to whether Householder agreed to enter a racketeering conspiracy involving bribery.”

The court should exclude testimony that “this is how fundraising works,” “everyone does it,” and certain acts are “commonplace,” prosecutors said.

Householder’s lawyers said that prosecutors’ critiques of his expert “make little sense.”

“For example, he will not give opinion testimony about Householder’s intent. And the remainder of the government’s critiques are ill supported,” they wrote.

They said experts are allowed to testify to courts about ordinary practices and procedures, and thus their expert may be allowed to testify on how officeholders can be aligned with 501(c)(4) dark money political action committees.

This argument between what is alleged common practice in campaign finance and what rises to a bribery racketeering conspiracy could preview the heart of intended argument and defense at trial.

In some instances then, the trial could bring up some of the issues in the landmark U.S. Supreme Court civil case campaign finance rulings in Citizens United v. FEC, where a 5-4 conservative majority struck down prohibitions on independent expenditures by corporations by invoking the Free Speech Clause of the First Amendment, and McCutcheon v. FEC, where a 5-4 conservative majority struck down aggregate limits on the amount an individual may contribute to federal candidates, parties, and political action committees.

Householder’s defense even quoted the McCutcheon ruling in the first line of the introduction of their latest filing: “Money in politics may at times seem repugnant to some, but so too does much of what the First Amendment vigorously protects.”

The House Bill 6 bailout / First Energy political bribery scandal

In what the federal prosecutors have called the biggest bribery scandal in state history, Householder and four others were arrested in the summer of 2020. Facing racketeering, money laundering, and other charges, Householder has been accused of accepting more than $60 million from FirstEnergy in donations to nonprofits he secretly controlled to ensure the passage of House Bill 6. 

Ohio House Bill 6 awarded FirstEnergy $1.3 billion worth of ratepayer funded bailouts for nuclear plants owned at the time by a company subsidiary and ratepayer-funded protections against drops in energy revenues. The alleged scheme also included helping block a ballot initiative for voters to overturn the bailout.

Since the indictments, Householder and ex-Ohio Republican Party Chairman Matt Borges have pleaded not guilty. Householder has been removed as speaker and expelled from the House. Two of his associates have pleaded guilty and a third has died by suicide. The nonprofit Generation Now was also indicted and has pleaded guilty. 

Householder and Borges await trial, currently scheduled for January. 

FirstEnergy entered into a deferred prosecution agreement with prosecutors in the summer of 2021, admitting using the Generation Now nonprofit to “conceal payments for the benefit of public officials and in return for official action.” 

It also admitted to giving a $4.3 million bribe to the then-chairman of Ohio’s utility regulator, Sam Randazzo. Randazzo has denied wrongdoing and has not been charged with a crime. He resigned from the Public Utilities Commission of Ohio (PUCO) in November 2020. Ohio Gov. Mike DeWine, who was warned about Randazzo’s ties to the energy industry, has said he does not regret picking Randazzo as Ohio’s top utility regulator.

In Householder’s racketeering case, prosecutors disclosed five expert witnesses they intend to call upon at trial. Householder’s team objected to two of them.

The two who were objected to were Noah Dormady, an associate professor of energy policy at Ohio State University, and University of Southern California law professor Abby Wood, who would testify about campaign finance and fundraising.

The campaign finance expert Householder intends to call in defense, and prosecutors have objected to, is Washington D.C. attorney and campaign finance advisor Caleb P. Burns.

The other three prosecutor experts not objected to included Ballotpedia research director Josh Altic, who will testify about ballot initiatives in Ohio; IRS agent Charles Walker, who will testify about dark money; and Ohio University accounting professor Toby Stock, who will testify about corporations.

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