FBI agents remove boxes of materials from PUCO Chairman Sam Randazzo’s condo in Columbus Nov. 17, 2020. Photo courtesy of Daniel Konik/Statehouse News Bureau.
Sam Randazzo, Gov. Mike DeWine’s first pick to chair the state’s utility regulator, isn’t even a party to a civil suit over a massive bribery scheme. Even so, judges keep admonishing Randazzo over what they say is his lack of cooperation.
A group of pension funds and other big investors are suing Akron-based FirstEnergy over a scheme in which it paid more than $60 million in 2018 and 2019 to get the legislature to pass and protect a $1.3 billion bailout that was mostly intended to benefit FirstEnergy.
Former House Speaker Larry Householder, R-Glenford, in June was sentenced to 20 years in federal prison after a jury found him guilty of racketeering for his role in the scheme. Former Ohio GOP Chairman Matt Borges was sentenced to five years in the same case.
FirstEnergy fired two of its top executives, CEO Chuck Jones and Vice President Michael Dowling. And it signed a deferred prosecution agreement admitting wrongdoing and committing to pay a $230 million fine.
Jones, Dowling and Randazzo denied wrongdoing, but in the agreement, FirstEnergy said the executives paid Randazzo a $4.3 million bribe just as DeWine was nominating him to be the top Ohio regulator overseeing FirstEnergy.
FirstEnergy said the payment was made through Randazzo’s “consulting company in return for (Randazzo) performing official action in his capacity as (Public Utilities Commission of Ohio) Chairman to further FirstEnergy Corp.’s interests” and that “it was under no legal obligation to make the payment … ”
A group of large pension funds and other big investors sued FirstEnergy, the former executives and others, arguing that they didn’t disclose their shenanigans and when they came to light, the investors lost billions of dollars because the company’s stock plummeted.
Randazzo, Jones and Dowling haven’t been charged in the case, but in court filings, they’ve acknowledged that they appear to be subjects of the ongoing criminal investigation. As the class-action case plays out in civil court, lawyers for the three have attempted to limit what plaintiffs’ lawyers can seek for fear of incriminating their clients.
Randazzo, the former regulator, isn’t a defendant in the civil case, but lawyers for the investors are keen to know what he did with the $4.3 million he got from FirstEnergy.
His response to orders to provide relevant emails and other documents has been grudging, prompting Magistrate Judge Kimberly Jolson in June to write of Randazzo and his attorneys, “Their reluctance to be transparent about their search methodology does not suggest good-faith compliance with their discovery obligations.”
A special master, Shawn K. Judge, was appointed in September to referee such evidentiary disputes in the sprawling case. Late last month, he held a hearing over Randazzo’s claims that he shouldn’t have to search the cloud for relevant documents, he shouldn’t have to provide communications after November 2020 — four months after Householder and others were arrested — and that he shouldn’t have to pay to do the searches.
Wrong on all counts, Judge ruled last week. He said Randazzo has failed to comply with Jolson’s earlier orders and it’s time to do so now.
“Litigation is not a game, and the Court’s Order are directives to be followed, not mere suggestions either to be ignored or to be chipped away at through subsequent attempts to raise arguments that were previously rejected or left unasserted,” Judge wrote. “Despite these simple truths, non-parties Randazzo and (the Randazzo-controlled group FirstEnergy paid $4.3 million) are again before the Court for their failure to meet not only their discovery obligations but also for their wanton disregard of Magistrate Judge Jolson’s clear and direct April 5, 2023 order…”
Judge said he agreed with a statement made by the investors’ attorneys meant to illustrate how uncooperative Randazzo and his attorneys have been.
“We just asked them to simply run the (search) term ‘FirstEnergy,'” the plaintiffs’ attorneys said. “The fact that they submitted declarations attesting that they conducted a reasonable search for any document regarding the $4.3 million and didn’t even include the term ‘FirstEnergy’ or any version of 4.3 million speaks volumes.”
Randazzo’s attorneys also have claimed the roughly $30,000 it would cost Randazzo to comply with the order is an undue burden without knowing how much money Randazzo now has, Judge, the special master, wrote.
At the October hearing, Judge asked one of Randazzo’s attorneys how much Randazzo had in liquid assets.
“Well, I don’t know, you know, down to the penny of what my client has,” the attorney said, according to Judge’s order. “Like I said, the big thing that I know about are the things that I just referenced, that the plaintiffs have been referencing, you know, the $3 million that’s gone into trust accounts. Part of that’s frozen, and part of it’s not accessible.”
When Judge asked another of Randazzo’s attorneys how much money was available to his client, that lawyer didn’t know either, Judge wrote.
He then gave Randazzo and the plaintiffs’ attorneys 14 days to agree on a search methodology and a cost to be borne by Randazzo. If that weren’t enough of a blow to the former regulator, Judge also ordered Randazzo to pay the plaintiffs’ costs to prepare for and participate in the October hearing.
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