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Ohio House Speaker Larry Householder leaves the federal courthouse after an initial hearing following charges against him and four others alleging a $60 million bribery scheme Tuesday, July 21, 2020, in Columbus, Ohio.
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Five arrested, including Ohio House speaker, over corruption allegations from nuke plant bailout

ASSOCIATED PRESS

Five arrested, including Ohio House speaker, over corruption allegations from nuke plant bailout

COLUMBUS — Authorities arrested Ohio House Speaker Larry Householder (R., Glenford) and four others on Tuesday, charging them as co-conspirators in a nearly $61 million bribery and racketeering scheme that has been called the worst in Ohio political history.

The scheme was tied to last year's passage and subsequent defense of a law bailing out nuclear power plants.

Mr. Householder, 61, was described as the ring leader by U.S. Attorney David DeVillers during a news conference in Columbus. Gov. Mike DeWine, Senate President Larry Obhof (R., Medina), Ohio Attorney General Dave Yost, Lt. Gov. John Husted (a former House speaker), and Ohio Republican Party Chairman Jane Timken were among fellow Republicans who called for Mr. Householder's immediate resignation.

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“I am deeply concerned about the allegations of wrongdoing in the criminal complaint issued today by the U.S. Attorney’s Office,” Governor DeWine said. “Every American has the presumption of innocence until proven guilty. Because of the nature of these charges, it will be impossible for Speaker Householder to effectively lead the Ohio House of Representatives; therefore, I am calling on Speaker Householder to resign immediately.

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"This is a sad day for Ohio," he said.

Governor DeWine even pushed back his daily coronavirus briefing from Tuesday to Wednesday because of the breaking news.

Also arrested were:

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— Matt Borges, 48, of Bexley, a former Ohio Republican Party chairman who was described by authorities as a lobbyist for a subsidiary of the unnamed “Company A” and at the heart of the effort to use dark money to kill a ballot effort to repeal the bailout law.

— Neil Clark, 68, a high-profile Columbus lobbyist, described as Mr. Householder’s “proxy” to enact House Bill 6 and kill the referendum effort. It is clear in the complaint that some of Mr. Clark’s conversations had been recorded.

— Jeff Longstreth, 44, of Columbus, a political consultant and key Householder adviser, described as a point of contact for “Company A” that was funneling unreported cash to nonprofit Generation Now.

— Juan Cespedes, 40, a Columbus lobbyist, described as a “key middleman” who tracked “Householder camp” legislative candidates who were later given dark money funneled through Generation Now.

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Additionally authorities have implicated a 501(c)4 organization called Generation Now; a nonprofit organization that prosecutors contend was used to disburse “dark money” campaign contributions to House candidates deemed loyal to Mr. Householder, nearly all of whom later supported his 2019 election as the Ohio House speaker.

All of the charged individuals are accused to diverting some of the money to their own personal benefit. All also made appearances via video before U.S. Magistrate Judge Stephanie K. Bowman of Cincinnati, part of U.S. District Court’s Southern District of Ohio.

The video appearance was because of the coronavirus pandemic.

The suspects are accused of racketeering conspiracy, a charge punishable by up to 20 years in prison and a $250,000 fine.

“All forms of public corruption are unacceptable,” said Chris Hoffman, the FBI’s special agent in charge in Cincinnati. “When the corruption is alleged to reach some of the highest levels of our state government, the citizens of Ohio should be shocked and appalled.”

During Tuesday’s court appearance each defendant, through their attorney or on their own, answered the judge's questions but did not offer additional statements, other than to say some have ailing relatives and other personal issues which may require them to seek permission from the court to periodically travel outside of southern Ohio.

Judge Bowman told them they are restricted from such travel unless special arrangements are made. She placed other limitations upon them, such as surrendering any and all firearms they own by 5 p.m. Wednesday, and surrendering any passport they may possess by 4 p.m. Friday.

Mr. Householder told the judge he indeed has firearms on his property and will turn them in before the deadline. She also allowed defendants to have all firearms "and destructive devices" they may own turned over to relatives who do not live with them.

Mr. Householder said he does not have a passport, but a couple of others said they do.

Assistant U.S. Attorney Emily N. Glatfelter, who represented prosecutors during the hearing, told Judge Bowman that in each case the government was not seeking detention.

Each of the defendants was allowed by the judge to remain free, provided they do not violate conditions of their respective bonds.

The judge ordered them not to communicate with one another or with victims, witnesses or potential defendants, victims, or witnesses in the cases brought against them.

Mr. Householder, a veteran Republican lawmaker, pushed for passage of House Bill 6, designed to funnel about $1 billion from surcharges on consumer bills to bail out two struggling nuclear power plants.

He is accused of conspiring with Generation Now between March, 2017

to March, 2020 to enact the bill and then work to kill a subsequent ballot effort that was designed to repeal it. The money flowed into Generation Now from an unidentified energy company and its affiliates, authorities allege.

Mr. Longstreth incorporated Generation Now, which the FBI contends was actually run by Mr. Householder. The money was used to help pay for Mr. Householder's campaign staff, according to federal officials.

Mr. Householder allegedly received an estimated $400,000 in personal benefits to settle a personal lawsuit, pay for costs associated with a Florida residence, and pay off thousands of dollars in credit card debt.

“Make no mistake, this is Larry Householder's 501(c)4,” Mr. DeVillers said.

The organization, created under a section of the Internal Revenue Service, was not required to disclose where it got its money, something that made it easier for such a scheme to be hatched and carried out.

Secretary of State Frank LaRose, a Republican, announced that he has referred to the Ohio Elections Commission 19 possible violations of state campaign finance law contained in the federal indictment. The alleged violations involve accepting illegal corporate contributions, failure to file accurate campaign finance statements, and converting campaign funds for personal benefit.

“Sadly, today’s criminal complaint is a reminder that some enter public life seeking to accumulate personal power and to enrich themselves,” Mr. LaRose said. “Those who do so are not fit to hold public office."

Preliminary hearings for the individuals have been scheduled for Aug. 6, and a first appearance in court is scheduled that day for Generation Now as well.

The Ohio House in July, 2019 narrowly voted to have Ohio consumers pay $150 million a year to rescue the financially failing Davis-Besse plant near Oak Harbor and the Perry plant east of Cleveland.

FirstEnergy Solutions — at the time the owner-operator of Davis-Besse — had said it would begin decommissioning the plant near Oak Harbor by May 31, 2020, and its Perry plant east of Cleveland a year later if it did not receive assistance. The plants have been unable to compete in this age of cheap and abundant natural gas, as well as lower-priced solar, wind, and other forms of renewable energy.

Together, Davis-Besse and Perry, directly and indirectly, provide or support more than 4,000 jobs. Each plant has about 700 full-time employees.

In a statement issued late Tuesday afternoon through company spokesman Jennifer Young, FirstEnergy Corp. said it had “received subpoenas in connection with the investigation surrounding Ohio House Bill 6.”

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

The current owner-operator, Energy Harbor, a company which emerged from FirstEnergy Solutions’ bankruptcy proceedings, had little to say.

“We are reviewing the complaint and will cooperate fully with the government’s investigation,” Jason D. Copsey, Energy Harbor spokesman, said.

While not named in the complaint, Mr. DeVillers said there’s no question who Company A is. Neither FirstEnergy nor its former subsidiary FES have been charged, but the investigation continues.

Sponsored by state Reps. Jamie Callender (R., Concord) and Shane Wilkin (R., Hillsboro), House Bill 6 required consumers to pay surcharges on their monthly electric bills — ranging from 85 cents for residential customers to $2,400 for big industrial factories — beginning in 2021 to fuel a $170 million-a-year fund.

Of that, $20 million a year would go to five utility-scale solar fields already holding state site approval in Hardin County and southern Ohio, but 88 percent would go to the nuclear plants' owner.

Howard Learner, executive director of the Chicago-based Environmental Law & Policy Center, which fought the bailout and related FirstEnergy bankruptcy proceedings, drew parallels to Commonwealth Edison’s agreement to pay $200 million to resolve a bribery complaint involving Illinois legislators.

That and other details were in an article the Associated Press published online four days ago. The AP said in that story that allegations of a long-running bribery scheme there implicate Illinois House Speaker Michael Madigan, who also is the Democratic Party of Illinois chairman and is considered one of that state’s most powerful Democrats. Illinois Gov. J.B. Pritzker was quoted in that story as saying that Mr. Madigan must resign if allegations are proven true.

“Sadly, if these federal charges are true, FirstEnergy has been manipulating the legislative process to raise rates on consumers through impermissible political manipulations instead of sound policies,” Mr. Learner said. “Ohio consumers and the public deserve better from FirstEnergy and their state legislators.”

He said the Ohio bailout “should not remain in effect if obtained through bribery or other means” and that the case could call into question legislation that was approved and bankruptcy court proceedings that followed.

After a bitter internal fight, Mr. Householder was elected again as Ohio speaker last year, two years after returning to the chamber after term limits had forced him out. He had previously served as speaker from 2001 to 2004.

In a joint statement, the rest of House Republican leadership under Mr. Householder — Reps. Jim Butler (R., Oakwood),  Bill Seitz (R., Cincinnati), Anthony DeVitis (R., Green), Jay Edwards (R., Nelsonville), and Laura Lanese (R., Grove City) — said they are reviewing the allegations.

“To our knowledge, no other member of the Ohio General Assembly is under investigation in connection with these allegations,” they said. “We have not been in contact with Speaker Householder today.”

They declined further comment.

Mr. DeVillers, however, said the investigation is now moving into another phase and others could yet be charged.

Mr. Borges was chairman of the Ohio GOP during most of Gov. John Kasich's tenure. He was linked to the Ohio Clean Energy Jobs Alliance, a consulting group tied to FES that lobbied heavily for the bailout subsidies.

He became chairman of the state Republican party despite his 2004 plea to a charge of misuse of public office stemming from fund-raising issues related to the campaigns of former state Treasurer Joe Deters, who is now Hamilton County prosecutor. The conviction was later expunged.

The complaint states that Mr. Borges referred to the payments made through Generation now “monopoly money.”

Ms. Timken joined Governor DeWine in calling for Mr. Householder's resignation.

“There is no right to hold public office,” she said. “This is a privilege extended by the people of Ohio to officeholders. It’s a higher calling and requires a higher level of responsibility. That’s why I’m calling on Larry Householder to step down as Speaker of the House and resign as a legislator.

“If he is acquitted, he will have a chance to serve again by running for office and letting the voters decide,” Ms. Timken said.

First Published July 21, 2020, 1:43 p.m.

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Ohio House Speaker Larry Householder leaves the federal courthouse after an initial hearing following charges against him and four others alleging a $60 million bribery scheme Tuesday, July 21, 2020, in Columbus, Ohio.  (ASSOCIATED PRESS)
Federal officials are on the scene of a farm that belongs to Ohio House Speaker Larry Householder, Tuesday, July 21, 2020 in Glenford, Ohio.  (ASSOCIATED PRESS)
This March 5, 2019 file photo shows Ohio House speaker Larry Householder speaking in Columbus, Ohio. FBI agents were at the farm of Householder on Tuesday morning, hours ahead of a planned announcement of a $60 million bribe investigation by federal prosecutors.  (ASSOCIATED PRESS)
Ohio House Speaker Larry Householder leaves the Federal Courthouse after he was arrested in a $60 million federal bribery probe Tuesday, July 21, 2020, in Columbus, Ohio.  (ASSOCIATED PRESS)
Davis-Bess Nuclear Power Plant Friday, July 17, 2020, in Carroll Township, Ohio.  (THE BLADE/JEREMY WADSWORTH)  Buy Image
Federal officials are on the scene of a farm that belongs to Ohio House Speaker Larry Householder, Tuesday, July 21, 2020 in Glenford, Ohio.  (ASSOCIATED PRESS)
Property belonging to Ohio house speaker Larry Householder is seen in rural Glenford, Ohio, Tuesday, July 21, 2020.  (ASSOCIATED PRESS)
A Perry County, Ohio, sheriff's deputy is seen outside of property belonging to Ohio house speaker Larry Householder in rural Glenford, Ohio, Tuesday, July 21, 2020.  (ASSOCIATED PRESS)
Protesters block a car with Ohio House Speaker Larry Householder in it from leaving the Federal Courthouse after Householder's initial hearing following charges against him and four others alleging a $60 million bribery scheme Tuesday, July 21, 2020, in Columbus, Ohio.  (ASSOCIATED PRESS)
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