How prosecutors say the Ohio House Speaker built a political machine on a ‘corrupt bargain’

Credit: Sarah Franks

Speaker of the House Investigation: Here’s what we know

Credit: Sarah Franks

EDITOR’S NOTE: This story is the first in a two-part series detailing how federal prosecutors say Ohio House Speaker Larry Householder illegally used nearly $61 million from an Akron-based utility company to build his power base, get elected speaker and pass an energy bill to benefit the company. Go here for Part 2.

Gov. Mike DeWine said Thursday the sweeping energy law at the center of a public corruption case should be repealed and replaced.

“While the policy in my opinion is good, the process by which it was created stinks, it’s terrible, it’s not acceptable,” DeWine said. “The most important thing is that the public have confidence in the process.”

DeWine reiterated that he thinks Householder should resign or be removed.

ExploreCan Larry Householder be forced from office?

Householder and four other men face racketeering charges in what federal prosecutors have called the largest bribery case in Ohio history.

Householder’s attorney, Dave Thomas, declined comment.

An 82-page criminal complaint, authored by FBI Agent Blane Wetzel, alleges that an Akron-based utility company funneled nearly $61 million to a dark money group controlled by Householder, who used the cash to elect allies to legislative seats, win the speaker’s post and then pass a $1.5 billion bailout bill for the company.

Wetzel, who learned the political ropes as a legislative staffer at the Michigan House of Representatives, provided a meticulous money trail and colorful quotes from secretly recorded conversations. The complaint doesn’t name the energy company but Akron-based FirstEnergy has said it has received subpoenas and is cooperating with the investigation.

Wetzel wrote that the bill’s passage was the result of a “corrupt bargain.” This story examines how the alleged scheme came together, according to the criminal complaint.

The documents details a Sept. 23, 2019, dinner club gathering, saying lobbyist Neil Clark acted coy as he explained his strategy to shut down a petition-gathering effort to prevent the recently passed House Bill 6 from taking effect. At the table for the profanity-laden, secretly recorded conversation was Householder and others working to protect the bailout on behalf of the energy company, court records allege.

Clark allegedly said they started a new tactic that day: sending out 235 spotters to find people collecting petitions and then buying them off, offering them $2,500 and a plane ticket to quit their jobs. Other parts of the effort included flooding the airwaves with ads scaring people out of signing petitions by claiming it was a subversive effort by the Chinese.

“If we knock off 25 people, collecting signatures, it virtually wipes them out in the next 20 days; this ends the whole (expletive) thing, ends it,” Clark said.

The complaint says Householder interrupted: “It is so important, it is so important, that they are not successful, because when the legislature votes on something, it needs to stay law.”

ExploreTimeline of House Bill 6, at root of racketeering case

The court records say Householder had reason to be concerned. The company had provided Householder and his allies millions of dollars, court records allege, allowing him to ascend to speaker by throwing money behind candidates who backed him.

Householder also allegedly benefited personally: $300,000 to pay off a lawsuit settlement, over $100,000 to pay costs associated with his Florida home, at least $97,000 to pay expenses for his 2018 Ohio House campaign.

In exchange: the company got its bailout funded by Ohio utility customers, court records allege.

Former Ohio Republican Party chairman turned lobbyist Matt Borges called it an “unholy alliance,” as he tried to bribe someone from the petition-gathering effort to leak insider information, court records say; the person he tried to bribe ended up recording conversations for the FBI.

Rise to power

Householder returned to the Statehouse in 2017 after a decade-long absence. As he clenched re-election, aide Jeffrey Longstreth in October 2016 drew up a memo titled “Game plan 2018” about how Householder could take back the speaker’s gavel.

“The only things that matter right away are raising money and recruiting candidates,” it says, suggesting they “hit the ground running with a ( c)(4) working as the recruitment and fundraising arm.”

The memo notes that then-Speaker Cliff Rosenberger, R-Clarksville, had a wealthy financial backer and they needed one, too.

At the same time, FirstEnergy’s nuclear generation future “looked grim,” the court document says. A weak financial market, poor forecast demands and hundreds of millions of dollars in losses had them looking for a legislative fix, the company said in a November 2016 report to shareholders. But initial attempts failed to pass.

In January 2017, Householder and one of his five sons took a ride on the FirstEnergy jet to attend President Trump’s inauguration.

The following month, Longstreth formed a 501(c)(4) called Generation Now. As a 501(c)(4), the organization was tax-exempt and committed to promoting the common good, according to IRS rules. It also didn’t have to disclose its donors.

“It’s a secret, a (c)(4) is a secret. Nobody knows the money goes into the speaker’s account. It is controlled by his people, one of his people, and it’s not recorded. A (c)(4) is non-recorded,” Clark said in a recorded conversation in mid-2019 quoted in the criminal complaint.

ExploreProsecutors: Dark money controlled by Householder influenced local Statehouse election

From March 2017 to March 2020, FirstEnergy and its entities allegedly paid Householder’s Enterprise $60,886,835.86. They weren’t the only ones. A January 2018 recorded conversation referenced in the criminal complaint makes reference to a payday lending company owner cutting a $25,000 check and “another industry” paying $30,000.

“The millions paid are akin to bags of cash — unlike campaign or PAC contributions, they were not regulated, not reported, not subject to public scrutiny — and the Enterprise freely spent the bribe payments to further the Enterprise’s political interests and to enrich themselves,” Wetzel wrote.

Most of the FirstEnergy money went to Generation Now. But the complaint also references others with names like “dark money group” and “front company” that were also involved — along with the private companies owned by Longstreth and Borges.

The complaint says most of these entities were controlled by Householder.

About this story

This story is the first in a two-part series detailing how federal prosecutors say Ohio House Speaker Larry Householder illegally used nearly $61 million from an Akron-based utility company to build his power base, get elected speaker and pass an energy bill to benefit the company.

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