‘Too much money, too much power.' How prosecutors say Householder used an energy company’s millions to seize control

Credit: Sarah Franks

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

Credit: Sarah Franks

EDITOR’S NOTE: This story is the second 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 1.

Wielding a multimillion-dollar war chest funded by an Akron-based energy company, Republican Larry Householder engineered his return to power as the Ohio House speaker in January 2019, according to a criminal complaint unsealed this week in federal court.

Through the 501(c)(4) nonprofit Generation Now, Householder and his allies threw more than $1 million into media buys and mailers to support 21 different Ohio House candidates whom they believed would vote for Householder as speaker, court records say. Most of the Team Householder candidates won the 2018 general election. All of them voted for Householder as speaker.

Then it was Householder’s turn to deliver on his end of what FBI Agent Blane Wetzel called a “corrupt bargain” with the energy company, according to the complaint.

ExploreHere’s how feds say largest bribery scheme in Ohio was orchestrated

Called “Company A” in the complaint, FirstEnergy benefited from the $1.3 billion state bailout for nuclear power plants in House Bill 6. FirstEnergy said in a statement it has received subpoenas and is cooperating with the investigation.

Federal prosecutors allege a complicated conspiracy that they say went like this: Company A funneled nearly $61 million to Generation Now, a dark money group created by Householder’s longtime political strategist Jeff Longstreth in March 2017; Householder controlled Generation Now and its cash; he and his allies used the money to elect pro-Householder legislators, win the speakership, pass HB6, and defend the new energy law from a referendum attempt.

Householder, Longstreth, former Ohio Republican Party Chairman Matt Borges and lobbyists Neil Clark and Juan Cespedes are each charged with racketeering.

“On April 12, 2019, just three months after Householder became speaker with help of Company A bribe payments, HB 6 was introduced by two freshmen, ‘Team Householder’ representatives,” the complaint says. The primary sponsors were Jamie Callender and Shane Wilkin.

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The controversial bill drew opposition from consumer advocates, environmental groups, free market think tanks and competing energy companies that use oil and natural gas to generate power.

Backers of the bill allegedly created a $15 million media campaign to provide “cover” for supporters and browbeat opponents. The campaign framed the bill as a way to protect Ohio jobs from “big oil.”

“Call Representative (redacted) and tell him to have the courage to support House Bill 6 and save 4,000 jobs, just like you would want him to fight to protect yours,” one mailer said.

It worked, the criminal complaint says: “I am sitting in my office listening to my constituent aide explain to repeated callers today why I didn’t have ‘the courage” to vote ‘yes,’” one lawmaker angrily texted to Longstreth.

Wetzel wrote he was interviewing another state lawmaker in May 2019 when the lawmaker received a text from Householder saying, “I really need you to vote yes on HB 6, it means a lot to me. Can I count on you?”

The lawmaker told Wetzel that Clark had warned him that standing in Householder’s way would likely mean the lawmaker would lose committee seats, financial help and the ability to pass legislation. But the lawmaker told Householder he opposed the bill.

Neil Clark
Neil Clark

“I just want you to remember — when I needed you — you weren’t there, twice,” Householder immediately texted back, the complaint says.

The next day, HB 6 passed. All but two of the representatives Householder helped get elected voted for the bill.

The lawmaker Householder threatened was later told he could be forgiven for not voting for HB 6 if he deleted the text messages from Householder, the complaint says; the lawmaker instead turned them over to the FBI.

Generation Now then mounted a $7 million campaign to pressure Ohio senators to pass the legislation with even more ad, the complaint says; even Householder tired of the commercials.

“I’m just sick of seeing that poor (expletive) drive that pickup truck down the road and cry about losing his job. Which means it’s burnt in,” he wrote in a June 2019 text to Longstreth describing the TV ad, the court document says.

HB6 passed the Ohio Senate on July 17, 2019, by a 19-12 vote and the House agreed with Senate changes on July 23 on a 51-38 vote. Gov. Mike DeWine signed it into law the same day.

From February 2017 to July 2019, Householder had 84 phone contacts with the energy company’s CEO, 14 with a subsidiary’s vice president of external affairs, and 188 with the utility’s Ohio director of state affairs, the complaint says.

In a recorded meeting in June, Clark noted that Householder wasn’t the first Ohio official to receive money from FirstEnergy through a 501(c)(4), but the other official didn’t deliver.

“Clark concluded that he wanted to be around politicians like Householder who ‘will go to the wall, but those guys that go to the wall can only do it once or twice a year because if they do it all the time everybody knows they’re pay to play,’” the complaint says. “Clark explained the only way politicians get exposed for pay to play is through ‘stupidity’ or ‘people who get aggrieved leak it.’”

‘Too much power’

Even before it won final passage, opponents of HB6 were getting ready to launch a referendum to ask voters to block the new law from taking effect. While Ohioans have had the right of referendum since 1912, it isn’t an easy lift.

The referendum campaign, Ohioans Against Corporate Bailouts, had 90 days to gather at least 265,744 valid voter signatures collected in half of the state’s 88 counties.

And the group faced a fierce counter-campaign — orchestrated and funded by Householder’s Enterprise, federal prosecutors say.

ExploreWith millions at stake, fight over energy bill takes ugly turn

One idea was to hire all the firms that collect signatures and pay them to do nothing so the opponents couldn’t hire them.

“Let’s just get all the signature firms hired tomorrow,” Cespedes wrote Longstreth on June 27, 2019, the complaint says. “If I need to up the budget, I will.”

Generation Now spent $549,240 over the course of seven days to hire national petition collection firms so they wouldn’t be available to work for the referendum side, the complaint says.

Because reports in the Dayton Daily News and other media outlets had drawn too much attention to Generation Now, a for-profit company called “Front Company” was formed in July to lead this effort with $23 million funneled through Generation Now, the complaint says.

“We call Company A ‘the bank’ because they can do, they can do, they can fund these things for 20 years if they want to … they’ve got too much money, too much power,” Clark said in a recorded July 2019 conversation, quoted in the complaint.

This money paid for an ad campaign accusing HB 6 signature collectors of being criminals and agents for the Chinese government.

“In the coming weeks, don’t give the Chinese government your personal information, email, cellphone, address or sign your name on their petition,” one mailer says.

Another flier accused signature collectors of being criminals. Clark allegedly explained at a recorded September 2019 dinner party that they conducted background checks on 150 of them and 15 had prior arrests; Householder thought it was hilarious.

That same month, Borges offered a $15,000 bribe to an insider at the referendum campaign in exchange for insider information — how many signatures they had, the complaint alleges. The insider turned it down and Borges told him: “No matter what — don’t ever tell anyone about our conversation from earlier.”

Ohio GOP Chairman Matthew Borges leaves U.S. District Court on Tuesday, July 21, 2020, in Columbus after an appearance on charges he participated in a racketeering conspiracy.
Ohio GOP Chairman Matthew Borges leaves U.S. District Court on Tuesday, July 21, 2020, in Columbus after an appearance on charges he participated in a racketeering conspiracy.

Credit: David Jablonski

Credit: David Jablonski

The insider, though, called the FBI and in subsequent meetings with Borges, wore a wire.

Front Company in October 2019 paid another company to start contacting signature collectors and offering them $2,500 buyouts, which the criminal complaint calls bribes.

“The Enterprise’s efforts were a success,” the complaint says. The referendum fell short of the signatures needed and time ran out.

ExploreOhio AG investigates new allegations in fight over energy bill referendum

Householder said in an Oct. 21 press release: “I am pleased that House Bill 6 will go into effect at midnight tonight and am confident it will produce positive results for Ohio.”

The next day, another $3 million was pumped into Generation Now, the complaint alleges, some of which personally benefited Householder and Longstreth. About $20,000 allegedly paid off Householder’s credit card debt this year.

Millions more was allegedly transferred this year to Generation Now, which funneled more than $1 million into political efforts in the 2020 primary — continuing the alliance’s out-sized influence on Ohio politics until charges were brought last week.

EDITOR’S NOTE: This story is the second 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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