Corruption Tax: The HB 6 Scandal Explained
Gov. Mike DeWine’s Central Role in the Largest Corruption Scandal in the Country
Updated December 2021
Summary
In July 2020, the FBI arrested the GOP Speaker of the Ohio House, Larry Householder, and four well-connected Republican lobbyists and campaign consultants. They faced federal racketeering, bribery, and money laundering charges. Two of them — Juan Cespedes and Jeff Longstreth — have since pleaded guilty. A third, superlobbyist Neil Clark, died by suicide.
At the heart of the scandal is House Bill 6 — a 2019 law, supported and signed by Governor Mike DeWine, that provided FirstEnergy, an Akron-based utility, a $1.3 billion dollar bailout paid for by new fees placed on every Ohioans’ electric bills (even those who did not receive electricity from FirstEnergy). The bill also eliminated Ohio’s clean energy standards and provided additional bailouts for two coal plants owned primarily by AEP, another Ohio utility.
In July 2021, FirstEnergy entered into a federal deferred prosecution agreement in which it admitted to paying $61 million in bribes to Householder and entities he controlled to build his political power and pass House Bill 6, as well as to bribing a DeWine’s top utility regulator. Texts published in the agreement show that FE executives worked closely with DeWine administration officials to financially and legislatively benefit the company.
The $61 million in bribes was moved through a series of campaign accounts, 501(c)4’s, and super PACs and used to elect enough of Householder’s allies to make him Speaker, pressure lawmakers to pass HB 6, and then stop a ballot initiative to repeal the bill.
Importantly, the scandal expanded beyond just Householder. FirstEnergy and others associated with the scandal gave gratuitously to the Ohio Republican Party and other GOP politicians, especially Gov. Mike DeWine. Since 2017, FirstEnergy sent at least $1 million to groups and campaigns supporting DeWine. DeWine supported HB 6, signing the bill within hours of it reaching his desk, all while filling his administration with former FirstEnergy lobbyists with connections to the scandal.
One of DeWine’s appointments included Sam Randazzo, a FirstEnergy lobbyist, to be the Chair of the Public Utility Commission of Ohio — the top utility regulator in the state — following a dinner with FirstEnergy’s CEO and ignoring warnings from his own allies about the appointment. Randazzo resigned following an FBI raid on his Columbus home.
FirstEnergy has admitted that Randazzo received a $4.3 million bribe from the company in return for taking actions in his role as PUCO Chair to aid the company, including helping to write and pass HB6 and hand the company a huge regulatory win. DeWine’s Chief of Staff, a former FirstEnergy lobbyist, admitted she was notified of the bribe by Randazzo before the FBI raid but questions remain about when DeWine was made aware. Regulators are continuing to investigate his actions while in office.
DeWine also admitted to successfully asking FirstEnergy to contribute hundreds of thousands of dollars to a super PAC supporting his daughter’s campaign for local office in the midst of the HB 6 fight, despite having no clear stake in her race.
Under public pressure, the GOP-controlled legislature repealed some, but not all, of the bill — many of the worst aspects remain intact. Despite the indictment, Householder remained a member of the House until June 2021.
While awaiting trial, lobbyist Neil Clark died by suicide while wearing a “DeWine for Governor” t-shirt. He posthumously published a book that included allegations against many Ohio Republicans, including DeWine, who Clark accuses of taking $5 million from FirstEnergy in exchange for supporting the bailout and appointing Randazzo.
DeWine and others have not provided adequate explanations for their actions or taken any serious steps to deal with this unbelievable corruption, which the FBI has called the biggest scandal in the country.
FirstEnergy and House Bill 6
Speaker Householder
For years, FirstEnergy, the primary utility in Northeast Ohio, had sought a state bailout of two of its failing nuclear power plants. In State Rep. Larry Householder, they finally found a willing partner. Householder had previously served as House Speaker in the early 2000s, before leaving under the cloud of an FBI investigation around shaking down campaign donors.
Now, as the 2018 elections approached, he was angling to become Speaker once again, but he lacked the votes. The outgoing, term-limited speaker, Cliff Rosenberger (who also resigned over a different FBI investigation), and his allies were supporting Rosenberger’s deputy, Rep. Ryan Smith. Rather than convince his colleagues, Householder decided to hand pick them.
He and his allies created a 501(c)4 — Generation Now — and a super PAC — Growth and Opportunity PAC — that were funded by FirstEnergy and supported pro-Householder candidates in Republican primaries. In November, they replicated the same approach, using dark money funnelled through a series of entities, including Hardworking Ohioans Inc., to defend vulnerable Republicans during a Democratic wave year. All of this spending took advantage of broken campaign finance laws that allowed FirstEnergy to remain anonymous at the time.
It worked. In December 2018, Householder secured enough votes to become Speaker thanks to millions of dollars in dark money from FirstEnergy and other energy companies.
House Bill 6
Householder quickly returned the favor. In early 2019, several of his allies introduced House Bill 6: legislation that would provide a ratepayer-funded bailout of two nuclear power plants owned by FirstEnergy Solutions (which had been spun off from FirstEnergy but remained linked). Without evidence, FirstEnergy said the plants would have to be shut down without such a bailout.
Throughout the spring of 2019, opposition to the bill grew from both Republicans and Democrats. FirstEnergy began to spend heavily via Householder’s group, Generation Now, and other dark money groups to pressure lawmakers.
Eventually, to secure enough votes, Householder made the bill even worse. To satisfy extreme Republicans, he included language to eliminate Ohio’s clean energy standards, effectively gutting the growing industry in Ohio. An additional bailout was also added for two aging coal plants owned primarily by AEP, one of which is in Indiana. A new monthly fee would be added to every electric bill in the state, regardless of whether the individual or business actually received service from FirstEnergy or the coal plants. These fees are a corruption tax paid by Ohio families and small businesses to corporations that bought themselves a bailout.
It was an all-hands-on-deck approach. During one critical vote, several supportive members were at a conference in Chicago. Gov. DeWine approved the use of a state plane to get them back to Columbus. Bob Paduchik, who is now the Chairman of the Ohio Republican Party, but was then Trump’s senior campaign advisor in Ohio, made calls to House members tying HB 6 to Trump’s re-election.
The bill passed both chambers in July 2019 and was quickly signed by Gov. Mike DeWine.
Referendum
Almost immediately, a broad coalition began an effort to use Ohio’s ballot initiative process to repeal the bill. Early polling showed the bailout to be incredibly unpopular, but the referendum group only had 90 days to collect more than 250,000 thousand signatures.
Householder and FirstEnergy did everything they could to stop the effort. They hired teams of lawyers to slow down the process and fight every procedural point. They spent tens of millions of dollars on direct mail, TV, and radio ads claiming that the recall effort would hand over Ohio’s electric grid to the Chinese government. They hired staff to act as “blockers” and follow petition gatherers and scare away potential signers. They paid signature collection firms to sit out the campaign. They even tracked down the personal information of paid petition gatherers and offered them thousands of dollars to quit their jobs and leave Ohio.
Given all these challenges, the referendum campaign was unable to gather a sufficient number of signatures by the deadline.
Indictments
Following his HB 6 victory, Householder was the most powerful politician in Ohio. He became a strong opponent of COVID-19 regulations and there was open speculation he’d oppose Gov. DeWine or Lt. Gov. Jon Husted in a GOP primary.
Rather than fund the GOP House caucus campaign committee, all funds ran through his personal committee. Despite facing no real threat to his speakership, his FirstEnergy-funded dark money groups spent heavily to help his preferred candidates in GOP primaries.
It all came to a screeching halt on July 20, 2020. The FBI arrested Householder, lobbyists Neil Clark, Juan Cespedes, and Matt Borges, as well as political consultant Jeff Longstreth. They were charged with racketeering, money laundering, and bribery. The U.S. Attorney called it the largest corruption scheme in Ohio history.
A number of informants and undercover agents had helped the FBI piece together the plot: $61 million in campaign funds to build Householder’s personal political power in exchange for the HB 6 bailout. The charging documents revealed that Clark, Cespedes, and Borges had helped move millions of dollars, threaten lawmakers and campaign operatives, and offer bribes. Householder and Longstreth orchestrated it from a corrupt idea to a bill on Mike DeWine’s desk, breaking numerous campaign finance regulations along the way.
The indictments also made clear that this was bigger than just HB 6: Householder and his team were actively following a similar approach with a number of other industries — exchanging legislation for huge dark money donations.
Mike DeWine’s Central Role
Householder could not have done all of this on his own. The entire Ohio GOP establishment, including Mike DeWine, was complicit in this scandal. A full accounting of donations related to the scandal can be found here.
2018 Campaign
Over his career, Mike DeWine has received hundreds of thousands of dollars in contributions from individuals and entities associated with this scandal.
In October 2018, as polling showed a tight race, DeWine attended a Republican Governors Association fundraiser at which FirstEnergy executives were present. The next day, FirstEnergy wrote the RGA a $500,000 check (additional money may have moved to DeWine’s dark money group, Securing Ohio’s Future via the RGA’s dark money group — State Solutions).
Interestingly, Securing Ohio’s Future also received FirstEnergy money in 2019, after DeWine’s election. During the HB 6 repeal fight, it reported spending tens of thousands of dollars on “voter contact.”
Randazzo and the Public Utility Commission of Ohio
In December 2018, DeWine and Lt. Gov. Jon Husted had dinner with FirstEnergy CEO Chuck Jones as they were making staffing decisions for their administration.
In early 2019, DeWine appointed Sam Randazzo, a long-time FirstEnergy lobbyist and renewable energy opponent, to lead the Public Utility Commission of Ohio, the state’s top utility regulator. One of DeWine’s political advisors reached out to warn him that Randazzo may be compromised, but this warning was ignored by Chief of Staff Laurel Dawson, whose husband is a FirstEnergy communications consultant. During his confirmation hearings, Randazzo lied about his financial relationship with FirstEnergy.
Just two weeks after Randazzo was appointed, and one day before HB 6 was introduced, DeWine hosted Randazzo and Householder at the governor’s residence for an “energy discussion.”
As PUCO Chair, Randazzo consistently ruled in favor of FirstEnergy and other utilities and against consumers. He also secretly advised Householder and DeWine’s staff about HB 6, helping to write the bill itself.
In November 2020, the FBI raided Randazzo’s home. DeWine defended him, saying such a raid didn’t necessarily mean anything. Days later, Randazzo resigned. It came to light that he had failed to disclose a $4 million “consulting fee” from FirstEnergy paid immediately before he was appointed. He notified DeWine’s Chief of Staff, Laurel Dawson (who is married to a FirstEnergy consultant) weeks before the raid of the payment, but no action was taken.
In July 2021, FirstEnergy entered into a deferred prosecution agreement in which they admitted to paying $61 million in bribes to Householder as well as a $4.3 million bribe to Randazzo. Copies of texts in the agreement showed that FirstEnergy executives were directly coordinating with both Randazzo and other DeWine administration officials both to pass HB 6 and secure other lucrative kickbacks for the company.
Individuals strongly resembling DeWine and Husted are named as “Public Official 1” and “Public Official 2” in the agreement and described as taking actions on behalf of FirstEnergy.
Other FirstEnergy Connections in DeWine’s Administration
In addition to Randazzo, DeWine’s senior staff have incredibly close ties to FirstEnergy. His Legislative Director from 2019 to 2021 was Dan McCarthy, was a longtime lobbyist for FirstEnergy and founded Partners for Progress, FirstEnergy’s 501(c)4 entity that moved $20 million to Householder.
DeWine’s former Chief of Staff (now Counsel), Laurel Dawson, previously worked at one of FirstEnergy’s primary lobbying firms. The firm’s founder, Josh Rubin, is a major DeWine fundraiser and member of his kitchen cabinet. DeWine’s campaign communications director now works at the firm and lobbies for FirstEnergy. Dawson’s husband, Mike Dawson, is also a communications consultant for FirstEnergy.
DeWine has also appointed numerous FirstEnergy executives and lobbyists to various state boards of trustees.
DeWine has ignored calls to fire his staff linked to the scandal.
Super PAC Supporting Alice DeWine
DeWine has admitted that sometime around September 2019 — during the HB 6 referendum fight — he approached FirstEnergy about funding a super PAC for his daughter, who was running in 2020 for Greene County Prosecutor. Despite having no clear interest in the race — FirstEnergy doesn’t provide electricity to Greene County — the company complied. They donated several hundred thousand dollars (some of which passed through DeWine’s organization Securing Ohio’s Future) to a dark money group supporting Alice DeWine. This contribution accounted for nearly all the funding the dark money group received.
Alice DeWine’s dark money nonprofit, Protecting Ohio’s Future, was founded by DeWine’s former staffer and used identical consultants and lawyers as her father’s group, Securing Ohio’s Future. Despite the massive spending, she lost the GOP primary.
Where Things Stand
Two of Householder’s cronies, Juan Cespedes and Jeff Longstreth, have pleaded guilty to the federal charges. Generation Now, the dark money group, has also pleaded guilty via Longstreth. They admitted to the crux of the FBI’s allegations: FirstEnergy used dark money donations to bribe Householder in exchange for House Bill 6.
Neil Clark died by suicide in Florida in March 2020 while wearing a “DeWine for Governor” t-shirt. His estate has subsequently published a tell-all memoir that includes bombshell allegations against many GOP elected officials. Most concerning is a claim that DeWine entered into a quid pro quo agreement with FirstEnergy officials to support the bailout and appoint Randazzo in exchange for $5 million in campaign support.
In a sign of how much power he continues to wield over House Republicans, Householder was not expelled from office until June 2021 — serving nearly 11 months while under federal indictment.
House Bill 6 was blocked from going into effect by several lawsuits. While the GOP controlled legislature has repealed the portions related to FirstEnergy, Ohioans are still paying a monthly fee to bail out two failing coal plants, one of which is in Indiana.
FirstEnergy admitted to their role in the scandal and agreed to pay a $230 million fine. Individuals described in the deferred prosecution agreement are believed to be DeWine, Husted, and a number of their staffers.
In November 2021, while facing a shareholder lawsuit over the scandal, two former FirstEnergy executives named Husted and several DeWine confidants as persons with information pertinent to their defense.
Neither Randazzo nor any FirstEnergy executives have yet to be indicted. Householder and Borges face trial in 2022.
The federal investigation is ongoing.
