Federal officials on Tuesday unraveled details of a years-long conspiracy involving Ohio House Speaker Larry Householder, who prosecutors say headed a scheme that funneled $60 million in bribes through a dark money group in order to pass a billion-dollar bailout for Ohio's nuclear power plants.
As laid out in the federal complaint, Householder is charged with accepting payments from the dark money group Generation Now for his personal benefit and to help advance his political career, in exchange for securing the passage of HB6.
That law, which was passed by Republicans in the Ohio legislature and signed into law by Gov. Mike DeWine last year, increases energy charges for customers and businesses in order to send $150 million a year to subsidize nuclear plants owned by FirstEnergy Solutions.
The complaint alleges that when opponents of the bailout sought to reverse the law through a referendum, Householder's "enterprise" then spent millions buying advertisements, mailing flyers, and bribing ballot collectors in order to protect the bailout, while concealing the origin of the money behind their campaign.
At a press conference Tuesday afternoon, U.S. Attorney David DeVillers called it "the largest bribery and money laundering scheme ever perpetrated against the people of the state of Ohio." According to FBI special agent Chris Hoffman, this is the first time a racketeering charge has been used on a public official in the Southern District of Ohio.
"Make no mistake: These allegations are bribery, pure and simple," DeVillers says. "This was a quid pro quo. This was pay to play.”
Householder was arrested Tuesday morning along with longtime adviser Jeffrey Longstreth, former Ohio GOP chair Matt Borges, and lobbyists Neil Clark from Grant Street Consultants and Juan Cespedes of Oxley Group.
In response to the charges, Gov. Mike DeWine called on Householder to step down as House Speaker.
"Because of the nature of these charges, it will be impossible for Speaker Householder to effectively lead the Ohio House of Representatives," DeWine wrote in a statement. "Therefore, I am calling on Speaker Householder to resign immediately. This is a sad day for Ohio."
Attorney General Dave Yost, Secretary of State Frank LaRose, Ohio Treasurer Robert Sprague, Senate President Larry Obhof, Senate Minority Leader Kenny Yuko, House Minority Leader Emilia Sykes and a number of other legislators have joined in calls for Householder's resignation.
Householder declined to comment.
FirstEnergy Solutions, now known as Energy Harbor, filed for bankruptcy in 2018 and announced it would decommission its Davis-Besse and Perry nuclear power plants in Ohio if it didn't get some financial relief from the state. That eventually came in the form of HB6, which was passed in 2019 by the majority-Republican legislature.
After DeWine signed the bill into law, opponents launched an effort to overturn the law through the ballot and courtroom. However, those strategies failed after an expensive and often bitter campaign by dark money groups, who were accused of racism and intimidating petitioners. The law went into effect this year.
The big voice behind the pro-bailout campaign was Generation Now, a 501(c)(4) organization – an IRS designation for groups that benefit a social cause. Unlike some other organizations, they are able to spend money without disclosing donors.
Tuesday's federal complaint alleges that all the funding Generation Now received came from FirstEnergy Solutions, which was then funneled to groups controlled by Householder.
"There's a strong inference that this entity looked for somebody to bribe them," said Hoffman.
But the conspiracy began even before Householder was House Speaker.
DeVillers says that in 2018, Generation Now filtered millions of dollars from FirstEnergy Solutions to build "Team Householder," a coalition of 21 Republican candidates running in primary and general elections around the state.
In return, those legislators helped elect Householder to the speakership, and ultimately backed legislation benefiting the energy company.
"It was imperative to hide that," DeVillers says. "And that's what that conspiracy did."
Generation Now and other related entities were responsible for a flood of pro-bailout advertisements and literature, while the legislature was considering HB 6 and during the referendum effort to overturn the law. DeVillers also says the conspiracy used thousands of dollars to bribe ballot collectors and make sure that signature-collecting services couldn't help anti-bailout groups.
The money from FirstEnergy Solutions also went into the pockets of the defendants, including at least $500,000 directly to Householder, who allegedly used the money to settle a lawsuit and pay for a house in Florida.
When it comes to politics, 501(c)(4) groups face significant restrictions. DeVillers explains Generation Now broke many of them.
"It is not and cannot financially benefit a shareholder or individual. In this case, it did," DeVillers said. "Political activity cannot be its primary activity. In this case, it was. And it cannot intervene politically in a political campaign on behalf or against any candidate, and in this case it did."
Behind The Conspiracy
Charges against Householder and his associates were laid out at a U.S. District Court hearing on Tuesday afternoon.
Householder faces a charge of conspiracy to commit racketeering, which is punishable by up to 20 years in prison and a $250,000 fine. As a condition for his release, U.S. District Judge Stephanie K. Bowman ordered that Householder must remove firearms from his home by 5 p.m. Wednesday.
Householder will have his travel limited to the Southern District of Ohio, and must avoid contact with any potential victims, witnesses or defendants.
Borges and Longstreth also face a charge each of conspiracy to commit racketeering, and will have similar release limitations. All are required to surrender firearms in their homes. Cespedes is charged with conspiracy to participate in racketeering.
In addition to the charges against individuals, federal prosecutors are bringing a separate case against Generation Now, which is charged with conspiracy to participate in enterprise affairs through racketeering.
No charges have been filed yet against Energy Harbor (formerly known as FirstEnergy Solutions), which is most likely the entity identified as "Company A" in the federal complaint.
However, DeVillers says their investigation isn't over.
"We are not done with this case," he said. "There are things we couldn't do before, people we couldn't interview, people we couldn't subpoena, documents we couldn't subpoena, search warrants we couldn't execute because if it got back to the enterprise, everything would've shut down."
DeVillers says that prosecutors' next step is to secure an indictment from a federal grand jury. A preliminary hearing in the case is set for August.
Who Is Householder?
Householder, a Republican from Glenford, first served as Ohio House Speaker from 2001-2004, but stepped down due to the term limits. After working as the Perry County Auditor, Householder returned to the Ohio House in 2017.
Householder's second rise to the Speaker position was also predicated on scandal: the resignation of then- Speaker Cliff Rosenberger, who came under an FBI investigation into his dealings and travel with payday loan lobbyists.
State Rep. Ryan Smith (R-Bidwell) was then elected to take Rosenberger's place. But in January 2019, after months of in-fighting among Republicans, Householder ousted Smith with the support of House Democrats and took back his top spot in the chamber.
This also is not the first bribery accusations against Householder. In March 2004, an anonymous memo surfaced that accused Householder and two aides of bribery and kickback schemes involving campaign vendors. The memo was turned over to the FBI, but the Justice Department declined to prosecute Householder.
Householder also had to return thousands of dollars in improper county Republican Party donations as he was building support for his run for Speaker in 2018.