On October 10, 2018, the then Rep. Larry Householder met with lobbyists representing a subsidiary of FirstEnergy in the offices at 65 E. State St. that Householder shared with the 501(c)(4) dark money group. One of the lobbyists, Robert F. Klafky, slipped an envelope containing a $400,000 check across the table and into Householder’s arm as they discussed the bailout requested by a subsidiary of FirstEnergy Services, another lobbyist, Juan Cespedes, testified Monday.
Cespedes, a co-defendant with Householder, later pleaded guilty and agreed to cooperate with federal prosecutors in a racketeering trial against the former Ohio House speaker and Matt Borges, a lobbyist and former chairman of the Ohio Republican Party. They are accused of being part of a scheme to use $61 million — much of it from FirstEnergy — to make Householder speaker and then funnel $1.3 billion in aid to nuclear and coal plants, most of which were owned by FirstEnergy Services.
In the weeks leading up to the trial, Cespedes’ testimony Monday marked the first time a co-defendant or witness with immunity has testified.
It appears that part of the prosecution’s goal was to show that Householder’s behavior was not just politics as usual, as the defense attorneys argued. Instead, they wanted to show the apparent quid pro quo: that Householder worked for the energy bailout in apparent exchange for a mountain of political money that FirstEnergy funneled into a dark money group he controlled.
Prosecutors appear to have strong legal grounds for doing so. In 2016, Art US Supreme Court unanimously overturns bribery charges against former Virginia Gov. Bob McDonnell and his wife because the court found that the prosecution did not do enough to show that the governor committed an “official act” in exchange for the $170,000 in gifts they received from the businessman.
On Monday, Cespedes described how he was hired under contract by FirstEnergy Services in 2018 to investigate why a relief bill failed to pass that year’s legislative session. He was also tasked with finding out what could be done to move one into the next.
Cespedes estimated that Householder, who sought to become speaker in the 2019 House session, would be more sympathetic to the campaign’s needs than then-Speaker Ryan Smith, who is also a Republican.
At the Aug. 1, 2018, meeting, Householder told FirstEnergy Services lobbyist Klefka that he needed “several hundred thousand dollars” to help him pick a slate of lawmakers so they could make him speaker, Cespedes revealed. Klafki “pushed back and said, ‘This is a bankrupt company,'” Cespedes said, explaining that his team would have to find another mechanism to get Householder the money he needed without bad optics.
Ultimately, much of it would go through Generation Now, the dark money group that Householder controlled and was not required to disclose where its money came from.
After the meeting, FirstEnergy officials decided they would initially give Householder $500,000, but Klafky said they would split it into payments of $400,000 and $100,000.
“I think the amount was a lot more than (Houseland) expected,” Cespedes said.
That’s how Householder got his first $400,000 in an informal State Street office that Householder shared with Generation Now. Lobbyists for FirstEnergy Services withheld the remaining $100,000 “because we wanted another chance to get in front of him and show our support,” Cespedes testified.
He explained that it was important to his team that there was no confusion.
“We tried to establish the fact that our support was specifically related to the legislation,” Cespedes said.
It seems likely that Assistant U.S. Attorney Matthew Singer obtained the testimony to show that Householder took what turned out to be millions of FirstEnergy dollars into a Generation Now account specifically in exchange for the passage of bailout legislation, the kind of official act that the Supreme court, was not demonstrated in the McDonnell case.
Another part of Cespedes’ testimony seems to demonstrate that some of those involved in the rescue drama thought what they did might have been sad.
In early 2019, Pat Tully was a senior policy adviser for the state’s utility regulator, the Public Utilities Commission of Ohio, when he sent his resume to an official of the company he was supposed to regulate, FirstEnergy lobbyist Ty Pine. Pyne referred him to Householder’s political strategist, and Talley soon became senior energy adviser to the House Republican caucus.
There was testimony Friday about how Talley and PUCO Chairman Sam Randazzo worked together on bailout legislation although it would be inappropriate for a top government regulator to be involved in such a project. But even more suspicious is that Randazzo took $4.3 million from FirstEnergy just as Gov. Mike DeWine appointed him chairman of the commission, according to the deferred prosecution agreement.
On Monday, Cespedes described how he also worked with Talley on the legislation, House Bill 6.
“Mr. Talley didn’t want to have an email or an electronic trail of us sending information back and forth,” a FirstEnergy Services lobbyist testified, explaining how they exchanged dozens of hard copies of the legislation.
“I thought it was very strange behavior,” Cespedes said. “But I understood why.”
Originally published Ohio Capital Journal. Republished here with permission.