Utility to pay $100 million for involvement in Ohio bribery scheme

FirstEnergy Corp., an energy company entwined in a significant $60 million bribery scandal in Ohio, has been ordered by the U.S. Securities and Exchange Commission (SEC) to pay a substantial civil penalty of $100 million. This action results from allegations of misleading investors regarding the company’s involvement in the scandal.

The SEC asserts that FirstEnergy violated antifraud provisions. Notably, it misrepresented its role in the political corruption scheme and failed to reveal associated payments. A cease and desist order indicated that the former CEO of the utility company made “a series of misrepresentations to investors,” both through a news release and during a July 2020 earnings conference call.

This penalty comes shortly after FirstEnergy reached an agreement to pay $20 million in order to avoid criminal charges as part of a settlement with state prosecutors. This bribery scheme has already led to a significant prison sentence for a former Ohio House speaker, who was a key figure in the orchestrated efforts surrounding the scandal.

The core of the scheme involved FirstEnergy’s attempts to persuade state lawmakers to approve a $1 billion bailout for two of its nuclear plants, as well as to shield this bill from any repeal efforts. These actions were pivotal in the larger narrative of corruption involving political figures in Ohio.

Brian Tierney, the President and CEO of FirstEnergy, expressed satisfaction with reaching a settlement with the SEC. However, the company must pay the imposed penalty within 14 days to avoid incurring additional interest charges.

In connection with the ongoing investigation, two former executives of FirstEnergy—CEO Chuck Jones and Senior Vice President Michael Dowling—were indicted in April. Both were dismissed from their positions in October 2020 due to violations of company policies and the code of conduct. They have since denied any wrongdoing linked to the bribery allegations.

Among those charged in association with the scandals was Sam Randazzo, the former chair of the Public Utilities Commission of Ohio. Randazzo pleaded not guilty in both federal and state courts, but tragically passed away by suicide in April at the age of 74.

Former House Speaker Larry Householder received a 20-year prison sentence in June 2023 for his substantial role in managing the scandal. Additionally, lobbyist Matt Borges, who once chaired the Ohio Republican Party, was sentenced to five years due to his involvement.

Federal prosecutors revealed that participants in this corruption scheme utilized $60 million in covertly funded FirstEnergy resources to ensure the success of Householder’s favored Republican candidates during the 2018 elections. This funding was instrumental in Householder securing the speakership in January 2019. The money was then directed toward passing the controversial energy bill while also executing a campaign to obstruct a repeal referendum from appearing on the ballot.

In July 2021, FirstEnergy publicly acknowledged its involvement in the bribery scheme as part of a deferred prosecution agreement with the U.S. Department of Justice. Under this agreement, the company consented to pay $230 million in penalties and implement a series of reforms over the next three years to avoid facing criminal charges on federal conspiracy grounds.