FirstEnergy acknowledges wire fraud conspiracy, agrees to pay $230 million penalty

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Ohio-based utility FirstEnergy Corp. was charged federally with “conspiring to commit honest services wire fraud” on July 22 and agreed to pay a $230 million monetary penalty.

The company signed a three-year deferred prosecution agreement that could potentially result in dismissal of the single charge.

The charge and agreement stem from the U.S. Attorney’s Office’s ongoing public corruption prosecutions. In court filings, FirstEnergy admitted it conspired with public officials and other individuals and entities to pay millions of dollars to public officials in exchange for actions for FirstEnergy Corp.’s benefit.

Steven E. Strah, FirstEnergy president and CEO, said in a statement, “Moving forward, we are intently focused on fostering a strong culture of compliance and ethics, starting at the top, and ensuring we have robust processes in place to prevent the type of misconduct that occurred in the past.”

In October 2020, First Energy fired Chuck Jones as its CEO. A statement issued by a public relations firm after the plea agreement was announced said that Jones “did not engage in any unlawful activity or violate any of FirstEnergy’s policies.” The statement said that Jones “did not make or authorize any payment of any money” to any public official in exchange for any official act.

“Whether one agrees with it or not,” the statement continued, “the First Amendment and campaign finance laws allow the use of 501(c)(4) entities for appropriate political activity; allow individuals and corporations to support political candidates in a lawful manner; and allow individuals and corporations to lobby on behalf of legislation and government policies.”

The federal complaint said that the money transfers took place through an entity set up through Section (501(c)(4) of the U.S. Tax Code.

The PR firm’s statement said that Jones was “very disappointed that FirstEnergy would falsely implicate so many hard working and dedicated employees in wrongdoing who were committed to implementing the Board’s stated goals.”

Racketeering conspiracy

In July 2020, the U.S. Attorney’s Office for the Southern District of Ohio charged the Speaker of the Ohio House of Representatives, the former chair of Ohio’s Republican Party, three other people and a “501(c)(4) entity” with a federal public corruption racketeering conspiracy involving $60 million.

The politician, Larry Householder, was arrested and charged in an alleged conspiracy to pass and then defend a billion-dollar nuclear plant bailout. The U.S. Attorney’s office alleged at the time that Householder and the “entity” conspired to violate the federal racketeering statute through the use of wire fraud, receipt of millions of dollars in bribes and money laundering.

According to the criminal complaint, from March 2017 to March 2020, the “enterprise” received millions of dollars in exchange for Householder’s–and the enterprise’s–help in passing what was known as House Bill 6. The bill was described in the complaint as a “billion-dollar bailout” crafted to save two failing Ohio nuclear power plants from closing.

The defendants also allegedly worked to “corruptly ensure” that HB 6 survived a ballot initiative aimed at overturning the legislation. The “enterprise” received around $60 million from an unnamed energy company and its affiliates.

In June, state lawmakers voted 75-21 to expel Householder, who had been Speaker of the Ohio House of Representatives. Some Republicans argued that ousting him from office violated his right to due process.

FirstEnergy admission

In the most recent court filing, FirstEnergy admitted that it paid millions of dollars to an elected state public official in return for that official pursuing legislation to benefit FirstEnergy’s nuclear power plants.

The company also acknowledged that it paid $4.3 million to a second public official, who acted in their official capacity to further First Energy’s interests related to passage of nuclear legislation and other company priorities.

With 60 days, FirstEnergy must pay $115 million to the United States and $115 million to the Ohio Development Service Agency’s Percentage of Income Payment Plus Plan, a program that provides assistance to Ohioans in paying their regulated utility bills.

As part of the agreement, FirstEnergy admitted to the facts alleged in the statement of facts, which detail actions by FirstEnergy Corp. executives to pay money to public officials in return for official action. The U.S. Attorney’s office said that as a corporation, FirstEnergy Corp. is “responsible for the acts of its current and former officers, directors, employees, and agents.”

Vipal J. Patel, acting U.S. Attorney for the Southern District of Ohio, and Chris Hoffman, special agent in charge, Federal Bureau of Investigation, Cincinnati Division, announced the charge and agreement. Deputy Criminal Chief Emily N. Glatfelter and Assistant U.S./ Attorney Matthew C. Singer are representing the United States in this case.

This article was updated July 26 to reflect a statement on behalf of former CEO Chuck Jones.

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