CINCINNATI (AP) – A branch of FirstEnergy Corp. ‘bleeded money’ as she explored options for the two aging nuclear plants ultimately saved by Ohio House legislation that federal prosecutors say former President Larry Householder defended in exchange for bribes -company wine, a utility executive testified on Tuesday.
Steven Staub, the company’s vice chairman and treasurer, told jurors on day two of Householder’s bribery trial that electricity prices had gotten so low in the years before the bill passed in 2019 that the Davis-Besse and Perry power plants in northern Ohio couldn’t cover the costs, let alone make a profit.
“The company was just bleeding money,” Staub said in response to questions from Assistant U.S. Attorney Matthew Singer.
Staub said factories don’t contribute anything to the company’s bottom line, but consume 90% of executives’ time. Meanwhile, FirstEnergy shareholders were pressuring the company to exit the unprofitable unregulated power generation business altogether, he said.
FirstEnergy’s dire financial situation at the time of the alleged bribery scheme was among the issues raised in day two testimony as federal prosecutors argued their case against Householder and lobbyist Matt Borges, former Ohio Republican Party Chairman, before the US District Court.
Another set of questions focused on the limits placed on the operations of 501(c)4 nonprofit groups, often referred to as “dark money” groups because they can accept unlimited contributions and are not required to report donors.
An indictment alleges Householder, Borges, three others and a black money group called Generation Now orchestrated an elaborate plan, secretly funded by FirstEnergy, to secure Householder’s power, elect his allies, pass legislation containing a $1 billion bailout for the two nuclear plants and then sabotaging an effort to overturn the bill by staging a referendum on the Ohio state ballot. The arrests took place in July 2020.
As part of a deal to avoid prosecution, Akron-based FirstEnergy admitted to using a network of dark money groups to fund the scheme and bribing the state’s top utility regulator. Sam Randazzo, then chairman of the Ohio Public Utilities Commission, resigned after an FBI search of his home. He has not been charged and denies any wrongdoing.
Two Householder associates, Jeff Longstreth and Juan Cespedes, and Generation Now pleaded guilty. Longstreth and Cespedes are among the witnesses scheduled to appear in the trial, which could last six weeks. A third defendant who pleaded not guilty committed suicide.
Charles Walker, an expert on nonprofits for the Internal Revenue Service, told jurors on Tuesday that 501(c)4 organizations are social welfare organizations whose efforts should benefit the community at large. They are not permitted to be used for private gain or for the benefit of anonymous insiders or outsiders with inordinate control over their operations, he said.
Householder’s attorney asked Walker to clarify: Could dark money groups legally accept unlimited donations, support political candidates, lobby for causes, and pay their own employees? Walker said yes – but only as long as they meet those other requirements.
Assistant U.S. Attorney Emily Glatfelter spent much of the afternoon seizing tens of thousands of documents from the court filing, including business records from a slew of nonprofits, bank statements, photos, legislative documents, videos, and recordings of calls to and from Householder’s home phone. .
Blane Wetzel, the FBI agent in charge of the Householder case, began his testimony on Tuesday by detailing the evidence gathered by the government against the parties.
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