• After Householder and Borges sentences, what — or who — comes next?
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After Householder and Borges sentences, what — or who — comes next?

By Kathiann M. Kowalski

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This monthly newsletter provides updates on Ohio’s ongoing utility corruption scandal and is a joint project of Eye on Ohio, the nonprofit, nonpartisan Ohio Center for Journalism, and the nonprofit Energy News Network.

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By Kathiann M. Kowalski

U.S. District Judge Timothy Black sentenced former Ohio House speaker Larry Householder to 20 years in federal prison and gave lobbyist Matt Borges a five-year sentence for their roles in Ohio’s House Bill 6 corruption scandal. Here’s what to expect next, plus an update on other developments:

  • Appeals by Householder and Borges will likely raise multiple issues.
  • On June 28, the Ohio Supreme Court heard arguments on whether the state should still be able to freeze some assets owned by Sam Randazzo, who formerly headed the Public Utilities Commission of Ohio. Randazzo is a defendant in the state’s civil corruption case against FirstEnergy, Energy Harbor and others. 
  • A challenge to FirstEnergy’s privilege claim for its internal investigation on HB 6 raises more questions about the company’s former employees.
  • The U.S. attorney’s office said its investigation into other individuals continues, but it’s unclear when more criminal charges might be filed.
  • HB 6 charges for two 1950s era coal plants started mounting up again on July 1. The current House speaker blocked an effort to repeal the charges.

What’s next for Householder and Borges?

Householder’s 20-year prison sentence for his role in the HB 6 corruption scheme was at the high end of the government’s requested 16- to 20-year range. Borges’ five-year sentence was at the low end of the five- to eight-year range sought by prosecutors. Householder’s lawyers had asked for just 12 to 18 months, and Borges’ lawyers asked for a sentence of one year and a day.

Householder’s sentence in particular ​“sends a strong message to Ohio politicians that politics isn’t, and shouldn’t be, a game,” said Miranda Leppla, who heads the environmental law clinic at Case Western Reserve University School of Law. ​“I hope any politician that thinks their donors’ interests are more important than their constituents thinks long and hard about their role in the statehouse and whose interests they’re supposed to serve as an elected member of the legislature.”

Both defendants ​“have the right to appeal any trial and sentencing issues they identify,” said Michael Benza, who teaches criminal law and procedure at Case Western Reserve University School of Law. ​“Clearly one of those issues will be related to the burden of proof outlined in cases from the Supreme Court like McDonnell v. United States.”

That case dealt with jury instructions on what was required to show ​“official action” by a former Virginia governor.

Notices of appeal are generally due 14 days after the court’s entry of the judgment of conviction.

Expect the defendants to raise more objections, too. Those might include:

  • Procedural issues. Among other things, lawyers for Householder and Borges might challenge whether they should have been tried together, whether the indictment was proper and other rulings.
  • Admissibility of evidence. Pretrial motions objected to different types of evidence, such as recordings of co-defendants, particularly of lobbyist Neil Clark. Clark implicated Householder and the dark money group Generation Now in talks with undercover federal agents but could not be called at trial because he died in 2021. Defendants might also challenge rulings on other exhibits, as well as whether the court should have let in more evidence about the claimed merits of HB 6, Borges’ argument that the Trump administration was biased against him, or the general use of dark money as part of business as usual in Ohio politics. 
  • Sufficiency of the evidence. Defendants will likely challenge Judge Black’s ruling that the government presented enough evidence against them to allow the case to go to the jurors.
  • Jury instructions. The defendants might object to multiple jury instructions beyond the ​“official action” issue. Householder’s lawyers wanted the court to let jurors speculate about what one witness might have said if he had been put on the stand, for example. (The person’s lawyer had indicated the witness would invoke his Fifth Amendment right against self-incrimination.)
  • Post-verdict motions. Although neither Householder nor Borges filed timely post-verdict motions, Borges might challenge a May 22 ruling denying yet more time based on two recent Supreme Court cases. The cases didn’t apply to Borges, Judge Black found.
  • Sentencing issues. The defendants might also challenge the length of their sentences, including how the court applied federal sentencing guidelines or whether there was possible bias against them.

Both Borges and Householder were taken into custody immediately after their sentencing hearings, pending transfer to a federal prison. Co-defendants Jeff Longstreth and Juan Cespedes pleaded guilty and testified at trial. They have yet to be sentenced.

Read more:

Money matters

Lawyers for the Ohio attorney general’s office and former PUCO chair Sam Randazzo argued at the Ohio Supreme Court on June 28 about whether the state should be able to continue restrictions on some of his assets pending a trial on civil claims relating to HB 6.

FirstEnergy admitted in 2021 that it paid $4.3 million to one of Randazzo’s companies shortly before he took office, with the expectation that Randazzo would act at the PUCO in FirstEnergy’s interests on HB 6 and other matters. Randazzo has denied the allegations.

Yet, said lawyer Charles Miller arguing for the state, Randazzo moved millions of dollars beyond the state’s reach, including a transfer of real estate to his son and placing funds with law firms in out-of-state accounts.

Meanwhile, Judge Christopher Brown has set a schedule for motions, discovery and trial in the case at the Franklin County Court of Common Pleas.

Deadlines and dates for Randazzo will depend on when the Ohio Supreme Court rules on the assets matter, which is expected to happen in the next several months.

In any case, trial against other defendants is not slated to start before March 2025. Other defendants in the case include FirstEnergy, Energy Harbor (formerly FirstEnergy Solutions), former FirstEnergy executives Chuck Jones and Michael Dowling, and defendants from the Householder criminal case.

Read more:

More from FirstEnergy’s investigation?

FirstEnergy might have to disclose its internal HB 6 investigation after all if a June 30 motion by shareholders suing the company succeeds.

Despite FirstEnergy’s claims of privilege, the shareholders’ filing suggests the real purpose was to get accountants to sign off on the company’s annual audit. As such, the investigation would have been primarily for a business purpose, versus a legal, attorney-client privileged matter, they argue.

“FirstEnergy’s position is doubly indefensible because its counsel is instructing witnesses not to answer questions about facts from the Company’s internal investigation that it has repeatedly chosen to disclose in other contexts,” the plaintiffs’ lawyers argued.

Company press releases and filings with the Securities and Exchange Commission refer to facts uncovered in the investigation, for example.

The June 30 filing also suggests the abrupt retirement of FirstEnergy CEO Steven Strah in September 2022 might have been at the behest of the board. According to the shareholders’ lawyers, a FirstEnergy vice-president ​“was only prepared to testify that ​‘the board’s offer [was] that Mr. Strah retire,’ but he was completely unprepared to testify as to what the alternative was if Strah declined the ​‘offer.’”

As stated in a company press release last September, ​“Steve Strah elected to retire from FirstEnergy. There isn’t any new information to provide,” said company spokesperson Jennifer Young.

Read more:

Who’s next?

So far no criminal charges have been filed against current or former executives at FirstEnergy or Energy Harbor, against former PUCO chair Randazzo, or others beyond those named in the federal government’s July 2020 criminal complaint. Individual defendants named in shareholder litigation or the state’s civil action have denied liability.

Yet some of those individuals have raised the threat of prosecution in efforts to avoid responses otherwise seek delays in civil cases. And the U.S. Attorney’s Office for the Southern District of Ohio has repeatedly said that its investigations are ongoing.

“We continue to look through evidence. We continue to listen to recordings and speak to individuals,” U.S. Attorney Kenneth Parker said on June 29, when asked about the possibility of more prosecutions. ​“So if something’s there, we’re going to go there and address matters.”

Read more:

HB 6 coal subsidies continue

HB 6 charges for two 1950s-era coal plants began mounting up again on ratepayers’ bills after a pause of several months due to prior overpayments. ​“Ohioans have already paid for $400 million in losses for OVEC, and I expect that to double by 2030,” said John Seryak, CEO of RunnerStone, which recently updated its cost estimates for the Ohio Manufacturers’ Association.

HB 120 would repeal and refund the coal subsidies. After no action since it was referred to the House Public Utilities Committee in March, 50 lawmakers signed a petition to get it out of committee so the full House could vote on it.

Rather than allow the vote, however, House Speaker Jason Stephens sent the bill to the House Rules and Reference Committee, where it has sat since June 20. Stephens also refused to allow any floor amendments to the two-year budget bill, HB 33, when lawmakers might have tried to add terms to repeal the coal subsidies. The subsidized Kyger Creek plant is in Stephens’ district.

The PUCO has not yet ruled on the reasonableness of the coal plant charges for 2018 and 2019, when regulatory rulings imposed the subsidy charges, or for 2020 after HB 6 went into effect.

Read more:

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