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Ohio House Speaker Larry Householder, 4 others arrested in $61 million bribery case

Published: Jul. 21, 2020 at 11:33 AM EDT|Updated: Jul. 21, 2020 at 12:21 PM EDT
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CINCINNATI (WXIX/Gray News) - Ohio House Speaker Larry Householder and four others were arrested Tuesday in connection with a $61 million federal public corruption racketeering conspiracy that U.S. Attorney David DeVillers says is “likely the largest money laundering scheme ever perpetrated against the people of the state of Ohio.”

The others charged in the scheme outlined in an 81-page affidavit unsealed Tuesday are Jeffrey Longstreth, advisor to Householder; former Ohio Republican Party chairman and consultant Matthew Borges; Neil Clark of Grant Street Consultants in Columbus and Juan Cespedes, co-founder of The Oxley Group in Columbus.

The men are accused of conspiracy to participate in racketeering and face up to 20 years in prison.

The arrests are related to House Bill 6, the FirstEnergy nuclear bailout bill for Ohio’s two nuclear power plants that lawmakers passed last year, court records show. It adds a new fee to all electricity bills and directs more than $150 million annually for the next six years to the plants.

“Make no mistake, these allegations are bribery,” DeVillers said, adding “This was quid pro quo. This was pay to play.”

An FBI spokesman confirmed Tuesday agents were on scene conducting law enforcement activity in the area of Householder’s Glenford Farm in Perry County.

WXIX reached out to Householder for comment but did not hear back.

According to court records, a group named Generation Now also was charged as a corporation in the case.

From March 2017 to March 2020, the enterprise received millions of dollars in exchange for Householder’s and the enterprise’s help in passing House Bill 6.

The defendants then also allegedly worked to corruptly ensure that House Bill 6 went into effect by defeating a ballot initiative to overturn the legislation. The enterprise received approximately $60 million into Generation Now from an energy company and its affiliates during the relevant period.

In February 2017, Longstreth incorporated Generation Now as a 501(c)(4) social welfare entity purporting to promote energy independence and economic development; however, the entity was secretly controlled by Householder, federal records said.

As Clark stated in a recorded conversation, “Generation Now is the Speaker’s (c)(4).” Pursuant to federal law, the names and addresses of contributors to 501(c)(4)s are not made available for public inspection.

In March 2017, Householder began receiving quarterly $250,000 payments from the related-energy companies into the bank account of Generation Now, federal officials say. The suspects allegedly spent millions of the company’s dollars to support Householder’s political bid to become the speaker, to support House candidates they believed would back Householder and for their own personal benefit. When asked how much money was in Generation Now, Clark said, “it’s unlimited.”

The affidavit filed in support of the criminal complaint also alleges, according to federal records:

  • In 2018, the enterprise spent energy company-to-Generation Now money on approximately 21 different state candidates – 15 (including Householder) in the primary, and six additional candidates in the general election. The Enterprise spent more than one million in fall 2018 alone to flood the airways with negative ads against enterprise opponents. Most of these candidates won the 2018 general election. All who won voted for Householder as Speaker.
  • Money passed from the energy company through Generation Now was used to pay for Householder campaign staff, which would otherwise have been paid by Householder’s candidate committee, Friends of Larry Householder.
  • Householder received more than $400,000 in personal benefits as a result of the payments into Generation Now, including funds to settle a personal lawsuit, to pay for costs associated with his residence with a pool in Naples, Florida, and to pay off thousands of dollars of credit card debt.
  • The enterprise paid $15,000 to an individual to provide insider information about the ballot initiative and offered to pay signature collectors for the ballot initiative $2,500 cash and plane fare to stop gathering signatures.

“It takes courage for citizens to assist law enforcement in the ways detailed in the affidavit,” DeVillers said. “We are grateful to those who felt a moral duty to work together with agents in bringing to light this alleged, significant public corruption.”

Chris Hoffman, head of the FBI Cincinnati Office, Special Agent Chris Hoffman said all forms of public corruption are unacceptable.

FirstEnergy Corp., whose former subsidiaries owned the plants, donated heavily to Householder’s campaigns and his backers in the Ohio House. The utility’s political action committee contributed $25,000 to Householder’s campaign in 2018, according to an analysis by Common Cause Ohio, a government watchdog.

The arrests Tuesday are not the end of the case, not by a long shot, DeVillers said.

FBI agents are “knocking on a lot of doors” and serving “a lot of affidavits” as they continued to investigate and follow the money, he said.

Christopher McDowell, a local federal criminal defense attorney who is on the executive committee of the Hamilton County GOP Party, tells WXIX the use of federal racketeering charges “is a serious hammer.”

“It is a strong indication that the federal government intends to put Mr. Householder and others in prison for a very long time, like an organized crime boss. You don’t get probation if you are convicted of racketeering. If you are convicted, you are going away.

“It is surprising to me,” McDowell continued, “that no one from FirstEnergy has been indicted at this time. The federal prosecutor said that ‘Company A’ went looking for someone to basically get onboard with this criminal enterprise. $61 million is so much money that many people at First Energy had to be involved or had knowledge. My guess is that those at First Energy are cooperating with the FBI in order to prove the case against the politicians and Householder’s agents. They may be indicted later, but they may be eligible later for a lighter sentence. If I represented one of those guys at FirstEnergy, I would tell them sing like a canary.”

DeVillers and Hoffman both made it clear public corruption is a priority of their offices because it violates the public trust.

Hoffman said this is a warning “from city councils to the statehouse - all forms of public corruption are unacceptable.”

DeVillers, a recent Trump appointee, shot down any concerns the case might be politically motivated.

“I don’t care what party they are in or who they work for. This is what this office does,” he said.

One of the co-sponsors of House Bill 6 is from Greater Cincinnati, State Rep. Shane Wilkin, R-Hillsboro. He sponsored it with State Rep. Jamie Callender, R-Concord.

We reached out to Wilkin for reaction to Householder’s arrest. He issued a statement late Tuesday stating:

“I was shocked at the news of the charges against Speaker Householder. There’s nothing more important than the public trust in their representatives. I have faithfully and diligently worked on behalf of my district and will continue to do so.

“Larry Householder and the others charged will have their day in court and, if convicted, they must be held accountable the same way any other Ohioan would be.””I was asked by Rep. Jamie Callender to be a joint sponsor of House Bill 6. When I saw that this bill removed and reduced government mandates placed on the electric bills of everyday Ohioans like the people I represent, I agreed to be a joint sponsor.”

State lawmakers and other elected officials expressed dismay and shock at Householder’s arrest early Tuesday.

“Today is a sad day. Ohioans deserve to know that their elected officials are working hard every day so that people in our state can have a better life,” said State Rep. Bridget Kelly, D-Cincinnati.

State Rep. George Lang, R-West Chester Township said he was “very surprised.”

“I would encourage everyone not to jump to any conclusions. Don’t pass any judgement until more information is gathered or released, and remember, in the United States, all people are considered innocent until proven guilty.”

After federal officials outlined their complex and lengthy case against Householder and the others, elected officials issued a flurry of late afternoon statements urging Householder to step down.

Virtually all state office holders called on him to resign, including Republicans Gov. Mike DeWine, Attorney General Dave Yost and Ohio Secretary of State Frank LaRose.

LaRose tweeted his comments out before federal officials finished their news conference.

Yost said the House should eject their Speaker if he doesn’t step down.

‘Larry Householder sold out the people of Ohio in exchange for power and dirty money. The 81-page sworn affidavit filed today shows plainly he cannot be trusted to act in the public interest, or trusted with public authority,” Yost said in statement. “He is entitled to a presumption of innocence regarding the criminality of his acts, but he is entitled to no presumption of continuance in office. He should resign immediately. If he refuses, the House should eject him under Article II, section 6 of the Ohio Constitution.’

“The allegations made today are very detailed, they are very serious, and they are very troubling to me, and undoubtedly, to the people of Ohio,” said Senate President Larry Obhof, R-Medina.

“Every member of the Ohio legislature has a sacred trust with the citizens of this state, and the people deserve the honest services of their elected representatives.”The seriousness and gravity of the allegations cast a dark shadow over the People’s House. It is clear that he cannot continue to lead the Ohio House of Representatives. He should resign.”

Ohio Democratic Party Chairman David Pepper said in a statement the revelations in the criminal complaint against Householder and his associates “tell the tale of conspirators who have been at this for a long time and know how to evade accountability for their corrupt actions. That’s because, for decades, the culture of Columbus and the Ohio Statehouse under GOP leadership is fundamentally one of corruption, kickbacks and pay-to-play.

“Keep in mind -- there are two other FBI investigations still active into Ohio Republican politicians, one involving the former Republican Speaker of the House and one involving a major Republican donor and former charter school operator. According to the criminal complaint, Larry Householder didn’t stop his activities when these investigations were revealed -- he stepped on the gas.

Pepper continued: “As the U.S. attorney indicated, this investigation is ongoing, and we will wait to hear all the facts as they emerge. However, given what was revealed in today’s complaint and the taint of corruption over Ohio legislative activity, we believe Speaker Householder should step down from leadership immediately as he avails himself of his due process rights.

“Our greatest hope for Ohio is that those officials who have defrauded the taxpayers and abused the people’s trust finally have a moment of accountability, whether that comes from the legal system or at the ballot box this November.”

Householder’s leadership team put out a statement saying they were “shocked.” The statement was from Speaker Pro Tempore Jim Butler, R-Oakwood; Majority Floor Leader Bill Seitz, R-Green Township; Assistant Majority Floor Leader Anthony DeVitis, R-Green; Majority Whip Jay Edwards, R-Nelsonville and Assistant Majority Whip Laura Lanese, R-Grove City.

“The Ohio House of Representatives remains open, and the members and staff are continuing their work to serve the people of Ohio. We are reviewing the allegations,” their statement reads.

“To our knowledge, no other member of the Ohio General Assembly is under investigation in connection with these allegations. We have not been in contact with Speaker Householder today. Due to the pending investigation, we cannot comment further at this time.”

Seitz, a staunch fierce backer of House Bill 6, told WXIX Tuesday he supported the measure long before Householder was re-elected to the House.

“I have nothing to do with it,” Seitz said of the alleged scheme. “I do not. I do not have anything to do with it other than being a strong supporter of House Bill 6. I was a strong supporter of House Bill 6 in prior General Assemblies. My support of it is based on long record of advocacy of utility issues, which way predates Speaker Householder’s return to the House.”

Seitz said he took no campaign money from the groups mentioned by the feds Tuesday or in the indictment including Generation Now. He said he’s never heard of them.

“I didn’t give them any money and I didn’t get any money from them,” he said, adding that he also took no money from Householder.

The House speaker and four of the five other suspects made initial appearances in court before federal Magistrate Judge Stephanie Bowman in Cincinnati. They were not required to enter a plea and were ordered to be released on their own recognizance.

Their travel is limited to the southern district of Ohio and they are prohibited having contact with anyone connected with the case, obtaining new passports and having firearms. Householder agreed to remove firearms from his home by 5 p.m. Wednesday.

Preliminary hearings were set for Aug. 6 at 1:30 p.m.

Householder became House speaker in January 2019, pulling off a surprise victory over then-State Rep. Ryan Smith by gaining the edge by getting support from Democrats.

This is not the feds’ first case against him. It is the second time they have investigated him, court records show. They looked into allegations in 2004 that Householder and his aides took kickbacks from vendors and traded legislation for campaign contributions. Householder left office in 2004 when he was term-limited. The investigation ended in 2006 with no charges filed.

Cincinnati Mayor John Cranley called for the repeal of House Bill 6.

He issued a statement saying:

“Those of us who stood up to the culture of corruption in Columbus and opposed the HB6 billion-dollar bailout knew it was terrible for Ohio, but didn’t realize how deep the corruption was! We stood up for clean energy in the middle of a swamp!

“Not only did HB6 impose one of the largest tax hikes ever on Ohioans, it repealed Ohio’s renewable clean energy standards—notoriously becoming the only state to ever do so—at a time when renewable energy jobs are the future and a path to better jobs for Ohioans. Of course, the corrupt Columbus politicians put their pocketbooks ahead of our kid’s interests in having a cleaner environment.

“In light of the indictments coming out today, I call on the Ohio General Assembly and Governor DeWine to immediately repeal the most crony corrupt bailout bill in the history of our state. And they should re-adopt renewable clean energy standards as the bare minimum first step to disinfect Ohio!”

Householder is the second Ohio House speaker to come under federal investigation in as many years.

Former Republican Speaker Cliff Rosenberger quit after he was investigated in 2018 by the FBI who looked into his travel and a condo he rented from a wealthy GOP donor.

Rosenberger has said he broke no laws and was not charged. At last check, the investigation remained open.

WXIX reached out to him for comment Tuesday but did not hear back.

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