BY: MARTY SCHLADEN and Ohio Capital Journal

Columbus, Ohio – The mammoth scandal surrounding a 2019 energy bailout appeared to creep closer on Thursday to the administration of Ohio Gov. Mike DeWine.

FirstEnergy said in a deferred prosecution agreement that the man DeWine appointed to lead the Public Utility Commission of Ohio took a $4.3 million payment and then acted on behalf of the Akron-based power company instead of as the state’s top regulator. 

That man, Sam Randazzo, has resigned. 

But FirstEnergy also helped control a 501(c)(4) “dark-money” group started by a senior DeWine aide while he was still a FirstEnergy lobbyist, the agreement showed. The company passed a torrent of money through the secretive group as part of a successful $61 million effort to buy a $1.3 billion, ratepayer-funded bailout, the document FirstEnergy signed off on said.

While Acting U.S. Attorney Vipal J. Patel slammed the dark money group, DeWine and the aide, Legislative Affairs Director Dan McCarthy, didn’t respond to requests for comment. DeWine has staunchly defended McCarthy since the scandal broke almost exactly a year ago.

Patel held a press conference in Cincinnati on Thursday to announce that his office had entered into a deferred prosecution agreement with FirstEnergy. The company will pay $230 million and, if it lives up to the terms of the agreement, will have a charge of conspiracy dismissed.

Former Ohio House Speaker Larry Householder, R-Glenford, has been charged in the case. He was stripped last year of his speakership and he was ejected from the House earlier this year.

Two of Householder’s associates charged in the case have pleaded guilty and a third, Neil Clark, took his own life in March.

For its part, FirstEnergy fired CEO Chuck Jones and two other executives and is conducting an investigation of its own.

In Cincinnati Wednesday, Patel stressed that the investigation is continuing. But he wouldn’t comment on matters other than the agreement with FirstEnergy. 

DeWine aide McCarthy hasn’t been charged and last summer, he denied wrongdoing. But Partners for Progress, the dark-money group he founded, was a topic of the prosecution agreement.

Then still a FirstEnergy lobbyist, McCarthy founded it, “weeks after certain FirstEnergy Corp. senior executives traveled with (Householder) on the FirstEnergy Corp. jet to the presidential inauguration (of Donald Trump)  in January 2017,” the agreement said.

The prosecution agreement added, “Although Partners for Progress appeared to be an independent 501(c)(4) on paper, in reality, it was controlled in part by certain former FirstEnergy Corp. executives, who funded it and directed its payments to entities associated with public officials. 

“For example, FirstEnergy Corp. executives directed the formation of Partners for Progress and decided to incorporate the entity in Delaware, rather than Ohio, because Delaware law made it more difficult for third parties to learn background information about the entity. Certain FirstEnergy Corp. executives were also involved in choosing the three directors of Partners for Progress, two of whom were FirstEnergy Corp. lobbyists.”

Millions would flow through Partners for Progress while McCarthy was its president and tens of millions more would later run through it and into the furious effort to pass the bailout after McCarthy resigned to become DeWine’s legislative affairs director in early 2019.

The prosecution agreement also appears to refer to McCarthy as “Official Aide 1”  as he worked on DeWine’s behalf to help pass the bailout that DeWine would sign later that year.

It cites emails among energy executives saying that Official Aide 1 and others were “fighting” to extend the term of a bailout of two failing nuclear reactors in Northern Ohio.  It also cites a text-message discussion between a FirstEnergy executive and the aide about language that would make the bailout harder to challenge in a referendum.

And in the press conference, Patel said the scandal would never have happened if not for the dark-money group of which McCarthy was president and another, Generation Now, which has pleaded guilty.

“This effort would not have been possible — both in the nature and the amount of the money provided — without the use of 501(c)(4)s,” Patel said.

The acting U.S. attorney called the scheme, and even the name of McCarthy’s former dark-money group, dishonest.

“These are supposed to be, according to the (tax) code, social welfare organizations. You all see a lot of social welfare going on? I don’t,” Patel said, adding, “What about these names? Partners for Progress? What are the partners here? The conspirators? What’s the progress? Passage of (the energy bailout) through bribery?”

While DeWine’s office didn’t respond to questions on Thursday, the governor in February defended his legislative affairs director.

“As far as I know, Dan McCarthy has been well-respected for many, many years, long before he started working for me as our legislative director and I have faith in his integrity,” DeWine said.

For Dayton Mayor Nan Whaley, a Democrat challenging DeWine in the 2022 election, that’s not good enough.

“Today’s charges make clear that this corruption case reaches the highest levels of government in Ohio,” she said in a statement. “Enough is enough. It’s time for Gov. DeWine to come clean about his knowledge and involvement in this scandal.”

MARTY SCHLADEN

Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He’s won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.

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