Dive Brief:

• Federal authorities arrested and charged Speaker of the Ohio House Larry Householder with bribery in a scheme he allegedly created to guarantee the passage of legislation last year bailing out two nuclear power plants owned by a subsidiary of the FirstEnergy Corp.
• FirstEnergy late Tuesday said the company had received subpoenas in connection with the investigation and would fully cooperate.
• The $61 million bribery charge against Householder and four high-powered Ohio political consultants is the first public expression of an investigation that began more than a year ago into Householder, said U.S. Attorney David DeVillers of the Southern District of Ohio. But the probe will continue to expand, he said. 

Dive Insight:

The largest bribery scheme involving Ohio public officials in at least a decade is expected to spiral into a continuing probe into public corruption, said DeVillers. "We are going to investigate this wherever it leads [including] individuals that work for Company A and the company itself," he said, without naming FirstEnergy or its former subsidiary FirstEnergy Solutions. 

"I think there is a strong inference [in an 81-page affidavit issued when the arrests were made] that this enterprise [Company A] went looking for someone to bribe," DeVillers said when asked whether FE or FES officials were also targets.

The announcement of the arrests and subsequent news conference explaining the case sent FirstEnergy's share price tumbling to the point that trading had to be suspended briefly. FirstEnergy's share price closed at $34.26, down $6.99, or 16.95% on the New York Stock Exchange. The price was continuing to fall after the market closed. FES, now called Energy Harbor, is a privately-traded company. 

The investigation began when unidentified "courageous individuals" alerted federal authorities that Householder's political organization was funding candidates for seats in the Ohio legislature, according to Chris Hoffman, FBI special agent in charge of the bureau's Cincinnati office. "Team Householder," as the resulting victors were called, constituted a large enough voting bloc to determine the outcome of nuclear bailout legislation that FirstEnergy had been trying to get approved for several years. 

House Bill 6, approved last year, raises electric rates state-wide to produce a $1.5 billion bailout for two northern Ohio nuclear power plants for six years, beginning in 2021. FES, under bankruptcy protection beginning March 31, 2018, had announced it would close the power plants without a state or federal subsidy. FES blamed renewable energy as well as the wholesale market rules promulgated by PJM Interconnection for its bankruptcy.

The unidentified company funneled money as it was needed into a tax-exempt social welfare organization that Householder created under Internal Revenue Service rule 501c4, said DeVillers. Millions of dollars, including as much as $10 million last spring to derail a petition drive aiming to put the bailout to a public vote, were deposited with the organization, which then spent the funds as needed, much of it for advertising as well as to pay people to stop collecting voter signatures for the petition. Householder's office was not taking requests for comment.

DeVillers declined to reveal the scope of the ongoing investigation, saying the probe would follow the evidence as it develops, and declined to say whether the scope would include both the Ohio House and the Senate.

The government is charging Householder and the consultants under the Racketeer Influenced and Corrupt Organizations Act, or RICO statutes, originally approved as a weapon against organized crime. The charges are the first in the the Southern District of Ohio under the RICO statute.

Hoffman also stressed that the investigation is ongoing. 

"Our state deserves to have an honest system of government that isn't hijacked by greed or corruption," said Hoffman. "This is as reminder to anyone that when lawmakers act as criminals the FBI and U.S. Attorneys office are there.  If you have information about this public case, we want to hear from you."

Gov. Mike DeWine has publicly asked Householder to step down immediately.

"I am deeply concerned about the allegations of wrongdoing in the criminal complaint issued today by the U.S. Attorney's Office. Every American has e presumption of innocence until proven guilty. Because of the nature of these charges, it will be impossible for Speaker Householder to effectively lead the Ohio House of Representatives; therefore, I am calling on Speaker Householder to resign immediately," he said.