Marty Schladen, Ohio Capitol Journal —
The announcement of new felony indictments against players in Ohio’s massive bribery scandal is again raising questions about what Gov. Mike DeWine knew before and after he nominated Sam Randazzo to be the top utility regulator in the state.
The indictment contained new allegations of a long, nefarious relationship between Randazzo, one of the state’s biggest utilities and a group of industrial users. On Thursday, DeWine’s spokesman reiterated that the governor believed in 2019 that Randazzo was qualified to be the top regulator because of his prior representation of utilities and large ratepayers. DeWine on Wednesday conceded that the appointment was a mistake.
Randazzo was indicted along with the former top executives of Akron-based FirstEnergy for their alleged roles in a scheme to pay more than $60 million in bribes in exchange for the 2019 passage of a $1.3 billion ratepayer bailout that was mostly intended to prop up two nuclear plants. Former House Speaker Larry Householder, R-Glenford, was convicted of his role in federal court last year and is serving a 20-year prison sentence.
Randazzo, DeWine’s 2019 pick to chair the Public Utilities Commission of Ohio, was indicted by the feds in December.
On Monday, law enforcement authorities led by Ohio Attorney General Dave Yost again indicted Randazzo, this time on state felony charges. Also indicted were former FirstEnergy CEO Chuck Jones and former Vice President Michael Dowling. They all pleaded not guilty on Tuesday.
Among the new allegations was that Randazzo had a corrupt relationship with the FirstEnergy executives stretching back to 2010.
As part of it, Randazzo allegedly served as general counsel to the Industrial Energy Users of Ohio while secretly being paid as a consultant for FirstEnergy. In those capacities, Randazzo settled disputes over electricity rates on terms that were acceptable to the energy companies, then channeled the settlement money through shell companies where he skimmed off a portion, the indictment said.
In 2015, FirstEnergy also paid out $8.5 million in supposed “consulting fees.”
The indictment said the money was really intended to be a cash payment to the industrial users so they would drop their opposition to a rate hike FirstEnergy was seeking. Through that “side deal,” a powerful utility paid off powerful industries to grease the skids for a rate hike on all FirstEnergy customers, if the allegations are true.
Between 2016 and 2019, FirstEnergy paid $13 million into Randazzo’s shell companies, the indictment said. Of that, Randazzo passed $7.75 million to the industrial users and pocketed the rest, it said.
On Thursday, DeWine Press Secretary Dan Tierney said that as his boss was entering the governor’s office at the start of 2019, DeWine saw Randazzo’s relationships with FirstEnergy and big electricity users as a special qualification to be the top regulator.
“Governor DeWine knew of Mr. Randazzo’s relationship to FirstEnergy as a paid consultant prior to the Governor’s appointment of Mr. Randazzo,” Tierney said in an email. “As we have previously stated, Mr. Randazzo was appointed due to his expertise and having represented many sides of utility rate issues, having represented both utilities as well as large ratepayers (in) whose interest it is to pay as little as possible for utilities.”
The connections between FirstEnergy and the incoming administration of Mike DeWine and Jon Husted were strong. DeWine’s chief of staff, Laurel Dawson, was married to a man who had been a paid lobbyist for FirstEnergy — and who had received a $10,000 loan from Randazzo in 2016, the indictment said.
DeWine’s legislative affairs director, Dan McCarthy, had also been a FirstEnergy lobbyist. When he was, McCarthy founded Partners for Progress, a 501(c)(4) dark money group that FirstEnergy admitted was used to funnel tens of millions of the corporation’s dollars into the effort to make Householder speaker and pass and protect the bailout. Once in the administration, McCarthy acted from that perch to help pass House Bill 6, the bailout legislation.
And, on Dec. 18, 2018 — just before DeWine and Husted took the oath of office — they met at the Columbus Athletic Club with Jones and Dowling, the top executives for FirstEnergy. Among the topics was whether Randazzo would be acceptable to regulate the executives’ company, the indictment said.
According to the state indictment, Jones and Dowling went from that dinner to Randazzo’s German Village condo, where they seem to have negotiated a payment that FirstEnergy later characterized as a bribe. Shortly after, Randazzo sent the executives a text message requesting $4.3 million over a period of years, according to copies filed as part of Randazzo’s indictments. Jones responded by saying it would be paid in a lump sum, the messages said.
In January, as Randazzo was being vetted to chair the PUCO, he told Dawson, DeWine’s chief of staff, about the $4.3 million payment, but he did not tell her about the other millions he had received from FirstEnergy, the state indictment said. Randazzo didn’t report any of the payments to the Ohio Ethics Commission, it added.
A former aide gave DeWine a dossier reporting shady financial connections between Randazzo and FirstEnergy on Jan. 28, 2019. But Tierney said that Dawson never told the governor about the $4.3 million payment before DeWine nominated Randazzo to chair the PUCO on Feb. 4, 2019.
According to the state indictment, Randazzo spent the rest of the year and part of the next helping to draft and openly lobby for the corrupt bailout. He also took other moves on behalf of FirstEnergy, including canceling a rate review that likely would have forced the utility to lower rates, thereby lowering stock prices and costing Jones and Dowling personally, the indictment said.
Householder and four others were arrested in July 2020. But it wasn’t until the following November — when the FBI searched Randazzo’s condo — that Dawson finally told the governor about the $4.3 million payout, Tierney said.
“The Governor had previously stated he had a conversation with Laurel Dawson in November 2020 about Sam Randazzo when Mr. Randazzo’s property was the subject of a federal search warrant,” he said. “The contractual termination payment was part of that discussion.”
Subsequently, DeWine has staunchly defended Dawson, much as he defended McCarthy, the former aide and FirstEnergy lobbyist.
July 2021 brought the lengthy, specific federal indictment of Householder, FirstEnergy, and others on the heels of Randazzo’s questionable work in support of HB 6. But DeWine apparently didn’t suspect that the company’s $4.3 million payment to Randazzo might have been a bribe — until federal agents searched his condo.
“Please note that the payment was never alleged to our office to be a bribe until later in 2021, well after any such conversation or initial PUCO vetting of Mr. Randazzo,” DeWine’s press secretary said Thursday.
Interestingly, the indictment unveiled on Monday contained a message from a FirstEnergy lobbyist briefing his top bosses on how to talk to DeWine.
“Explain things like he doesn’t know anything about it — and be surprised when he does,” the lobbyist wrote. “Sometimes he knows what you’re talking about. Sometimes he doesn’t. Sometimes he does and pretends he doesn’t.”