Bankruptcy court records show lawyers for FirstEnergy Solutions drafted, but never filed, a motion seeking a judge’s approval to make political contributions shortly before the company contributed $500,000 to the Republican Governors Association during the closing weeks of the 2018 elections.
The $500,000 FirstEnergy Solutions (FES) contribution to RGA represents nearly half of the over $1 million that FirstEnergy has spent in support of Ohio Governor Mike DeWine since 2017, according to a Dayton Daily News investigation. DeWine served as Ohio’s attorney general during his successful 2018 campaign for governor.
FirstEnergy’s financial support is one of several factors that has drawn DeWine into the growing corruption scandal surrounding House Bill 6. The legislation, which DeWine signed into law in 2019, was set to deliver a $1 billion ratepayer bailout to two nuclear power plants then owned by FES before courts halted the payments. It also achieved FirstEnergy’s longtime goal of rolling back Ohio’s renewable energy and energy efficiency requirements for electric utilities, and bailed out several coal plants.
DeWine is also facing heat over his 2019 appointment of Samuel Randazzo as chairman of the Public Utilities Commission of Ohio. FirstEnergy has admitted that an Ohio utility regulator acted at the company’s request, and for its benefit, as a result of receiving a $4.3 million payment from FirstEnergy shortly before their appointment. FirstEnergy hasn’t named the regulator, but Randazzo matches the company’s description.
FES’s outside attorneys and lobbyists at Akin Gump worked on a “draft political contributions motion” in September of 2018, according to a monthly invoice the law firm filed in FES’s bankruptcy case. The monthly invoice was included in a lengthy and detailed final application for compensation that Akin Gump filed in FES’s bankruptcy case last year.
U.S. Bankruptcy Judge Alan Koschik held off on granting final approval of the over $68 million in fees and expenses that FES racked up with Akin Gump after news broke of the federal bribery investigation into HB 6. Most of the money has already been paid to Akin Gump by FES, but the judge has said that he still can disapprove of fees and expenses that have already been paid, and order the disgorgement, or recovery, of any money found to be involved in legal wrongdoing.
Koschik questioned Akin Gump attorney Lisa Beckerman about the political contributions motion during a November 17, 2020 court hearing. Beckerman was representing Energy Harbor, the reorganized debtors that emerged from FES’s Chapter 11 bankruptcy last year as a new company and which has since been subpoenaed in connection with the HB 6 bribery case.
Public access to a transcript of the hearing was restricted for 90 days, but a copy of the full transcript can now be found here.
At the hearing, Koschik asked Beckerman about time entries he found while reviewing monthly invoices and timesheets that Akin Gump included in its final application for compensation:
… there was a reference in late September or in September 2018, so this is about six months into the case, to a political contribution motion. And I looked at the docket and I couldn’t quite find anything that was obvious related to that. Perhaps this is a motion that was never filed.
“I think there was a discussion about whether or not a motion needed to be filed to make political contributions or whether that was in the ordinary course of business of the Debtor, Your Honor,” Beckerman said.
“And on that political contribution question, which I understand what that is, do you recall that you decided not to file it?” Koschik asked Beckerman.
“It was not filed, that’s correct,” Beckerman said. “I believe the amount they were talking about providing at that point was fairly small compared to the amount of contributions they’ve made in the past and, therefore, my recollection is that the decision was — the viewpoint was that this was ordinary course for their business.”
Beckerman described FES as an energy company with over $1.5 billion revenue that typically made political contributions during election years.
After the hearing, Koschik ordered four Akin Gump lobbyists who had led the firm’s “Ohio statehouse team” for FES to file sworn statements answering questions about their connections to the HB 6 bribery case.
The earliest mention of the political contributions motion was in a September 6, 2018 timesheet entry by Akin Gump that shows “LGB” (Lisa G. Beckerman) reviewed and responded to an email “re a contribution request motion” from lobbyist Geoffrey Verhoff, and reviewed “correspondence re same” from attorney Scott Alberino and lobbyist Sean D’Arcy.
D’Arcy participated in a client meeting at FES’s Davis-Besse nuclear power plant one day earlier on September 5, 2018, according to a time sheet entry. DeWine and his Democratic opponent Richard Cordray both visited the Davis-Besse plant that week, to local media reports.
Verhoff (“GKV”) also engaged in “outreach re: Ohio Gov race” on September 11, another time sheet entry said.
D’Arcy and Verhoff are among the Akin Gump lobbyists who must now file sworn statements with the bankruptcy court.
Work on the “draft political contributions motion” for FES continued until the final day of September 2018, according to Akin Gump’s monthly invoice for that month. The motion wasn’t mentioned again in monthly invoices that Akin Gump filed in the case after that.
As first reported by the Dayton Daily News, FES’s $500,000 contribution to RGA was made on October 11, 2018, just one day after DeWine met with FirstEnergy officials at an RGA fundraiser in Columbus.
The $500,000 contribution to RGA was never explicitly mentioned by Akin Gump in the monthly invoices the firm filed in FES’s bankruptcy case.
Akin Gump’s monthly invoice to FES for November 2018 did include a $22.92 expense for a “PHX-RGA, Uber” ride Verhoff paid for during a “client support development trip” on “11/29/2018,” when the RGA’s annual meeting was underway in Scottsdale, Arizona.
In 2019, FES made a $1,859,457 wire payment to Generation Now, the dark money group that pleaded guilty last month to participating in a $60 million racketeering conspiracy that resulted in HB 6’s $1 billion nuclear power plant bailout.
In their sworn statements to the bankruptcy court, the members of Akin Gump’s “Ohio Statehouse team” will have to answer questions about their involvement with Generation Now and Juan Cespedes, a former FES lobbyist from the Oxley Group who also pleaded guilty to participating in the racketeering conspiracy.
Most of that $60 million in bribe money is believed to have flowed to Generation Now through the FirstEnergy Service Company, which provided shared services that included “corporate contributions” to FES during the bankruptcy case.
The service company was also paid by all of FirstEnergy Corp.’s other subsidiaries to provide various services, including largely political services like external and government affairs. It’s not yet clear how much of the tens of millions of dollars that’s believed to have flowed through the FirstEnergy Service Company to Generation Now can be attributed to FES.