CINCINNATI — A lobbyist who pleaded guilty to being a key middleman in what prosecutors describe as a $61 million scheme to "sell the statehouse," testified on Monday in the largest public corruption trial in Ohio history.
“I am guilty of the charge … I’m not proud of it,” testified Juan Cespedes, a former lobbyist for Akron-based FirstEnergy Corp., said at the start of his testimony which lasted for several hours and is set to continue Tuesday.
Cespedes explained the inner workings of the plot to elect Larry Householder as Ohio House speaker, solidify his power base, secure enough votes to pass a ratepayer-funded $1.3 billion bailout of two FirstEnergy nuclear plants known as House Bill 6 and ensure it survived a ballot campaign to overturn it.
At an Oct. 10, 2018 meeting, Cespedes described how a $400,000 FirstEnergy check in an envelope was slid across the table into the hand of Larry Householder, which was tied to his support of bailout legislation.
“I believe this far exceeded his expectation,” Cespedes said, describing Householder’s reaction when he opened the envelope and saw the check amount.
FirstEnergy representatives signed a deferred prosecution agreement with prosecutors in July 2021 and agreed to pay a $230 million fine. The public utility holding company admitted it conspired with public officials and others to pay tens of millions in exchange for bailout legislation.
Householder and FirstEnergy associates first began exchanging emails in 2016. At the time, the company was “bleeding cash,” because coal and nuclear plants were not making any money, FirstEnergy vice president and treasurer Steve Staub testified two weeks ago.
Staub testified that several executives involved in the H.B. 6 scandal were fired in 2020, including former president and CEO Chuck Jones, and Mike Dowling, senior vice president of external affairs.
First Energy operatives planned to push forward with their quest for a nuclear bailout regardless of who was elected speaker, but Cespedes said, “we knew our efforts would be more successful with Mr. Householder.”
By January 2019, “it was a matter of when, not if,” Householder introduced the bailout legislation, Cespedes said.
And by March, Householder had shared his vision of the bill with FirstEnergy executives at a meeting in his statehouse office, where he had written it out on a large whiteboard. He planned to wipe out subsidies for wind and solar energy to free up money to subsidize the failing nuclear plants and add a decoupling provision which would benefit the parent company by $50 million, Cespedes said.
“We were a little surprised but at the end of the day it accomplished what we needed,” Cespedes said. “FirstEnergy benefitted significantly … Our subsidy grand total was well over $1 billion.”
In the weeks that followed, FirstEnergy executives traded large documents that were written drafts of the bill with Householder’s energy policy expert, Pat Tully, Cespedes said.
“I found this to be extremely odd behavior,” Cespedes said, because Tully did not want an electronic chain of the amended legislation. “We had significant changes we made along the way .. it probably changed hands a dozen times.”
After the Ohio House passed the nuclear bailout on May 29, 2019, Cespedes said he got a text message from Householder’s former political strategist Jeff Longstreth, “Going to Mitchell’s at 7 with some yes votes.”
When Cespedes arrived at the private restaurant room, “Everybody in the room was either a yes vote or a FirstEnergy affiliate.”
Longstreth also pleaded guilty and is expected to testify.
Once H.B. 6 passed as law, Cespedes said FirstEnergy's efforts turned to making sure it would survive any ballot effort to overturn it.
FirstEnergy spent $35 million, funneled through a nonprofit Generation Now, to defeat the ballot campaign including spending money on private investigators to do background checks on people who worked for the opposition, Cespedes said.
Former Ohio GOP chair turned lobbyist Matt Borges began working on the campaign to stop the ballot initiative due in part to his then close relationship with Attorney General Dave Yost, according to text messages an FBI agent read to jurors last week.
Prosecutors have sent a subpoena to Yost, but have not said whether he will be called to testify, according to a Yost spokeswoman.
Householder and Borges have maintained their innocence.
A Householder attorney said in his opening statement that the former speaker supported the bailout because he wanted to save jobs and was opposed to inefficient energy mandates.
Similarly, Borges’ attorneys said he wanted to thwart a referendum to overturn H.B. 6 because he worked as a lobbyist for a school district that would have lost substantial tax revenue if the plants closed.
The trial is expected to last for at least two more weeks, since six days of testimony were lost due to two COVID outbreaks.
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