Prosecutor says Householder led pay-to-play scheme; defense calls it 'nothing burger'

Former Ohio House Speaker Larry Householder led a criminal enterprise to sell legislation for political power and nearly $61 million, a federal prosecutor said in closing arguments of the state’s largest corruption trial Tuesday.

“Mr. Householder did not act alone but he was at the top,” Assistant U.S. Attorney Matt Singer said. “He benefited the most because the enterprise was set up to benefit his political machine.”

Householder and ex-Ohio Republican Party Chairman Matt Borges are accused of participating in a pay-to-play scheme to pass House Bill 6, a $1.3 billion bailout for two nuclear plants then-owned by FirstEnergy Solutions and defend the law against a ballot initiative to block it. Both men say they did nothing wrong.

Householder defense attorney Steven Bradley, however, said that Householder backed the nuclear bailout because "he believed it was good policy and was consistent with his long-held political views regarding the importance of energy generation in Ohio." In short, he wasn't bribed.

"It's not bribe money. It's political contributions," Bradley said.

Federal prosecutors accuse Borges of participating in Householder’s conspiracy by paying a $15,000 bribe for insider information about the anti-House Bill 6 referendum. “Matthew Borges entered the criminal conspiracy with his eyes wide open,” Singer said.

But Borges' attorney Karl Schneider said Borges wasn't a member of Team Householder or Householder's alleged criminal enterprise. “Matt Borges was never an insider and if he wasn’t an insider, he wasn’t an enterpriser," Schneider said.

What is racketeering conspiracy?

Householder and Borges are accused of racketeering conspiracy, punishable by up to 20 years in prison. They have pleaded not guilty. Jurors must determine whether prosecutors proved four elements beyond a reasonable doubt:

• A criminal enterprise existed.

• The enterprise engaged in interstate commerce.

• Householder and/or Borges were associated with or employed by the enterprise.

• They conspired to participate in the enterprise through a pattern of racketeering activity. That means at least two offenses, such as bribery, honest service fraud, extortion and money laundering.

The law doesn't require that the agreement be explicit. It can be expressed through winks and nods.

'Concealment shows corrupt intent'

Federal prosecutors say the enterprise was hatched between Householder and executives for FirstEnergy over steakhouse dinners in Washington, D.C., during former President Donald Trump’s inauguration in 2017.

FirstEnergy needed a bailout and Householder needed cash to fuel his quest for more political power. "They needed each other," Singer said.

But Householder's attorneys questioned whether then-FirstEnergy CEO Chuck Jones was even there for one of the nights. Householder told jurors that he never attended those dinners. Instead, he ate pizza, attended a country concert and a gala.

Singer told jurors: "Mr. Householder's testimony was not true."

Singer pointed to the testimony of Householder’s political adviser Jeff Longstreth, who said Householder was at the dinners, and a picture of FirstEnergy’s top lobbyist Michael Dowling, Householder’s son and Householder’s knee outside of the steakhouse.

Lying on the witness stand was one way Householder tried to conceal the enterprise, but it wasn't the only one, Singer argued.

The intentionally complex web of dark money groups made it impossible for the public to learn that FirstEnergy and its subsidiary were funding pro-Householder and pro-House Bill 6 ads, Singer said. Householder deleted text messages and phone logs. Members of Team Householder deleted paperwork related to the ballot battle to preserve House Bill 6.

“Concealment shows corrupt intent,” Singer said.

Was Householder bribed?

Singer argued that Householder knew that FirstEnergy’s millions came with an expectation to pass a bailout for the nuclear plants and to defend that law against a ballot initiative to block it in 2019.

“The evidence is clear: Mr. Householder received that money knowing what it was for," Singer said.

In October 2018, FirstEnergy Solutions’ lobbyists hand-delivered a $400,000 check to Householder for Generation Now, the dark money group at the center of the alleged scheme, to help Householder win control of the Ohio House.

Former FirstEnergy Solutions lobbyist Juan Cespedes testified that fellow lobbyist Bob Klaffky gave Householder the check and said: "Our client cares very much about this issue.”

Householder upon opening the check replied: “Well, yes they do.”

Householder said that verbal exchange never happened and Klaffky testified that he couldn’t recall the exact wording, but it wasn’t pay-to-play. Singer said Klaffky, as a powerful lobbyist in Ohio, “had an interest in distancing himself from the exchange.”

After Householder won the speakership, passed House Bill 6 and successfully defended it, Householder shifted his attention to a constitutional amendment that could give him another 16 years as House speaker. Once again, FirstEnergy and FirstEnergy Solutions were ready to bankroll Householder's plan.

"They wanted Householder in charge. They knew that it was in their best interests to do that," Singer said.

Householder's defense: 'This is a nothing burger'

Householder's team cast doubt on the government's case and timeline of events.

Householder was interested in legislation to help utilities like FirstEnergy months before a trip on the FirstEnergy jet to the 2017 inauguration and before the creation of Generation Now, a dark money group, Bradley said.

Bradley picked apart the prosecutor's contention that Jones arrived Jan 18, 2017 in Washington, D.C., but that records indicate Jones was in Naples, Florida that day. He cast doubt on the veracity of testimony by Longstreth.

“It’s all fantasy. Didn’t happen," Bradley said.

Bradley said that the FBI never interviewed key players or pulled expense reports from FirstEnergy executives or wiretapped Householder's phone.

"This was a woefully incomplete investigation," said Bradley, accusing the government of bias. "They don't want evidence that is inconsistent with their theory of the case."

Bradley also chipped away at the idea that Householder was personally enriched via payments Longstreth made on Householder's legal issues, home repairs and credit card debts. It was a loan that was going to be repaid through a business arrangement, he said.

"This is a nothing burger," Bradley said.

Bradley refuted the government's allegation that Householder pressured lawmakers to support the bailout bill, noting that legislators testifying for the defense said there was no coercion.

He also shifted blame to Longstreth, saying he decided how to spend the dark money. "Jeff controlled Generation Now, not Larry," he said.

Householder long supported utilities so of course, those companies would want him as speaker, Bradley said.

What was Borges' role?

Borges was tasked with influencing Ohio Attorney General Dave Yost and convincing him that House Bill 6 was a tax that couldn't be challenged at the ballot box. Borges also gave $15,000 to political operative Tyler Fehrman who was working on the anti-House Bill 6 referendum.

Singer said Borges knew about the larger enterprise and bribed Fehrman for insider information, such as how many signatures the anti-House Bill 6 effort had collected to make the ballot. As Borges told Fehrman in a recorded call: “Everyone’s getting fat on this. Why not us?”

But Borges attorney Schneider argued that Fehrman never delivered confidential information in exchange for that money. Even if Fehrman had disclosed a statewide signature count, it wouldn't have harmed Fehrman's employer, which was collecting signatures for the anti-House Bill 6 effort.

Ultimately, the case was overcharged and Borges is innocent, Schneider argued.

The closing arguments come at the end of a seven-week trial in the U.S. District Court in Cincinnati. The jury is expected to begin deliberations Wednesday.

The case came two-and-a-half years after the arrests of Householder, Borges and three others − lobbyist Neil Clark, Cespedes and Longstreth. Clark died by suicide two years ago. Cespedes and Longstreth signed guilty pleas in October 2020 and provided damaging testimony against Householder and Borges.

Ohio Statehouse CaseWho you need to know in public corruption case

USA TODAY Network Ohio bureau reporters Jessie Balmert and Laura Bischoff have been following the House Bill 6 scandal since the story broke. They will continue to follow developments and the trial. Follow them on Twitter at @lbischoff and @jbalmert for updates.

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This article originally appeared on The Columbus Dispatch: Householder trial: 'He was at the top' of pay-to-play scheme