CLEVELAND, Ohio -- A Columbus-based lobbyist helped funnel millions from FirstEnergy Corp. into a dark-money group controlled by Ohio House Speaker Larry Householder to ensure a billion-dollar bailout to save two of the company’s failing nuclear power plants became law and survived a bitter referendum, according to federal court records unsealed Tuesday.
Lorain native Juan Cespedes, the co-founder of the Oxley Group and a member of the Ohio Civil Rights Commission, is among five people, including Householder arrested and charged in U.S. District Court in Columbus with conspiracy to commit racketeering. The men could face up to 20 years in federal prison and fines of $250,000 if convicted.
An affidavit says Cespedes is a crucial middleman who helped FirstEnergy carry out its end of a quid pro quo with Householder in which FirstEnergy paid Householder more than $60 million in bribes, including helping to fund his bid to reclaim the speaker’s gavel he held from 2001 to 2004 and expand his political power, in exchange for Householder’s promise to push legislation bailing out the company’s nuclear power plants.
Cespedes then helped FirstEnergy secretly fund Householder’s efforts to pressure legislators into supporting the bailout that came to be known as House Bill 6, the complaint says. He also helped quash a ballot initiative to overturn the bill after it passed both chambers and Ohio Gov. Mike DeWine signed it into law, according to complaint.
A FirstEnergy subsidiary not named in the affidavit hired the Oxley Group in June 2018, shortly after the struggling utility company filed for Chapter 11 bankruptcy. The contract directed Cespedes to help FirstEnergy get “necessary funding through government acts” to make the two nuclear plants financially sustainable. The effort included making support for the legislation a campaign issue for incoming legislators and provide constant updates on the election of a new Speaker of the House in early 2019, the affidavit says.
FirstEnergy paid Cespedes $227,000 for his work, and he received $600,000 from Householder’s associates in payments passed through a company created by former Ohio GOP chairman Matt Borges, who was working on the issues as a lobbyist on behalf of a FirstEnergy subsidiary, the affidavit says.
Cepedes’ role includes helping FirstEnergy funnel $15 million into a non-profit known as Generation Now to fund a media and advertisement blitz after Householder introduced the bill in April 2018, the affidavit says. The campaign provided political cover to legislators to vote for the bill, and urged constituents of those opposed to call their officers and urge them to vote for it, the affidavit says.
FBI investigators say Householder and his associates created and used Generation Now to conceal from the public who was bankrolling the campaign.
Investigators seized text messages between Cespedes and Jeff Longstreth, who is described in the affidavit as Householder’s “longtime campaign and political strategist” and who helped control Generation Now’s finances. The two discussed a $15 million budget spread out over eight weeks, and bank records show that FirstEnergy’s payments to Generation Now funded the entire campaign, the affidavit says.
Cespedes also coordinated with the enterprise to defeat the ballot referendum after he received word from Borges that groups opposing the bailout had hired firms to collect signatures from voters to put a referendum overturn the legislation on the November 2019 ballot. Cespedes urged the Generation Now to hire all the major firms so the opposition could not, and offered to “up the budget” to Generation Now, the records show. Investigators also recovered documents showing Cespedes was tracking which firms the Generation Now hired.
Investigators seized documents from his possession in which Cespedes wrote, “Householder has a history of favorably rewarding those who provide both early and late money into his efforts,” the affidavit said. He also wrote that “[i]f Householder is successful the effort will likely be led from his Chamber potential legislative introduction,” the affidavit says.
The affidavit also says that Borges called Cespedes immediately before and after he offered to pay a $15,000 bribe to a member of the opposition group for inside information. Borges also created a company that was fed solely by money from Generation Now, and wrote a $100,000 check to Cespedes’ company, 614 Solutions.
In addition to owning the Oxley Group, Cespedes is a commissioner on the Ohio Civil Rights Commission, according to the organization’s website. He previously served as a member of the Ohio Arts Council, was the Ohio Liaison for the White House Office of Public Engagement during President Barack Obama’s administration, and sat on the board of the Capitol Square Review and Advisory Board.
Cespedes also worked under Ohio Treasurer Joe Deters from 2002 through 2006, when Borges was Deters’ chief of staff. The office was rocked by scandal when a former Lehman Brothers broker pleaded guilty in state and federal courts in Cleveland to running a $125 million investment scam.
That investigation uncovered allegations that the broker, Frank Gruttadaria, masked a $50,000 campaign contribution to Deters in exchange for receiving securities commissions from the treasurer’s office. Cuyahoga County Prosecutor Bill Mason’s office accused Borges of telling the state investments director to dole out state securities business to a shortlist of politically generous brokers, and three people in Deters’ office -- including Borges -- ultimately pleaded guilty.
Cespedes’ LinkedIn page lists his position as investment officer and said he “managed the state’s $4 billion investment portfolio and supervised the office’s approval process for broker/dealers and underwriters,” and that he administered the state’s lottery account.
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