The racketeering trial of former Ohio House Speaker Larry Householder and lobbyist Matt Borges was cancelled due to illness again Friday, giving jurors a long holiday weekend to mull striking new details revealed this week by players directly involved in an alleged $60 million bribery scheme.
It marked the third time since the largest corruption trial in state history began Jan. 23 that U.S. District Judge Timothy Black in Cincinnati has postponed proceedings. Two previous pauses involved jurors testing positive for COVID-19; on Friday, Householder himself was sick, though apparently not with the coronavirus.
Testimony is scheduled to resume Tuesday, after the Presidents Day holiday. Before being slowed by illnesses, the trial was expected to last about six weeks.
The jury must decide whether Householder, 63, and Borges, 50, are guilty of conspiracy to participate in a racketeering enterprise involving bribery and money laundering. Both have pleaded not guilty and maintain innocence. Each faces up to 20 years in prison if convicted.
An indictment alleges Householder, Borges, three other people and a dark money group called Generation Now orchestrated an elaborate scheme, secretly funded by Akron-based FirstEnergy Corp., to secure Householder’s power, elect his allies, pass legislation containing a $1 billion bailout for two aging nuclear power plants, and then vex a ballot effort to overturn the bill with a dirty tricks campaign. The arrests happened in July 2020.
Juan Cespedes, a former lobbyist who has pleaded guilty in the case, provided the most gripping testimony of the week, if not the entire trial.
It amounted to the first time Cespedes had spoken publicly since the arrests. Jeff Longstreth, a longtime Householder associate who was also arrested and charged, has pleaded guilty and is expected to testify soon. The third man arrested along with Householder and Borges, long-powerful Statehouse lobbyist Neil Clark, pleaded not guilty before dying by suicide in March 2021.
“I’m here to tell the truth and be accountable for it,” Cespedes said as his testimony began.
He said he worked for FirstEnergy Solutions and coordinated tens of millions in donations steered to Generation Now, which he described as controlled by Householder and Longstreth.
Cespedes testified Monday to directing a client to give Householder, through Generation Now, a $500,000 campaign contribution in exchange for legislation bailing out two aging nuclear plants owned by his company, which the Ohio House would eventually pass under Householder's watch.
He said that at an Oct. 10, 2018, meeting, another Columbus lobbyist, Robert Klaffky, slid a $400,000 check across to Householder while emphasizing the importance of the legislation.
“Our client cares very much about this issue,” Klaffky said.
Householder looked into the envelope containing the check, made out from FirstEnergy to Generation Now, and said, “Well yes, they do.” Klaffky told cleveland.com he does not recall saying those things.
The remaining $100,000 was given to Longstreth to give to Householder, Cespedes said.
Householder's lawyers argued during opening statements that he was not part of any criminal conspiracy but was engaging in politics as usual.
Cespedes described the contribution as a clear pay-to-play scheme.
“We were trying to establish the fact that our support was specifically tied to the legislation,” Cespedes said.
Generation Now has pleaded guilty to its role in the scheme. In a deal to avoid prosecution, Akron-based FirstEnergy Corp. has admitted to using dark money groups to fund the bribery scheme and agreed to pay $230 million and other conditions.
Cespedes testified Tuesday that he and Borges paid $15,000 off the books in 2019 to referendum operative Tyler Fehrman to try to get inside information on a campaign to repeal the nuclear bailout bill, known as House Bill 6.
The alleged $15,000 bribe is key to the government's case against Borges, a former chair of the Ohio Republican Party. His attorneys describe the payment as a loan to help a friend.
Cespedes testified that it was for a spying effort on behalf of FirstEnergy Solutions, a then-subsidiary of FirstEnergy. He said he tried to keep the firm's executive chair, John Kiani, in the dark because he believed Kiani would apply pressure to go through with the bribe. After Kiani learned of the plan, that came to pass, Cespedes said.
“(W)hat happened to the black ops,” Kiani asked in an Aug. 31, 2019, text, a reference Cespedes testified was to the plan to get inside information. On Sept. 2, 2019, Cespedes texted Borges that Kiani “reiterated to do whatever it takes to get this information.”
Cespedes testified that Kiani had plans to operate the two Ohio nuclear plants for a short period, get a government bailout, then sell them in a deal that could have netted him $100 million. On cross-examination, Borges’ attorneys got Cespedes to concede that he, too, could have gotten rich off the planned sale.
Jurors also heard hours of tapes this week of the voice of the late Clark, which were gathered by two undercover FBI agents posing as developers who had hired him as their lobbyist.
Clark took the pair to a dinner at the Aubergine Private Dining Club in suburban Columbus on Sept. 23, 2019, to meet Householder — and advised them to bring a $50,000 check made out to Generation Now. Republican state Rep. Jay Edwards, of Athens County in southeastern Ohio, and a House staffer also attended.
In the recordings, Clark described himself as Householder's “proxy” and told the agents that, for getting attention, “a noticeable number is $15,000, $20,000 or $25,000.” He said “it goes into a (c)(4),” referring to Generation Now by the IRS code section — 501(c)(4) — that sets the rules for a category of tax-exempt organizations that can raise and spend unlimited amounts without disclosing their donors.
“It’s the speaker’s (c)(4). That’s how it works,” he told them.
