New documents disclosed in federal court by FirstEnergy’s former CEO Chuck Jones raise new questions about what other top company executives knew about the existence of a $4.3 million payment to Samuel Randazzo as early as December of 2018.
The payment to Randazzo, made weeks before his February 2019 appointment by Ohio Gov. Mike DeWine to be the chairman of the Public Utilities Commission of Ohio (PUCO), is now the subject of an ongoing federal criminal investigation in Ohio. DeWine appointed Randazzo to the PUCO, which regulates FirstEnergy’s Ohio utilities, despite being warned of Randazzo’s murky financial ties to FirstEnergy.
Jones disclosed the existence of the payment to Randazzo’s private consulting firm at an Executive Council meeting in December 2018, according to new documents filed in federal court last Friday by Jones’ defense attorneys.
Most of the individuals who served in these high-level positions at FirstEnergy in 2018 have since left the company, either voluntarily through retirement or as part of a wave of terminations and separations that followed on the heels of the federal criminal investigation.
Others remain, including FirstEnergy’s current CEO Steven E. Strah, and SVP of operations Samuel Belcher. Strah served as a SVP and chief financial officer in 2018, and later succeeded Jones as CEO in 2020. Belcher was president of FirstEnergy Utilities in 2018.
“We are not able to comment due to pending litigation,” Jennifer Young, an external communications manager for FirstEnergy, said when asked via email if Strah or Belcher attended a December 2018 Executive Council meeting where Jones disclosed the Randazzo payment.
Last summer, as part of a deferred prosecution agreement with federal prosecutors, FirstEnergy admitted that it paid $4.3 million to influence Randazzo’s official actions on the PUCO for the company’s benefit. Randazzo has not been named or charged by the prosecutors, but matches the description of the former PUCO chairman dubbed “Public Official B” in the FirstEnergy criminal complaint.
A detailed statement of facts about the case signed by FirstEnergy’s current CEO, Steven E. Strah, as part of the company’s agreement with prosecutors appears to focus on actions by Jones and Dowling. The statement of facts did not mention the December 2018 meeting where Jones may have disclosed the $4.3 million Randazzo payment to other top FirstEnergy executives involved in the Executive Council.
Jones and Dowling are not named in the federal criminal case, but are widelyreported to be “Executive 1” and “Executive 2” described in court filings. Neither Jones or Dowling have been charged by federal prosecutors. Both deny wrongdoing and maintain they were wrongly terminated by FirstEnergy.
First public mention of the internal Executive Council meeting where the Randazzo payment was allegedly disclosed came last week in a shareholder securities lawsuit
On Friday, lawyers for Jones and Dowling filed a motion to compel a second deposition of a representative of FirstEnergy in the case. According to the two defendants’ counsel, FirstEnergy’s designated company representative for the first deposition, an assistant controller named Tracy Ashton, was “unable to answer substantive questions.”
Prior to Ashton’s deposition in May, Jones and Dowling’s legal counsel presented FirstEnergy with a chart of topics for questioning, which included the following:
Jones and Dowling intend to question the Company’s representative regarding whether members of the Executive Council knew about contracts with and payments to Randazzo, SFA, and or IEU-Ohio. Jones and Dowling also intend to ask when the Executive Council members learned about Randazzo’s potential appointment to the PUCO, and any communications they had regarding the payment after learning of Randazzo’s potential or actual appointment. The Company’s corporate representative should be prepared to offer specific deposition testimony as to the Executive Council meeting on or about December 19, 2018, in which Jones disclosed the $4,333,333 payment to SFA.
“SFA” is Randazzo’s consulting firm, the Sustainability Funding Alliance of Ohio, which received the $4.3 million payment from FirstEnergy. IEU-Ohio is the name of Randazzo’s other consulting firm, the IEU-Ohio Administration Company. FirstEnergy paid the two consulting firms a total of $22.8 million between 2010 and early 2019, according to an audit of FirstEnergy made public by the Federal Energy Regulatory Commission in February.
Randazzo also long represented a non-profit 501(c)(6) industry association called the Industrial Energy Users-Ohio as a lawyer and lobbyist prior to his appointment to the PUCO.
The redacted motion filed by Jones and Dowling’s lawyers on Friday indicates that Ashton was unable to answer these questions:
Attorneys for Jones and Dowling claimed in the motion that FirstEnergy prepared Ashton “to little more” than to recite passages from the deferred prosecution agreement and a script prepared by FirstEnergy’s own legal counsel.
The timing of the alleged Executive Council meeting matters
… on December 17, 2018, Public Official B emailed Executive 2 and others the announcement stating that PUCO was seeking applications for a commissioner. The next day, on December 18, 2018, Executive 1 and Executive 2 met with Public Official B at Public Official B’s condominium. During the meeting at Public Official B’s condominium, Executive 1, Executive 2, and Public Official B discussed the remaining payments under the consulting agreement and Public Official B’s candidacy for the open PUCO chair position.
The next day, Public Official B texted Executive 1 and Executive 2 detailing the remaining payments under his consulting agreement with FirstEnergy Corp. from 2019 to 2024. The payments totaled $4,333,333. Public Official B added, “Thanks for the visit. Good to see both of you,” to which Executive 2 responded immediately, “Got it, [Public Official B]. Good to see you as well. Thanks for the hospitality. Cool condo.”
Later that day, Executive 1 texted Public Official B and Executive 2, “We’re gonna get this handled this year, paid in full, no discount. Don’t forget about us or Hurricane [Executive 1] may show up on your doorstep! Of course, no guarantee he won’t show up anyway.” Executive 1 then attached an image of a venomous snake protruding from a hurricane. Public Official B replied, “Made me laugh – you guys are welcome anytime and any whereI [sic] can open the door. Let me know how you want me to structure the invoices. Thanks.” Public Official B then added, “I think Isaid this last night but just in case – if asked by the administration to go for the Chair spot, I would say yes.”
After meeting with Public Official B in December 2018 to discuss the payout and Public Official B’s candidacy for PUCO Chairman, certain FirstEnergy Corp. executives pushed to have Public Official B appointed as the PUCO Chairman.
Leila L. Vespoli – executive VP of corporate strategy and regulatory affairs and chief legal officer: Vespoli retired from FirstEnergy in April 2019, and now serves on TimkenSteel’s board of directors.
James F. Pearson – executive VP of finance: Pearson retired from FirstEnergy in April of 2019.
Dennis Chack – SVP of product development, marketing and branding: Terminated by FirstEnergy in October of 2020, along with Jones and Dowling.
An archived “Leadership” page from FirstEnergy’s website also listed Robert Reffner as VP and general counsel in 2018, and Ebony Yeboah-Amankwah as VP, corporate secretary and chief ethics officer. Reffner and Yeboah-Amankwah “were separated from FirstEnergy” in November 2020 in connection with the bribery scandal in Ohio.
Strah and FirstEnergy’s other current C-Suite executives are the subject of an ongoing internal review as part of a shaky tentative settlement agreement in multiple derivatives actions filed separately by FirstEnergy shareholders in response to the federal criminal investigation. The review is expected to conclude in September.
