Bloomberg Law
Free Newsletter Sign Up
Bloomberg Law
Welcome
Go
Free Newsletter Sign Up

FirstEnergy Shareholder Lawyers Cite Ex-Executives in Bribe Case

March 23, 2022, 6:52 PM

Proof at trial in a FirstEnergy Corp. shareholder’s derivative suit would likely have shown that a former CEO and vice president of the company were the individuals who arranged bribes to state lawmakers, two attorneys said in a sworn affidavit filed Wednesday in federal court in Ohio.

Former CEO Charles E. Jones and former Senior Vice President for External Affairs Michael J. Dowling apparently “devised and orchestrated FirstEnergy’s payments to public officials in exchange for favorable legislation and regulatory action,” the attorneys for the shareholder told the court. They said that they believe information obtained in discovery would have demonstrated the accuracy of those allegations.

Jones and Dowling deny the allegations. Both are named as defendants in the suit, in which Jones is accused in the complaint of receiving more than $55 million in compensation for his role. In an order Tuesday, Judge John R. Adams of the U.S. District Court for the Northern District of Ohio said 13 others, not including Dowling, are alleged to have received approximately $50 million more in compensation in exchange for implementing the bribery scheme.

The suit alleges FirstEnergy conspired to obtain “a billion-dollar bailout” in the form of legislation increasing ratepayer surcharges. Adams said he was trying to understand how a settlement came about in a similar suit filed in the Southern District of Ohio, which he said was filed in a “forum-shopping” effort. He demanded Tuesday that shareholder Jennifer L. Miller’s attorneys divulge what they had learned.

“FirstEnergy made numerous admissions in its deferred prosecution agreement” with federal prosecutors, including that it paid more than $80 million to two companies for the benefit of public officials, according to Adams.

The two attorneys for Miller, Jeroen van Kwawegen and Thomas Curry, say in their affidavit that the discovery information led them to “understand that Defendant Jones is the individual identified in the DPA as ‘Executive 1' and that Defendant Dowling is the individual identified in the DPA as ‘Executive 2.’”

“Defendants Jones and Dowling have vehemently denied acting improperly, and neither Jones nor Dowling have been charged by the Department of Justice,” they say.

Other shareholders—the Employees Retirement System of the City of St. Louis; Local 103, Electrical Workers Pension Fund, I.B.E.W.; and the Massachusetts Laborers’ Pension Fund—have intervened in the suit as plaintiffs.

Goldman, Scarlato & Penny PC; Rosca Scarlato LLC; Edelson Lechtzin LLP; and John C. Camillus, who practices in Columbus, Ohio, represent the Northern District shareholders. ArentFox Schiff LLP, Giffen & Kaminski LLC, and Debevoise & Plimpton LLP represent FirstEnergy. Jones Day represents the officers and directors.

The case is Miller v. Anderson, N.D. Ohio, No. 5:20-cv-01743, affidavit 3/23/22.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Peggy Aulino at maulino@bloomberglaw.com