‘Dark Money’ Ohio Bribe Verdict Shows Citizens United Limit (2)

Ohio’s former House Speaker was found guilty of public corruption capping a landmark trial over a $61 million bribery scheme in which FirstEnergy Corp. paid for a state-funded nuclear bailout.

A Cincinnati jury found Larry Householder, a Republican two-time Ohio House Speaker, guilty of racketeering, an offense for which the southern-Ohio politician could face up to 20 years in prison. The jury also found former Ohio Republican Party Chair Matthew Borges guilty of the same offense.

The case was a major test of the boundaries for “dark money” prosecutions of nonprofit donations because the big question for jurors was how explicit a deal must be to take donations from the realm of normal politics into the zone of a corrupt quid-pro-quo bribe. The verdict could also open the door to additional wire fraud prosecutions against nonprofits.

“It will have a large impact nationally,” said David DeVillers, the former US Attorney for the Southern District of Ohio who originally indicted Householder who is now a partner at Barnes & Thornburg LLP. That’s because the trial is perhaps the first of its kind where a 501(c)(4) nonprofit—a group that’s supposed to be a social welfare organization with anonymous donations but limits on political activities—was the money laundering mechanism for a political corruption scheme.

“If an agency wants to look at 501(c)(4)s and they’re able to follow the money, they’re going to find a lot. And you’re going to see politicians, officer holders and big companies hopefully change their ways,” he said.

Householder’s attorney, Steven Bradley, said he‘d appeal the verdict.

“While we respect the jury’s decision we are very disappointed in the verdict,” he said in an email. “Mr. Householder is looking forward to returning home to be with his family in this difficult time. We will most certainly pursue an appeal and otherwise consider all of our legal options.”

The Department of Justice lawyers came to trial with guilty pleas from accomplices, implicating texts, phone recordings, bank statements, and a deferred prosecution agreement from Akron-based FirstEnergy, which admitted to funding the scheme in exchange for a $1.3 billion energy bailout bill meant to support Ohio’s two struggling nuclear power plants.

The prosecutors focused their trial evidence on how the company funneled donations through several nonprofits to bolster politicians that would support Householder’s bid for the speakership. Householder, in addition to calling fellow legislators to the stand, spoke in his own defense saying he supported the bailout on its merits and there was no scheme.

“Campaign finance laws are a prophylactic—they’re supposed to prevent corruption from arising in the first place,” Brendan Fischer, deputy executive director of Documented, a campaign finance watchdog group, said in an email. “Householder is advocating for a world in which it is easy to avoid preventative anti-corruption measures, and easy to avoid accountability for actual corruption, as long as you’re careful enough to avoid putting the quid pro quo bargain in writing.”

The verdict has powerful implications for Ohio and the rest of the country because it shows that while Citizens United may have opened the floodgates of corporate cash, “that doesn’t mean that pay-to-play is legal or right,” said Catherine Turcer, executive director of Common Cause Ohio and a longtime Ohio advocate of campaign finance and government reform.

“Ohioans can rest easy tonight knowing, that at long last, someone will be held accountable,” she said.

The verdict also opens the door for a different avenue of criminal cases against political nonprofits, DeVillers said.

With this victory, the US Department of Justice could be emboldened to bring wire fraud cases, something the Southern District of Ohio contemplated but didn’t bring against Householder, DeVillers said.

Prosecutors could make those cases by proving that the nonprofit is used by a politician in ways that violate the internal revenue code. For example, using more than 50% of the nonprofit’s funds to attack a lawmaker’s political opponent.

“That’s the next step, and are we going to take that step because then you don’t even need quid-pro-quo corruption?” he said. “I’m not sure we should, but it’s difficult to prove quid-pro-quo corruption and that’s what we had to do in this case.”

The case is US v. Householder, S.D. Ohio, No. 1:20-cr-00077-TSB, 3/6/23.