In a room full of company investors at an industry conference, then-FirstEnergy CEO Chuck Jones made an optimistic promise.
His claim soothed investors but sent a shock through several company executives, who sat in on several such meetings arranged throughout the day at the Edison Electric Institute’s annual meeting in Orlando in early November 2019.
“I can almost guarantee you we will not have to go in for a rate case in May of 2024,” Jones said, according to testimony from company treasurer Steve Staub at Jones’ criminal trial.
The Public Utilities Commission of Ohio had ordered FirstEnergy to undergo such a rate case in 2024, and the company privately expected to take a $150 million annual hit to its revenue by the time the regulators were done.
But lying to investors would be illegal. Jason Lisowski, FirstEnergy’s chief accounting officer, was worried. So was Staub, who was concerned enough that he sought out Irene Prezelj, FirstEnergy’s vice president of investor relations.
She already knew what Jones was planning.
A few days prior, Mike Dowling, a senior vice president overseeing FirstEnergy’s lobbying, had passed on a message. Sam Randazzo, chairman of the PUCO, said he’s clear on Jones “definitively stating” there would be no rate decrease in the foreseeable future, a surprise to the analysts. And Jones gave Prezelj a private heads-up that day. She, too, was worried.
“I wasn’t in a position to tell the CEO he couldn’t be confident and strident,” she testified. “[But] I didn’t see anything that supported that high confidence.”
A PUCO ruling less than two weeks later would vindicate Jones’ predictions, absolving FirstEnergy of the rate case its leaders worried about. The company’s share price, which set most of Jones’ $20 million in compensation that year, jumped by about $1 per share in response.
Prosecutors are hoping jurors see an obvious reason behind Jones’ oracle-like confidence.
In January 2019, about ten months prior, Jones and Dowling discreetly transferred $4.3 million to a corporate bank account Randazzo controlled. From there, they met with him several times to discuss their concerns about a rate case in 2024, not long before Gov. Mike DeWine appointed Randazzo to the PUCO.
That money, prosecutors allege, was a well-disguised bribe paid in exchange for a series of favors from Randazzo from his powerful perch in state government.
The rate case is just one of the ways prosecutors have sought to show jurors the value that an undercover corporate agent working inside a regulatory agency like the PUCO can deliver. That has been a central thesis of the first legal effort to hold corporate actors accountable in what’s likely the biggest public corruption scandal in state history. Prosecutors reserved Prezelj as their final witness before wrapping a case they’ve been making to jurors since Feb. 3 in the Summit County Court of Common Pleas in Akron.
They’ve taken testimony from 26 witnesses, including 11 current or former FirstEnergy executives and attorneys, six of whom signed immunity agreements with prosecutors in exchange for their testimony.
Jones and Dowling have argued the $4.3 million settled a 2015 legal action between FirstEnergy and Randazzo’s legal clients from his time as a private sector attorney. Randazzo, they say, stole that money from his clients. Randazzo died by suicide in 2024, leaving jurors to decide whether to believe the two men on trial pinning the blame on a dead man.
Randazzo made FirstEnergy’s problems go away
A rate review entails regulators combing through a utility’s books and determining what costs it can charge customers and what returns the company can make on its capital investments.
The PUCO (before Randazzo’s tenure) in 2017 granted FirstEnergy what was known as a “distribution modernization rider” – a pot of between $158 million and $204 million per year to be spent modernizing the electrical grid. But in exchange, the company would come in for its first rate review in about two decades in 2024.
As an accountability measure, the PUCO required an independent audit of the distribution modernization rider. Paul Corey, an attorney for Oxford Advisors, a consultancy hired by the PUCO, told jurors how he and his staff identified a problem with FirstEnergy’s use of the money it did collect. It dumped it into a huge pot of money that held funds from different sources. So there was no way to tell if the “distribution modernization” funds went to modernizing the grid. At least some of the money went out to company investors as dividends, Corey testified.
“If the company can increase its dividends during the period of the rider DMR, perhaps they didn’t need the subsidies,” he said.
Corey and his firm detailed these findings in a section of a draft of their audit. But at the behest of Randazzo, the PUCO chairman, Corey deleted the recommendation from a draft of his audit before it was published, he testified.
The Ohio Supreme Court in June 2019 invalidated the distribution modernization rider, faulting the PUCO for failing to require FirstEnergy spend the money on the grid and demonstrate as much. This in itself didn’t scuttle FirstEnergy’s rate review. But the PUCO needed to issue a legal entry recognizing and heeding the Supreme Court’s ruling.
In August 2019, Randazzo, through an aide, sent an email to Greg Price, a senior administrative law judge at the PUCO. He told Price that, given the court ruling, “there is no need to require the filing of a rate case in 2024” for FirstEnergy.
Price testified in court that he didn’t think this was appropriate – he’d be making an order that no party in a case even asked him to do or argued about in public. It had huge implications for the company’s 2 million customers. He told the PUCO’s legal director about his concerns. He asked Randazzo for a meeting and went ignored.
When Randazzo asked him a second time, Price saw no use resisting the chairman. The PUCO issued its order in November 2019. Texts show Randazzo sent early notice to FirstEnergy before the ruling. Jones texted Randazzo a picture of the company’s share price increasing after the fact.
“Thank you,” Jones said.
Dennis Chack, a company senior vice president whose office sat down the hall from Jones on the 19th floor of the company’s Akron headquarters, said he remembers working on a project in 2019 to stand up a company subsidiary, FirstEnergy Advisors, as an energy broker, connecting customers to new electric suppliers.
This required a license, and ratepayer advocates were fighting the company at the PUCO, claiming FirstEnergy would use its monopoly power to abuse customers. Chack testified that he asked Jones for help with Randazzo on the issue. And so Jones took Chack and another official to Randazzo’s mansion in Naples, Florida, where they talked about several different PUCO issues. That all occurred despite rules that prevent judges or regulators from discussing cases with only one side of a conflict and not the other, a rule designed to protect the fairness of proceedings.
Jones then asked Chack and John Skory, a company vice president, to leave the room for what Chack estimated was a ten-minute conversation.
Sitting in a jury box, Chack, one of the former FirstEnergy executives to sign an immunity agreement, read a text message Jones sent him after he asked for an update.
“He will get it done for us but cannot just jettison all process,” Jones wrote. “Says the combination of overruling [PUCO] staff and other Commissioners on decoupling, getting rid of [significantly excessive earnings test] and burning the DMR final report has a lot of talk going on in the halls of PUCO about, does he work there or work for us. He’ll move it as fast as we can.”
The PUCO granted FirstEnergy Advisors its broker’s license about a month later.
An unregistered lobbyist
Among the charges, prosecutors say Randazzo acted as an unregistered lobbyist for the company.
During witness testimony, they presented evidence of Randazzo steering the state’s budget to rework the calculations behind the PUCO’s “significantly excessive earnings test” in such a manner as to uniquely benefit FirstEnergy, given its corporate structure.
Randazzo also advocated for and helped draft House Bill 6. The legislation, eventually signed by DeWine, provided a $1.3 billion ratepayer-funded bailout of FirstEnergy Solutions’ struggling nuclear plants on Lake Erie. It also created a mechanism for FirstEnergy to “decouple” its costs and revenue, allowing it to charge ratepayers for tens of millions of dollars.
Prosecutors have shown jurors texts and emails showing Randazzo – widely regarded as an expert on energy policy and seen as a neutral party given his state job – meeting with lawmakers and steering bill amendments.
“I’ve been on the phone with [Randazzo] last night and all day on the FES ‘audit’ issue. I’m so ready to be done with HB6!!” Dowling wrote in a text at the time.
All parties have been prohibited from bringing it up, but the passage of HB6 and the no-holds-barred campaign from FirstEnergy to thwart an effort to repeal the bill, led to the racketeering conviction of ex-Ohio House Speaker Larry Householder, who is currently in federal prison serving a 20-year sentence. Three others pleaded guilty or were convicted. FirstEnergy, as a corporate entity, in 2021 signed an agreement with federal prosecutors, admitting to bribing both Householder and Randazzo, and pinning most of the culpability on Jones and Dowling.
A relationship born in secrecy
Randazzo’s financial relationship with FirstEnergy dates back at least to 2013, when he signed an agreement to work as a sales consultant for FirstEnergy Solutions, the company’s coal and nuclear generation (unregulated) arm, as opposed to its electricity distribution (regulated) division.
Even then, his consulting contract for tens of thousands of dollars per month rankled some at the company. Mark Hayden, an associate general counsel, was asked to oversee that contract. He told jurors he didn’t understand what value FirstEnergy Solutions was getting from Randazzo, and saw a “pretty clear conflict of interest” given Randazzo’s legal clients, heavy industrial energy users, almost always opposed FirstEnergy in PUCO cases.
“It’s bad enough that we are paying this guy every month to do nothing – but to make matters worse, he takes positions in cases that are contrary to the company that hired him to represent its interests,” he emailed to his boss, Ebony Yeboah-Amankwah. “That is truly the definition of bull—-.”
That contract survived Hayden’s effort to kill it. Same for Don Schneider, president of FirstEnergy Solutions, who said he didn’t feel right paying Randazzo so much money while the company laid off workers due to pressure from the unregulated company’s losses.
Yeboah-Amankwah agreed with Hayden at the time. Regardless, she testified that in 2015, she was asked to amend that consulting agreement.
The Industrial Energy Users of Ohio, Randazzo’s clients, had aggressively fought FirstEnergy for months in a PUCO case, even as FirstEnergy Solutions paid Randazzo as its consultant. But the parties entered private negotiations and eventually agreed on a solution. Industrial Energy Users of Ohio would remove its opposition from the PUCO case, which carries a lot of weight with the commissioners. In exchange, FirstEnergy made a cash payment, which it hid from other parties in the case.
However, that money didn’t go to a special bank account lawyers use to house their clients’ money. It went to the Sustainability Funding Alliance of Ohio, a company owned by Randazzo that had no employees.
And it’s here that Randazzo used Sustainability Funding Alliance of Ohio, and his impishly named other company, the Industrial Energy Users of Ohio Administration Co., to steal from the Industrial Energy Users of Ohio. Brakey Energy, led by Matt Brakey, represented several comparatively smaller industrial players as one member of the Industrial Energy Users of Ohio and was the chairperson of all members. He said he never knew about Randazzo’s financial dealings with FirstEnergy through his private company, nor any $4.3 million payment.
All the while, Randazzo was technically a public official. He sat on the PUCO nominating council, a body that would send the governor a shortlist of candidates from which to choose to fill open commissioner positions.
An opportunity arose shortly after DeWine won his competitive 2018 bid for governor. With then-PUCO Chairman Asim Haque accepting a new job, DeWine would have two spots to fill.
FirstEnergy heavily backed DeWine in 2018, and Jones even hosted a fundraiser for him in his own backyard. And so Jones and Dowling drove from Akron to Columbus to celebrate with the governor-elect, his lieutenant governor Jon Husted, and Josh Rubin, a FirstEnergy consultant with close ties to DeWine.
Dowling’s handwritten notes show a plan to “explain things like he doesn’t know anything about it” and also to “not mention that we are meeting with Sam Randazzo after.”
Just like Dowling wrote, from dinner with DeWIne, Dowling and Jones went to Randazzo’s residence in Columbus. In a 2023 deposition shown to jurors, Dowling offered limited memories of the dinner and the visit to Randazzo’s.
He said Randazzo asked that Jones “consider accelerating” the payments, which were owed to his clients through 2024, due to his originally planned retirement. Dowling characterized the payments as going toward Randazzo’s clients, not Randazzo personally, which is a key plank of his defense.
At 9:53 p.m., after the dinner, Randazzo texted the two men.
2019 1,633,333
2020 600,000
2021 600,000
2022 600,000
2023 600,000
2024 300,000
Total 4,333,333
Thanks for the visit. Good to see both of you.
From there, the three texted about administrative details of how invoices had been handled. The next morning, Jones responded that they would get this “handled this year, paid in full, no discount.” Randazzo responded.
“I think I said this last night but just in case – if asked by the administration to go for the Chair spot, I would say yes,” he said.
Jones then told him that at the dinner, he offered DeWine several attributes he should look for in a PUCO chair, and “you fit all of those.”
The two men worked with others in the company’s legal and financial departments to execute the payments. They did so despite Yeboah-Amankwah, a top company lawyer and chief ethics officer, advising them not to pay. Yeboah-Amankwah said that Leila Vespoli, the chief legal officer, advised the same, although Vespoli did not testify at trial.
A relationship kept secret
Prosecutors summoned several witnesses to make clear that throughout Randazzo’s tenure, Randazzo, Jones and Dowling all took steps to keep the $4.3 million payment a secret.
Dave Anderson, an advocacy journalist, trawled through thousands of pages of bankruptcy records to establish a link of some kind at the time between FirstEnergy and Sustainability Funding Alliance of Ohio. But a blog post he published at the time estimated the relationship as worth a few thousand dollars.
Brakey, chairman of the Industrial Energy Users of Ohio, didn’t know about it. Nor did Prezelj, the head of investor relations. (Prosecutors didn’t delve into the touchy area of what DeWIne or his staff knew.)
State ethics officials testified at the trial that Randazzo should have disclosed the income on his annual ethics forms.
The FBI arrested Householder in July 2020, setting off an immense wave of scrutiny on energy politics in Ohio and triggering the repeal of HB6. At one of those hearings, Randazzo told lawmakers that he never represented FirstEnergy as a lawyer or lobbyist, and that he complied with all Ohio’s lobbying laws.
The FBI raided Randazzo’s home in November 2020 (he wasn’t charged by state officials until 2024), prompting his resignation. That roughly coincided with FirstEnergy’s first official acknowledgement to shareholders that it made the $4.3 million payment to a person who was soon to become a senior public official.
Paul Nick, head of the Ohio Ethics Commission, walked jurors through a letter from Randazzo adding an addendum to his financial disclosure statements referring to the $4.3 million as a “final payment for consulting services” – not mentioning any legal settlement or his clients.
None of that money, Randazzo wrote, came from people he knew, or should have known, “was doing or seeking to do business of any kind with any agency for which I was a public official during the years 2013 through 2019.”
From here, defense attorneys will file motions for judgments of acquittal, essentially asking the judge to throw out the case based on insufficient evidence of the state’s case. Assuming that fails, they expect to present their case over about two weeks.