Nucleargate in Ohio

Huge criminal racketeering conspiracy orchestrated reactor bailouts

By Linda Pentz Gunter

It’s been a bit of a Watergate week for nuclear power, with individuals in two states arrested for criminally defrauding the public to keep nuclear power alive. In Ohio, it was public officials, believed to be backed by nuclear company money, who illegally orchestrated a massive subsidy. In South Carolina, it was the arrest of an energy company official who has pled guilty to a $9 billion nuclear fraud. This week, we feature the Ohio story. Next week, it will be South Carolina’s turn.

If you were going to pull someone out of central casting to play a thuggish villain, you would choose Larry Householder. But he wouldn’t need any acting skills.

On July 21, Householder, along with four others, was arrested for his alleged involvement in what amounts to the biggest criminal racketeering conspiracy in Ohio history. Somehow it’s not a surprise that it revolved around pots of money to keep two aging and unaffordable nuclear power plants open.

Larry Householder’s straight-from-central-casting campaign ad

While Householder may physically embody everyone’s idea of a gangster, it’s not his official profession. He is — and presumably that will soon be a “was” — the Speaker of the Ohio House of Representatives.

The scheme is laid bare in an 81-page criminal complaint. It was busted open by a year-long, detailed and covert investigation by the US Attorney’s office and the FBI, and involves the flow of $61 million of dark money directed toward activities that would ensure the passage of legislation in Ohio guaranteeing the bailout of the Davis-Besse and Perry nuclear reactors to the tune of $1.5 billion. The subsidy is being funded via a surcharge on electricity customers.

The bill, known as HB6, also slashed mandates for wind and solar energy and eliminated energy efficiency requirements. It was, as David Roberts described it on Vox just after the bill passed in July 2019, “the worst piece of legislation in the 21st century” and “the most counterproductive and corrupt piece of state energy legislation I can recall in all my time covering this stuff.”

FirstEnergy Solutions, the then owner of the plants, had threatened their closure if the subsidy was not forthcoming.

That ultimatum set in motion a breathtaking sequence of criminal activities beginning in 2018, with the $61 million slush fund first used to bankroll political elections, then to ensure sufficient votes for the July 2019 passage of HB 6, and finally the sometimes violent suppression of citizen efforts to overturn it. 

Millions of dollars went into the campaign war chests of 21 political candidates, in order to stack the House with friendly votes for the subsequent nuclear bailout bill. (Only one ended up voting against it.) The money also shored up Householder’s successful bid to regain the House Speakership. 

The money also went into the personal pockets of the co-conspirators, although the exact amounts and their purposes are still being investigated.  As events unfold we may also learn whether votes in favor of HB6 were “bought” by Householder.

As the story is far from over, more arrests will almost certainly follow. And more news on this will continue to break. By necessity, this can only be a glimpse of the story so far.

The crimes with which Householder and four political advisors and lobbyists have been charged constitute  “a shameful betrayal of public trust,” said FBI special agent, Chris Hoffman during a July 21 press conference announcing the arrests and indictment. 

It was also, “likely the largest bribery money-laundering scheme ever perpetrated against the people of the state of Ohio,” said US Attorney for the Southern District of Ohio, David DeVillers at the same press conference, whose department led the investigation alongside the FBI.

But whose money was it?

The racketeering scheme that the justice department uncovered found a money trail of $61 million flowing from what they are required to call “Company A” in the indictment, into a 501(c)(4) fund named Generation Now. Generation Now has also been charged with racketeering conspiracy.

“Company A” is most likely FirstEnergy, whose subsidiary, FirstEnergy Solutions (FES) was the then owner of the crumbling and uneconomical Davis-Besse and Perry reactors. (They are now owned by yet another spin-off, Energy Harbor).

Although FirstEnergy has been served with subpoenas, so far no one there has been named in the indictment. And while “Company A” clearly handed out the $61 million, DeVillers said of the web of conspirators that “this enterprise went looking for someone to bribe them”. 

Meanwhile, the money trail that led from “Company A” to Larry Householder’s pocket and others’ was deftly concealed. As DeVillers described it, the entire scheme was “created completely and utterly to hide where there donor came from and [who it] was.”

Generation Now, as a 501(c)(4), was not obliged to declare the source of its funding. If it had been, said DeVillers at the press conference, the criminal enterprise it operated could never have happened. Despite its name, DeVillers said, “make no mistake, this is Larry Householder’s 501(c)(4).”

And a Republican-led operation. Generation Now’s treasurer is D. Eric Lycan, a Lexington, KY attorney with ties to the Kentucky House Republican Leadership Caucus. Generation Now made ad buys for an entity called Strategic Media Placement, run by GOP operative, Rex Elass. As DeVillers told the media as he pointed to a rather simple flow chart displayed at the press conference, “the real one would have covered this whole wall.”

Screenshot of US Attorney DeVillers’ flow chart shown during press conference

FBI special agent Hoffman lumped Householder and his cronies in with FBI usual suspects like “gangs, child sex trafficking and Chinese spies,” but said that “public corruption is actually the top criminal priority for the FBI.”

But it should not be the priority for the US Attorney’s office. DeVillers, a Republican and Trump appointee, could not suppress his anger as he told reporters that his district is already struggling with limited resources and “a massive overdose epidemic where you’ve got people dying of overdoses of fentanyl, people stacked up like cord wood at a coroner’s office, we’ve got violent crime sky-rocketing, we’ve got two Franklin County sheriff’s deputies shot this morning.” 

And yet, he continued, “we have to take our resources away from those real victim cases and investigate and prosecute some politicians who just won’t do their damn job.”

Chinese spies were in fact part of the Generation Now misinformation campaign, a scare tactic used to derail efforts by a coalition called Ohioans Against Corporate Bailouts (OACB), which launched a petition drive to repeal HB6. 

A FirstEnergy/Householder front group ran scaremongering “yellow peril” ads to deter people from signing a petition that would have reversed the nuclear bailout bill, HB6

As petitioners took to the streets, attempting to gather enough signatures to get a repeal of HB6 onto a November ballot, a smear campaign suggested that, among other things, the petition gatherers were in the payroll of Chinese government operatives who were “quietly invading our American electric grid” and that if you signed the HB6 repeal petition, the Chinese government would be capturing “your name, your address, your signature”. National security would be at risk.

Most ludicrously, the Chinese scare ad, put together by Ohioans for Energy Security (in reality a front group funded by Generation Now) suggested China, and by definition the ballot petitioners, were “taking Ohio money,” which is precisely what the Householder racket was doing.

It worked. OACB eventually ran out of time and petition gatherers, with some having been bought off with a portion of the $61 million. In October 2019, OACB withdrew the initiative, which is when HB6 effectively became law. And it still is.

That’s the worst part of the news. Householder and others may pay a fine, or even see jail time, but the people of Ohio remain in danger. Davis-Besse and Perry are two of the most seriously degraded reactors in the country and should have been shut down long ago. 

The notorious hole in the Davis-Besse reactor pressure vessel, showing a buildup of boric acid deposits from leaking nozzles (not shown). (Photo US NRC)

If Davis-Besse suffered a serious meltdown, there could be “1,400 peak early fatalities, 73,000 peak early injuries, 10,000 peak cancer deaths, and $84 billion in property damage,” according to Beyond Nuclear’s Kevin Kamps, citing a 1982 study by the Nuclear Regulatory Commission. With populations having soared since then, today’s figures would be far higher, he pointed out.

Likewise, the Perry plant’s numbers would be well above the 5,500 acute radiation deaths, 180,000 radiation injuries, 14,000 latent cancer fatalities, and $102 billion in property damage, cited in the 1982 study, should that reactor suffer a major accident.

The $1.5 billion subsidy, says Toledo public interest attorney, Terry Lodge, “didn’t go to ensure safe nuclear plant operations for the next five years, but instead was paid to investors as dividends once the FirstEnergy bailout was over.”

However, it looks unlikely that HB6 will be undone, despite the criminal machinations behind its passage. While Howard Learner, executive director of the Chicago-based Environmental Law & Policy Center, told the Toledo Blade that the Ohio bailout “should not remain in effect if obtained through bribery or other means”, it would have to be nullified by the legislature itself, an action for which there seems little political inclination.

One reason for that reluctance could be yet one more sinister discovery. Prior to the vote on HB6, a Trump operative, Bob Paduchik had pressured “at least five members of the Ohio House of Representatives,” to vote ‘yes’ on HR6, according to Politico. “The message is that if we have these plants shut down we can’t get Trump reelected,” one senior legislative source told Politico.

As DeVillers said: “We’re not done with this case.”

Headline photo by By Stokkete/Shutterstock

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