COLUMBUS, Ohio (Legal Newsline) – A federal judge has given preliminary approval to a settlement brought by shareholders of a power provider caught up in a $60 million bribery scandal.
Ohio federal judge Algenon Marbley on May 9 OK’d the $180 million settlement brought forward in March by lawyers at Bernstein Litowitz and Saxena White who are asking for up to $48.6 million in fees.
FirstEnergy has already entered into a deferred prosecution agreement with criminal prosecutors and paid a $230 million penalty. The derivative settlement says insurers will pay $180 million to the company, while requiring six defendants to leave the board of directors. It also adds new duties for the new board like "actively" overseeing spending and lobbying activities.
FirstEnergy was accused of sending $60 million to then-Ohio House Speaker Larry Householder in exchange for legislation that would bail out the company’s failing nuclear power plants.
Litigation followed the FBI’s complaint against Householder and two FirstEnergy lobbyists.
Householder has pleaded not guilty to the alleged bribery scheme. It started in 2016, when FirstEnergy told investors it was seeking “legislative solutions” to the financial problems at two of its aging nuclear plants in Northern Ohio.
Householder was running for a House seat he previously held. He resigned in 2004 after bribery allegations arose. But his district’s voters picked him to retake the seat and he took office in 2017.
FirstEnergy flew Householder to D.C. for the presidential inauguration and allegedly began making quarterly payments of $250,000 to Householder’s PAC, Generation Now.
FirstEnergy and its subsidiaries put tens of millions of dollars into entities controlled by Generation Now as Householder mounted a campaign to be named House Speaker, it is alleged.
Once speaker, Householder helped HB6 get passed, which charged ratepayers a monthly surcharge. It was essentially a $1.3 billion bailout.
The FBI called it a “sophisticated criminal conspiracy to enact legislation.” Voters were given a ballot initiative to overturn the bailout, and First Energy spent $38 million to defeat it.
Holders of FirstEnergy stock will have the opportunity to object to the settlement before it receives final approval. A fairness hearing is scheduled for July 21.
The monetary component, at $180 million, measures favorably against other shareholder derivative settlements and would have a significant effect on the company’s financial position,” the judge wrote.
“Moreover, the company’s insurance policies, which are the main source of recoverable assets, are being eroded by legal costs as this derivative action continues, meaning the ultimate recovery might be higher now than at the end of a case tried to verdict.”