COLUMBUS – Akron-based FirstEnergy and its executives want to dismiss a lawsuit brought by shareholders alleging securities fraud, saying the company’s political donations were protected by the First Amendment.
FirstEnergy has been under surveillance for federal prosecutors alleged Ohio House President Larry Householder and four other people engaged in a nearly $ 61 million corruption plan to pass a $ 1 billion bailout for two nuclear power plants, then owned by FirstEnergy Solutions, and defend this law against a voting initiative to block it.
A 100% subsidiary of FirstEnergy contributed most of that money the company previously disclosed in a federal lawsuit.
No one from FirstEnergy has been arrested or charged with any crime, but the fallout has been massive. Within 48 hours of the arrests, FirstEnergy shareholders collectively lost $ 7.6 billion as the parent company’s stock price fell 34%.
Shareholders filed lawsuits alleging violations of anti-fraud law in the Stock Exchange Act. Now lawyers for FirstEnergy want to dismiss this lawsuit, arguing that shareholders did not detail any illegal acts by FirstEnergy and that political donations were protected by the First Amendment.
“At most, the complaint alleges that Householder has received contributions, but it is not bribery to support politicians who promote policies that match its interests,” FirstEnergy lawyers wrote in a petition filed Tuesday. in federal court.
Businesses can legally donate unlimited amounts to nonprofits that don’t need to disclose their donors, thanks to a 2010 United States Supreme Court decision.
Shareholders point to Householder’s talks with former FirstEnergy CEO Chuck Jones, former senior vice president of external affairs Michael Dowling and former lobbyist Ty Pine as evidence of wrongdoing. But lawyers for FirstEnergy say it does not detail “an explicit counterpart agreement whereby Householder pledged a specific official act in return for contributions.”
FirstEnergy and its leaders “could not have falsely concealed an explicit counterpart agreement that did not exist and could not have improperly” plotted “to engage in legally authorized political discourse,” according to the motion.
The reprimand for any wrongdoing on the part of FirstEnergy comes as the company is discuss agreement with federal prosecutors this would allow him to avoid possible criminal prosecution.
FirstEnergy’s actions since the arrests last July are also not a problem, lawyers say, although the company fired Jones, Dowling and another executive, Dennis Chack in a $ 4 million payment to Sam Randazzo, who was later appointed to head the Public Utilities Commission of Ohio. Randazzo resigned shortly after the disclosure and the FBI raided his home.
“There is no specific fact to show that the Randazzo payment was illegal or that unidentified ‘FirstEnergy executives’ ever entered into a matching arrangement in which payment was offered in exchange for specific official action,” wrote the lawyers for FirstEnergy. Rather than commit a crime, the company violated “ambitious internal policies”.
Jones, in a separate file, argued that he had no obligation to disclose political contributions or the payment from FirstEnergy to Randazzo “based on a prediction that the government might later achieve the disputed legal conclusion that this conduct was illegal “.
“These confessions only show that Generation Now and Longstreth believed it would be in their own best interests to make the confession requested by the government in exchange for favorable treatment,” the lawyers wrote.
A federal judge will decide the fate of the trial in the coming weeks.
Akron Beacon Journal reporter Doug Livingston contributed to this article.
Read FirstEnergy’s legal arguments here:
Read the motion from former FirstEnergy CEO Chuck Jones: