CINCINNATI — A lobbyist with ties to Ohio's top Republicans in 2019 paid $15,000 for inside information about a campaign to repeal $1.3 billion in utility subsidies that were later determined to be corruptly passed, according to an FBI agent's testimony Monday.
The agent also said that Secretary of State Frank LaRose wanted to meet with leaders of Akron-based FirstEnergy Solutions — the company that funded the vast majority of the scheme — while Attorney General Dave Yost became angered by the heavy-handed tactics used by opponents of the repeal.
It was the seventh day of testimony in the racketeering trial of former Ohio House Speaker Larry Householder and Matt Borges, a former state Republican Party chairman who lobbied to pass and protect the utility subsidy, House Bill 6. Prosecutors said they corruptly used $61 million from FirstEnergy and other utilities to elect Householder speaker, pass HB 6, and thwart the effort to repeal the bill.
Two co-defendants have pleaded guilty and another died by suicide. FirstEnergy signed a deferred prosecution agreement in which it admitted to many of its misdeeds.
When HB 6 passed in July of 2019, Gov. Mike DeWine signed it the same day. But for Householder and FirstEnergy, there wasn't much time to celebrate. Opponents of the law quickly swung into action, gathering petitions to place a repeal on the November ballot.
In response, FirstEnergy pumped millions more into dark money groups to stop the repeal effort. What followed was a series of xenophobic ads meant to whip up unfounded fears of China.
"They took our manufacturing jobs," a TV ad that ran in August 2019 said. "They shuttered our factories. Now, they're coming for our energy jobs. The Chinese government is quietly invading our American electric grid, intertwining themselves financially in our energy infrastructure. Now, a special interest group, boosting Chinese financial interests, is targeting Ohio's energy, taking Ohio money, exporting Ohio jobs, even risking our national security. They're meddling in our elections."
The ad's producers never showed evidence to support their claims.
The staunchest supporters of HB 6 didn't only try to scare Ohioans into keeping the bailout. Borges also gave a $15,000 check to a man who was supposed to help gather signatures for the repeal effort, FBI Special Agent Blane Wetzel testified.
An employee of Advanced Micro Targeting, Tyler Fehrman complained to Borges of financial struggles related to his divorce. In text messages obtained by the FBI, Borges and Juan Cespedes — a co-defendant who has pleaded guilty — discussed inside information from Fehrman such as the number of signatures gathered by the repeal effort and where the gatherers were focusing their work.
In a conversation between Borges and Fehrman recorded on Sept. 10, 2019, Borges seemed to acknowledge that what he was doing was improper.
"I'm so f****ng nervous," Fehrman said.
Borges replied, "You texted me (that) your personal integrity is not for sale. You're not trying to set me up, are you?"
Borges later said, "It would be bad for both of us if the story came out. But it would be worse for you."
In a subsequent conversation on Oct. 21, 2019, Fehrman told Borges he was nervous because a reporter was asking whether someone working for the petition campaign had been flipped. He said he was also worried about being questioned under oath.
Borges told him that the $15,000 he paid Fehrman wasn't related to the information Fehrman was providing. It was for other projects, Borges said.
"We decided to put those off until this effort is over," Borges said.
Fehrman reported his arrangement with Borges to the FBI. Wetzel, the agent who testified Monday, said Fehrman was upset with Borges, but didn't explain why.
As he explained meeting with Fehrman, Wetzel said the opponents of the repeal campaign were routinely being followed, so he had to be careful that nobody followed Fehrman to meetings with the FBI.
Stories of following and harassing people who signed repeal petitions angered Attorney General Dave Yost, the Toledo Blade reported. In earlier texts, Borges, a former campaign manager for Yost, said that his old boss thought House Bill 6 was a bad law, but didn't speak out against it because FirstEnergy had given Yost money.
But Yost — who has to approve the language of any initiative before it goes on the ballot — erupted at Borges after hearing about a woman who was followed and harassed by people hired to block the repeal effort.
Private investigators were also paid more than $100,000 to track people involved in the petition effort, Wetzel testified. In some instances, they went as far as attaching GPS devices to petition circulators’ vehicles, Wetzel said.
But as Yost was souring on the campaign to support HB 6, another statewide official seems to have been warming to it.
Secretary of State Frank LaRose chairs the Ohio Ballot Board, which also has to review the language of initiatives before they go on the ballot. In a November 2019 text conversation, Borges told Cespedes that LaRose wanted to meet John Kiani, board chairman of FirstEnergy Solutions, the FirstEnergy subsidiary that owned the failing nuclear and coal plants.
Borges said LaRose, "told me he wants to get to know Kiani, and I said, 'Are you sure about that?'"
Cespedes replied, "He will live to regret that."
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