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Watch | What 'dark money' is and its role in Larry Householder's indictment and ousting as Ohio House Speaker: Legally Speaking

3News Legal Analyst Stephanie Haney explains what 'dark money' is, and what's legal and not legal to do with it
Credit: AP
Former Ohio House speaker Larry Householder speaks before Ohio Governor Mike DeWine's Ohio State of the State address at the Ohio Statehouse in Columbus, Ohio, Tuesday, March 5, 2019. (AP Photo/Paul Vernon)

CLEVELAND — Legal Analysis: On Thursday, Ohio state Representative Larry Householder was unanimously voted out as Speaker of the House, within an hour of being indicted by a grand jury on a federal racketeering conspiracy charged tied to the alleged improper use of so-called "dark money."

“Dark money is a breeding ground for corruption," U.S. Attorney David M. DeVillers said while announcing the formal charge against Householder and four others, and adding that "this investigation continues."

Dark money is money used to influence politics, when it’s spent by non-profit organizations that don’t have to reveal who their donors are.

Generation Now, the group at the center of Householder’s bribery scandal, claims to be the most common kind of these groups. It's registered as a 501(c)(4) organization formed to promote social welfare, just like the National Rifle Association and Planned Parenthood.

Legally speaking, groups like Generation Now can take in unlimited donations and spend that money on elections, without anyone outside of the organization ever knowing where that money came from.

Dark money is hard to trace, but there are limits to what a 501(c)(4) organization can do.

For starters, politics can’t be its main purpose, according to the Internal Revenue Service. The sort of unofficial rule here is less than half of its spending can go to elections.

Generation Now claims to exist solely to promote energy independence and economic development, but the Department of Justice says that’s not true.

The DOJ says Generation Now was more like Householder’s personal piggy bank.

It is not legal to use Dark money to hide bribes, for example by secretly passing money from companies to politicians, in exchange for passing laws in their favor. 

Householder is accused of using some of the more than $60 million allegedly paid into Generation Now by FirstEnergy Solutions, to settle a personal lawsuit, pay for a home in Florida and pay thousands in credit card debt, all in exchange for supporting the billion dollar bailout of two nuclear power plants.

If all of this is true, we’re not talking about dark money here. We’re talking about racketeering, and up to 20 years in prison for everyone involved.

Stephanie Haney is licensed to practice law in both Ohio and California.

The information in this article is provided for general informational purposes only. None of the information in this article is offered, nor should it be construed, as legal advice on any matter.