Judge orders attorneys, adviser to explain bailout bill work

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CLEVELAND (AP) — A federal bankruptcy judge in Cleveland has asked one the country’s top law firms to provide details about their lobbying to help a FirstEnergy Corp. subsidiary win passage of now-tainted legislation to provide a $1 billion subsidy for two Ohio nuclear power plants.

U.S. Bankruptcy Judge Alan Koschik on Tuesday ordered three partners and a senior policy adviser from the firm Akin Gump to explain their millions of dollars in billings for lobbying and other work during the period when the Ohio Legislature was considering and then approving the nuclear bailout bill known as House Bill 6 in July 2019.

The order comes as Koschik considers final payments to Akin Gump for its work in the bankruptcy filed in March 2018 by a wholly owned subsidiary of Akron-based FirstEnergy Corp. called FirstEnergy Solutions, which operated the plants at the time. Ownership was transferred in February to a new independent company called Energy Harbor in a deal made in bankruptcy court.

“Akin Gump is aware of the court’s order and will readily provide additional information to facilitate approval of the firm’s fees,” said firm spokesperson Benjamin Harris on Wednesday.

Koschik wrote that the court learned shortly before a July 21 hearing on bankruptcy case fees that the FBI had arrested then-Ohio House Speaker Larry Householder and four others in connection with an alleged $60 million bribery scheme secretly funded by FirstEnergy to get HB6 approved.

Householder and the four men were soon indicted on federal racketeering charges. Householder has pleaded not guilty. Two of the men, a top Householder aide and a former FirstEnergy Solutions lobbyist, pleaded guilty to charges last month.

News of the arrests prompted Koschik to adjourn the hearing until Aug. 18, when he approved fees for other law firms and professionals who worked on the bankruptcy but not Akin Gump. Koschik after several more hearings approved the firm’s fees Nov. 20 “on an interim basis only.”

While the U.S. Justice Department filed no objections to the Akin Gump’s payment request, “the court remains concerned about the value provided to the debtors in connection with their state-level lobbying work in Ohio, given the apparently expanding federal investigations, civil and criminal, regarding the passage of HB6,” Koschik wrote.

The three Akin Gump partners — Sean D’Arcy, Henry Terhune and James Tucker — billed just over $3 million for work they performed for FirstEnergy Solutions between March 2018 and February 2020. Senior policy adviser Geoffrey Verhoff billed $372,000.

Koschik in his order referred to the four as Akin Gump’s “Ohio statehouse team.”

In all, the firm billed $65.5 million for 73,000 hours of work related to the bankruptcy and lobbying for that time period.

Koschik asked the four men to provide a detailed explanation of their listed time and expense entries for the following:

__ Their roles in the selection of House speaker in 2018 and 2019. Householder was elected speaker in January 2019.

__ Roles in the 2018 legislative elections. An FBI affidavit filed the day of the arrests said FirstEnergy provided a dark money group controlled by Householder with millions to help support candidates who Householder needed to win the speakership and get HB6 approved.

__ Interactions and their relationship with Juan Cespedes, the FirstEnergy lobbyist who pleaded guilty to racketeering charges.

__ Their roles in votes that led to the passage of HB6. Koschik ordered D’Arcy to explain “what acts were involved in ‘mobilizing the HB6 vote’ in July 2019.”

__ Whether they or any other Akin Gump professionals advised FirstEnergy Solutions on a $1.9 million payment made to the dark money group, Generation Now, on July 5, 2019, and any other money transfers to Generation Now, the conduit for FirstEnergy’s millions in the alleged bribery scheme.

__ Whether the four were aware of or advised FirstEnergy Solutions about Generation Now before the plants were transferred to Energy Harbor’s ownership.

During a hearing Tuesday, Koschik acknowledged the fees “could all be easily explained.” He said while he was not accusing anyone of wrongdoing, he needed more detail because of the indictments and because federal authorities have not weighed in on the issue.

The order comes as Koschik considers final payments to Akin Gump for its work in the bankruptcy filed in March 2018 by a wholly owned subsidiary of Akron-based FirstEnergy Corp. called FirstEnergy Solutions, which operated the plants at the time. Ownership was transferred in February to a new independent company called Energy Harbor in a deal made in bankruptcy court.

“Akin Gump is aware of the court’s order and will readily provide additional information to facilitate approval of the firm’s fees,” said firm spokesperson Benjamin Harris on Wednesday.

Koschik wrote that the court learned shortly before a July 21 hearing on bankruptcy case fees that the FBI had arrested then-Ohio House Speaker Larry Householder and four others in connection with an alleged $60 million bribery scheme secretly funded by FirstEnergy to get HB6 approved.

Householder and the four men were soon indicted on federal racketeering charges. Householder has pleaded not guilty. Two of the men, a top Householder aide and a former FirstEnergy Solutions lobbyist, pleaded guilty to charges last month.

News of the arrests prompted Koschik to adjourn the hearing until Aug. 18, when he approved fees for other law firms and professionals who worked on the bankruptcy but not Akin Gump. Koschik after several more hearings approved the firm’s fees Nov. 20 “on an interim basis only.”

While the U.S. Justice Department filed no objections to the Akin Gump’s payment request, “the court remains concerned about the value provided to the debtors in connection with their state-level lobbying work in Ohio, given the apparently expanding federal investigations, civil and criminal, regarding the passage of HB6,” Koschik wrote.

The three Akin Gump partners — Sean D’Arcy, Henry Terhune and James Tucker — billed just over $3 million for work they performed for FirstEnergy Solutions between March 2018 and February 2020. Senior policy adviser Geoffrey Verhoff billed $372,000.

Koschik in his order referred to the four as Akin Gump’s “Ohio statehouse team.”

In all, the firm billed $65.5 million for 73,000 hours of work related to the bankruptcy and lobbying for that time period.

Koschik asked the four men to provide a detailed explanation of their listed time and expense entries for the following:

__ Their roles in the selection of House speaker in 2018 and 2019. Householder was elected speaker in January 2019.

__ Roles in the 2018 legislative elections. An FBI affidavit filed the day of the arrests said FirstEnergy provided a dark money group controlled by Householder with millions to help support candidates who Householder needed to win the speakership and get HB6 approved.

__ Interactions and their relationship with Juan Cespedes, the FirstEnergy lobbyist who pleaded guilty to racketeering charges.

__ Their roles in votes that led to the passage of HB6. Koschik ordered D’Arcy to explain “what acts were involved in ‘mobilizing the HB6 vote’ in July 2019.”

__ Whether they or any other Akin Gump professionals advised FirstEnergy Solutions on a $1.9 million payment made to the dark money group, Generation Now, on July 5, 2019, and any other money transfers to Generation Now, the conduit for FirstEnergy’s millions in the alleged bribery scheme.

__ Whether the four were aware of or advised FirstEnergy Solutions about Generation Now before the plants were transferred to Energy Harbor’s ownership.

During a hearing Tuesday, Koschik acknowledged the fees “could all be easily explained.” He said while he was not accusing anyone of wrongdoing, he needed more detail because of the indictments and because federal authorities have not weighed in on the issue.

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