Householder, 4 others indicted in $60M bribery scheme, lawmakers remove him as speaker

WATCH: Ohio House Speaker Larry Householder, 4 others arrested in $60 million bribery case

COLUMBUS, Ohio (FOX19) - State Rep. Larry Householder and four associates were indicted by a federal grand jury Thursday in connection with what they say is likely the largest bribery and money laundering scheme in Ohio history.

The announcement came via a tweet from the U.S. Attorney’s Office for the Southern District of Ohio just before the Ohio House of Representatives unanimously voted 90-0 to remove Householder as their speaker.

“Dark money is a breeding ground for corruption. This investigation continues,” U.S. Attorney David DeVillers, said in a tweet.

The others indicted are:

  • Mathew Borges, 48, of Bexley, a lobbyist who previously served as chair of the Ohio Republican Party;
  • Jeffrey Longstreth, 44, of Columbus, Householder’s longtime campaign and political strategist;
  • Neil Clark, 67, of Columbus, a lobbyist who owns and operates Grant Street Consultants and previously served as budget director for the Ohio Republican Caucus; and
  • Juan Cespedes, 40, of Columbus, a multi-client lobbyist.
  • Generation Now, a corporate entity registered as a 501(c)(4) social welfare organization, was also charged.

The racketeering conspiracy as charged in this case is punishable by up to 20 years in prison upon conviction.

Read the indictment:

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“Today’s strong bipartisan vote to remove Larry Householder as Speaker of the Ohio House of Representatives is not a decision any member of the House took lightly, but it was clear that Mr. Householder is unable to effectively lead the House,” reads a joint statement from Householder’s leadership team, Speaker Pro Tempore Jim Butler, R-Oakwood, Majority Floor Leader Bill Seitz, R-Cincinnati, Assistant Majority Floor Leader Anthony DeVitis, R-Green, Majority Whip Jay Edwards, R-Nelsonville and Assistant Majority Whip Laura Lanese, R-Grove City.

“This is an opportunity to move the House forward and continue our work to move Ohio forward. It is our hope that the Ohio House will soon elect a new Speaker to lead this institution.”

Democratic State Rep. Bridget Kelly of Cincinnati said: “One party rule isn’t working for the people in this state. Removing the speaker is an important first step to try to rebuild an institution mired in corruption. Ohioans deserve to know that their elected officials are working hard every day so that people in our state can have a better life.”

The Ohio House GOP Caucus met and voted for Rep. Bob Cupp, R-Lima, to be the new speaker. The full House approved it in a 55-38 vote early Thursday night.

Lt. Governor Jon Husted said of Cupp’s election:

“Rep. Cupp has served the people of our state honorably in the Ohio House, the Ohio Senate, and as a Justice of the Ohio Supreme Court. His character is well known and his selection as Speaker is an excellent choice. I am confident he will lead the House with integrity and I look forward to working with him in his new role.”

Householder, meanwhile remains a state representative, at least for now.

Several state representatives and other Ohio office holders including Gov. Mike DeWine and Ohio Attorney General Dave Yost have called for Householder to resign.

Householder, however, has not stepped down.

He responded “No” when a reporter asked him outside the federal courthouse in Columbus last week if he would.

He has not publicly spoken, and his attorney declined comment last week.

His lawyer, David Thomas of Columbus, did not respond to a request for comment earlier this week regarding the House’s effort to remove him as speaker.

When Householder’s leadership team had a “very brief” phone call with his attorney on Friday, Thomas told them Householder was not going to quit, lawmakers tell FOX19 NOW.

Yost has said if Householder also refuses to resign as state representative, the House “should eject him under Article II, section 6 of the Ohio Constitution.”

That allows House lawmakers to expel a member with a vote of two-thirds of legislators for “disorderly conduct.”

RELATED: LaRose refers Householder-related ‘campaign finance violations’ to Ohio Elections Commission

House members have introduced legislation to repeal House Bill 6. Householder and the four political operatives were arrested in connection with the taxpayer-funded bailout of Ohio’s two nuclear power plants

Householder was a driving force of the financial rescue that tacked a new fee to every electricity bill in Ohio and directed over $150 million annually through 2026 to the plants, which are located near Toledo and Cleveland.

According to court documents, from March 2017 to March 2020, the enterprise received millions of dollars in exchange for Householder’s and the enterprise’s help in passing House Bill 6, a billion-dollar bailout that saved two failing, Ohio nuclear power plants from closing.

The defendants then also allegedly worked to corruptly ensure that HB 6 went into effect by defeating a ballot initiative to overturn the legislation. The Enterprise received approximately $60 million into Generation Now from an energy company and its affiliates during the relevant period.

As alleged, in February 2017, Longstreth incorporated Generation Now as a 501(c)(4) social welfare entity purporting to promote energy independence and economic development; however, the entity was secretly controlled by Householder. As Clark stated in a recorded conversation, “Generation Now is the Speaker’s (c)(4).” Pursuant to federal law, the names and addresses of contributors to 501(c)(4)s are not made available for public inspection.

In March 2017, Householder began receiving quarterly $250,000 payments from the related-energy companies into the bank account of Generation Now. The defendants allegedly spent millions of the company’s dollars to support Householder’s political bid to become Speaker, to support House candidates they believed would back Householder, and for their own personal benefit. When asked how much money was in Generation Now, Clark said, “it’s unlimited.”

The affidavit filed in support of the criminal complaint also alleges:

  • In 2018, the enterprise spent energy company-to-Generation Now money on approximately 21 different state candidates – 15 (including Householder) in the primary, and six additional candidates in the general election. The Enterprise spent more than one million in fall 2018 alone to flood the airways with negative ads against enterprise opponents. Most of these candidates won the 2018 general election. All who won voted for Householder as Speaker.
  • Money passed from the energy company through Generation Now was used to pay for Householder campaign staff, which would otherwise have been paid by Householder’s candidate committee, Friends of Larry Householder.
  • Householder received more than $400,000 in personal benefits as a result of the payments into Generation Now, including funds to settle a personal lawsuit, to pay for costs associated with his residence in Florida, and to pay off thousands of dollars of credit card debt.
  • The enterprise paid $15,000 to an individual to provide insider information about the ballot initiative and offered to pay signature collectors for the ballot initiative $2,500 cash and plane fare to stop gathering signatures.

Federal officials say the investigation remains ongoing.

DeVillers said when he first announced charges against Householder and the others last week federal agents would continue to interview possible witnesses and execute search warrants.

“We’re not done with this case,” he said. “There are a lot of federal agents knocking on a lot of doors.”

If you have information related to the public corruption alleged in this case, please contact the FBI at 614-849-1777.

Ohio’s secretary of state, Frank LaRose, also has alerted the state’s elections commission over 19 possible violations of campaign finance law tied to the alleged scheme.

In other developments at the statehouse, State Rep. Jessica E. Miranda, D-Forest Park, and Rep. Gayle Manning, R-North Ridgeville, have introduced House Bill 737, bipartisan campaign finance reform legislation they say is “the first step toward lifting the cloud of corruption that hangs over the Statehouse.”

The bill would bring Ohio campaign finance regulations in line with federal law. HB 737 mirrors legislation that was introduced by then-Senator Jon Husted in the 128th General Assembly, they said in a joint news release Thursday.

“These past two weeks have been some of the most damaging weeks in terms of public trust in government,” Miranda said. “House Bill 737 is a good first step to restoring confidence and regaining the public’s trust by increasing transparency and accountability in our campaign finance laws. This bill has the backing of the Secretary of State and poses the best chance to pass meaningful reform now.”

She also said: “This is the first step to rein in the wild west of dark money spending we’ve seen in Ohio over the last decade or longer. Corruption has tainted our Statehouse for far too long. We’re seeing the sowing of all that right now more than ever.”

HB 737 would:

  • Generally eliminates the prohibitions against corporations and labor organizations making independent expenditures and electioneering communications.
  • Generally regulates independent expenditures and electioneering communications made by corporations and labor organizations in the same manner as they are regulated under existing law for other entities.
  • Requires corporations and labor organizations making independent expenditures to identify the source of any amounts the corporation or labor organization receives during the filing period that exceeds $5,000 and that is not received in the ordinary course of business or in exchange for goods and services.
  • Requires the reporting of independent expenditures if the amount spent is $500 or more.
  • Prohibits a foreign national from making any disbursement for the direct costs of producing and airing electioneering communications.

In a news release, the Ohio House Democratic Caucus campaign committee called on all Republican candidates to immediately freeze and forever refuse to accept any contributions from Householder, the Ohio Republican Party, and the Ohio House Republican Campaign Caucus “that Householder funded with millions of dollars of tainted funds.”

“We are also calling on these candidates to refuse future contributions until a full investigation can be completed and that Ohioans can be assured that these are not part of Ohio’s largest bribery and money laundering scheme,” said Aryeh Alex, Executive Director for the Ohio House Democratic Caucus campaign committee.

“Ohioans deserve better than the pay-to-play scheme hatched by Householder that Republican candidates for the Ohio House either knowingly or unwittingly bought into to help them win elections. Well, now these Republican candidates have no excuses. They know better, and they should freeze the money and refuse to take a single tainted cent from Householder or the campaign committees he runs.”

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