In affidavits filed in a federal bankruptcy court Tuesday, four employees of the national law and lobbying firm Akin Gump Strauss Hauer & Feld denied wrongdoing but revealed the firm’s deep involvement in FirstEnergy’s (NYSE:FE) efforts to win passage of nuclear bailout legislation in the Ohio legislature.

That passage led to the indictment on federal racketeering bribery charges of the former speaker of the Ohio House of Representatives and four of his associates and the company paying a $230 million fine in a deferred prosecution deal. (See DOJ Orders $230 Million Fine for FirstEnergy.)

Akin has represented FirstEnergy since its incorporation in 1997, as well as its generation subsidiary FirstEnergy Solutions in its bankruptcy case, which began March 31, 2018.

After Akin last year revealed in a routine disclosure of charges and expenses — including those for assisting the company to win approval of Ohio House Bill 6 and fighting the resulting campaign against a ballot drive to rescind it — U.S. Bankruptcy Court for the Northern District of Ohio Judge Alan Koschik held up the final payment of the firm’s $67 million in legal fees while waiting for a Justice Department investigation into the passage of H.B. 6 to conclude.

But the judge demanded specific information from four employees, including their knowledge of FirstEnergy giving millions of dollars to Generation Now, a 501(c)4, the company used as a “dark money” organization to fund a legislative and public relations campaign. Classified as social welfare organizations by the IRS, 501(c)4 groups do not have to report donors.

After a second delay in July, the judge set a deadline for this week. The sworn disclosures of three Akin partners and a senior policy adviser give detailed accounts of their involvement with the company and top Ohio-based lobbyists in 2018 and 2019 to assist former Ohio House Speaker Larry Householder (R) engineer the passage of the bailout legislation.

H.B. 6, which has since been rescinded, created a six-year, $1.1 billion public bailout of two Ohio nuclear plants, formerly owned by the company. Its passage also immediately led to the Justice Department investigation and subsequent indictments.

Householder has pleaded not guilty to federal racketeering charges stemming from that multiyear campaign and is awaiting trial.

Two of his associates, including lobbyist Juan Cespedes and political strategist Jeffrey Longstreth, also pleaded guilty but have not been sentenced as the Justice Department investigation continues. Longstreth also pleaded guilty on behalf of Generation Now.

Affidavits Describe Company Activities

The affidavits of the Akin employees offer numerous details about their efforts, which included daily consultations to win passage of the bailout, beginning a year before the legislation won approval.

“I was first introduced to Juan Cespedes and his company, the Oxley Group, in or around March 2018,” wrote attorney Jamie Tucker, an Akin partner and member of the firm’s Law and Policy section. “At the time, we were looking for in-state legislative consultants to help with outreach to policymakers regarding the nuclear power plant deactivation process in Ohio and announcement of FES’ bankruptcy, as well as to assess the likelihood of possible legislative solutions.”

The affidavit continues that Cespedes “became the principal day-to-day point of contact” and that Akin and FES “relied upon Cespedes to report on the likelihood that particular members of the legislature would be supportive.”

A year later, leading up to the votes in the House and Senate, Tucker described his role and that of other members of the Akin team as one of analysis and strategizing.

The court also wanted to know specifically whether:

• Akin’s staffers were aware of Generation Now before FES emerged from bankruptcy in February 2020;
• they had advised FES “with respect to interaction with Generation Now”; and
• they had advised FES regarding a “$1,879,457 electronic transfer to Generation Now on July 5, 2019 … or regarding any other transfer to or for the benefit of Generation Now.”

Tucker responded that in summer 2018, he learned that Generation Now “was a 501(c)(4) organization addressing energy independence and economic development, and that it was aligned with Larry Householder.”

“Over the course of the next two months, FES’ governmental affairs team and I, with input from outside consultants and others at Akin Gump, advised FES in connection with its decision to donate a total of $500,000 to Generation Now in October 2018 as part of its broader, bipartisan contribution strategy,” Tucker wrote.

He added that he had no “personal knowledge” of the $1.87 million transfer “or any other transfers” other than the $500,000 that had been discussed.

In a letter accompanying the affidavits, Akin attorney Abid Qureshi, who argued the FES case on several occasions during hearings in bankruptcy court, told the court that “the firm is not aware of any evidence that its attorneys and professionals knew of any illegal activity” and that “Akin Gump is not aware of anything that would lead the firm to revise its pending fee application.”

He said Akin’s restructuring lawyers routinely attended FES board meetings during the Chapter 11 proceedings, including a May 28, 2019, meeting.

“During that meeting, the board adopted a resolution, which Akin Gump corporate attorneys had drafted, authorizing expenditures of up to $15 million to Generation Now to fund Generation Now’s voter-education efforts,” Qureshi wrote.

He added that the “policy professionals,” such as Tucker, “were not specifically aware of the $15 million … and they did not advise on the authorization. Some of them were aware that FES’ media and voter-education efforts in support of House Bill 6 had been transitioned from another firm to Generation Now and that monies were being spent on those efforts.”

Qureshi’s letter went on to describe an August 2019 FES board meeting when the board adopted another resolution drawn up by the firm authorizing additional expenditures of up to $25 million in a drive to defeat a referendum petition that had been organized by opponents of H.B. 6. Again, he stressed that Akin’s team working with FES on the ground were not aware of those voted-upon decisions.

The court has set a final hearing on the issue of the final payments to Akin for Oct. 26.