FirstEnergy Corp. faces at least eight class action lawsuits from stockholders and ratepayers, as well as possible legal action from the Ohio Attorney General’s Office, regarding an alleged $60 million bribery scheme to keep two of the power company’s nuclear plants operating, according to a filing Monday with the U.S. Securities and Exchange Commission.
All the class action lawsuits — five in federal court and three in county common pleas courts in Ohio — are roughly similar. They seek unspecified amounts of damages because FirstEnergy and its top officers breached their fiduciary duties by pursuing the alleged bribery scheme. The lawsuits alleged FirstEnergy actions led to rate increases and plummeting stock values.
The value of FirstEnergy’s stock fell from $41.26 per share on July 20, the day before the unveiling of an FBI indictment against then-Ohio House Speaker Larry Householder (R) and four other suspects in the case, to $22.85 on July 22, according to one of the shareholder lawsuits. The stock was valued at $28.64 before market open on Thursday.
“The outcome of any of these lawsuits is uncertain and could have a material adverse effect on FE’s or its subsidiaries’ financial condition, results of operations and cash flows,” according to FirstEnergy’s quarterly 10-Q filing.
The document adds that “The Ohio Attorney General may be considering legal action and, in a letter dated July 24, 2020, notified FE of its duty to not destroy documents in its custody or control regarding Ohio House Bill 6.”
On July 21, the FBI unsealed a criminal affidavit against Householder, three lobbyists, and another political operator in an alleged scheme to funnel and launder $60 million from “Company A” to advance legislative action to prevent the closures by May 2021 of the financially troubled Davis-Besse and Perry nuclear power plants.
Federal authorities have not denied that Company A is Akron-based FirstEnergy Corp., which says it is cooperating with the investigation The plants were owned by a subsidiary, FirstEnergy Solutions, which has since become the stand-alone company Energy Harbor.
The money was allegedly used to support the elections of roughly 20 candidates in 2018 who became freshmen legislators in the Ohio House, who then successfully supported Householder becoming the House speaker. The FBI said the money was also used to pay bribes to Householder and the other four; to support the campaign for legislation passed last year to bail out the two plants; and to finance opposition to a proposed, ultimately failed ballot initiative to repeal the rate hikes.