mistake.club2nd Opinion
Back to the archive

The encyclopedia · Finance & Accounting · Financial decision · 2017–2020

FirstEnergy funneled $60M through a political nonprofit and told investors nothing

The utility paid $60M to a nonprofit controlled by Ohio's House Speaker to secure a nuclear bailout, then concealed the payments in its books.

FirstEnergy

What happened

Between 2017 and 2020, FirstEnergy and its affiliates channelled roughly $60 million to a 501(c)(4) nonprofit controlled by the then-Speaker of the Ohio House. The payments secured passage of House Bill 6, which raised electricity rates and delivered a $150 million-per-year subsidy to two FirstEnergy nuclear plants — a benefit the company valued at $1.3 billion.

The payments were not disclosed to investors. When the Speaker was arrested in July 2020, FirstEnergy and its CEO made misrepresentations to the public about the company's role. An independent board review terminated the CEO and two senior vice presidents in October 2020.

In September 2024 the SEC charged FirstEnergy with fraud, books-and-records violations, and internal-controls failures. The company settled without admitting or denying the findings and agreed to pay a $90 million civil penalty. The separate DOJ resolution totalled $230 million.

Why it happened

  • The nuclear subsidies were worth $1.3 billion, so a $60M payment looked like a bargain to the executives who approved it.
  • Routing the money through a 501(c)(4) kept it off the books and out of proxy disclosures.
  • Internal controls failed because senior management was the party overriding them.
What it cost$90M SEC penalty; $230M totalcostly

The lesson

When the people who approve the payments also override the controls, the controls are theatre — the board's audit committee needs a direct line to compliance, not a report from the CEO.

Sources

spotted an error? The club wants to know.

Comments · 0

    Sign in to join the comments.

    More like this

    1912–2018 · Finance & Accounting

    The $45B LBO of TXU was the largest in history — it bankrupted the company in 7 years

    $45B LBO; over $40B debt; 3rd-largest energy bankruptcy
    2001 · Finance & Accounting

    Enron hid debt in hundreds of shell companies to look profitable — then imploded

    ~$70B market cap wiped out
    2025 · Trading & Investing

    A Texas power fund returned 188% — then shrank to a tenth and closed

    flagship closed; AUM fell from ~$400M to under $100M

    Somewhere, someone solved the problem this company failed at. 2nd Opinion →