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.
The $60M bought a $1.3B subsidy, so it looked cheap; routing through a 501(c)(4) kept it off the books, costing $90M SEC penalty and $230M total.
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.
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.
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