SEC charges FirstEnergy Corp.'s former CEO with fraud in connection with political corruption scheme
The Securities and Exchange Commission has filed fraud charges against Charles E. Jones, former CEO of FirstEnergy Corp. ("FirstEnergy"), in connection with a years-long corruption scheme in which FirstEnergy made payments to former Speaker of the Ohio House of Representatives, Larry Householder, in exchange for official action benefitting FirstEnergy's business interests.
In a separate proceeding, the SEC also charged FirstEnergy with fraud in connection with the scheme. FirstEnergy agreed to settle the charges, paying a civil penalty of $100 million.
According to the SEC's complaint, from 2017 to 2020, with Jones' active participation, FirstEnergy engaged in a corrupt scheme to directly and indirectly pay Householder about $60 million with the intent to incentivize Householder to support legislation for the benefit of FirstEnergy. The complaint alleges that FirstEnergy secretly funneled payments to Householder via tax exempt 501(c)(4) organizations.
In July 2020, Householder was indicted in connection with FirstEnergy's payments. The complaint alleges that Jones misled investors when in response to Householder's arrest, he told the public that "FirstEnergy acted ethically in this matter" and "transparently."
The complaint also alleges that, as part of the scheme, Jones misled FirstEnergy's auditor, aided and abetted FirstEnergy's failure to devise and maintain internal accounting controls, and aided and abetted the misrepresentations and omissions made by FirstEnergy in an SEC filing.
The SEC's complaint, filed in the U.S. District Court for the Northern District of Ohio, alleges that Jones violated the antifraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The complaint also charges Jones with violations of Exchange Act Rules 13a-14 and 13b2-2(a); and aiding and abetting FirstEnergy's violations of Section 13(a) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-11 thereunder. The SEC seeks permanent injunctive relief, disgorgement plus prejudgment interest, a civil penalty, and an officer and director bar against him.
The SEC's investigation was conducted by Natalie Garner, Kristal Olson, Justin Delfino, and Joseph Chimienti of the Public Finance Abuse Unit, Keith Constance of the SEC's Chicago Regional Office, and Emily Shea and Peter Rosario of the Home Office. The investigation was supervised by Brian Fagel and Kevin Guerrero. The SEC's litigation against Jones will be conducted by Jonathan Polish of the SEC's Chicago Regional Office.
Publisher's note: A free press is critical to having well-informed voters and citizens. While some news organizations opt for paid websites or costly paywalls, The Highland County Press has maintained a free newspaper and website for the last 25 years for our community. If you would like to contribute to this service, it would be greatly appreciated. Donations may be made to: The Highland County Press, P.O. Box 849, Hillsboro, Ohio 45133. Please include "for website" on the memo line.