St. Louis' retirees are unwittingly embroiled in an extraordinary scandal centering on allegations of bribery and racketeering involving political leaders and an energy company the trustees invested in.
The Employee Retirement System has filed a lawsuit against directors and managers of FirstEnergy, one of many filed in connection with allegations that the company and its employees funneled $60 million in kick backs to a powerful political leader.
In additional to civil suits, criminal charges of racketeering have been filed against former Ohio House Speaker Larry Householder, lobbyists Juan Cespedes, Matt Borges and Neil Clark, and political strategist Jeff Longstreth.
The retirement system is suing on behalf of the company, which it claims lost value because of the actions of management. It filed suit in federal court in the Southern District of Ohio.
"The recent revelations of the criminal scheme and defendants’ knowledge or blatant disregard of it have deeply damaged FirstEnergy, and additional damages to the Company will continue in the coming months and years," the lawsuit states.
"We cannot comment because it is pending litigation," Lester Hooker of Saxena White, one of the law firms representing the retirement system, told the St. Louis Record.
The defendants are accused of breach of fiduciary duty, unjust enrichment, and corporate waste. Ultimately, the lawsuit is designed to overhaul the company's corporate governance and end alleged fraud.
According to the lawsuit, a law, HB 6, was introduced that provided FirstEnergy with "a massive $1.3 billion bailout for FirstEnergy’s uncompetitive power plants funded by monthly ratepayer surcharges, as well as other one-sided legislative amendments."
These, the suit states, included "provisions that removed incentives to build renewable energy projects, canceled statewide energy conservation efforts, and allowed the Company to upcharge Ohio customers for their energy."
A number of lawsuits have been filed by investers seeking to recoup money lost, possibly running into hundreds of millions, if not billions, according to a source with knowledge of the actions.
These actions are in their infancy and are likely to be folded into one action with the appointment of a leading counsel.
Ohio Attorney General Dave Yost last week filed the latest civil lawsuit to "block the payment of nuclear bailout money stemming from House Bill 6."
“Ohio laws should not be built on the basis of fraud, deceit and intimidation,” Yost said. “Given the corruption surrounding House Bill 6, it is proper to block these ill-gotten gains from filling the coffers of those under criminal indictment.”
The civil lawsuit seeks to prevent FirstEnergy and other entities. from receiving proceeds of funds collected pursuant to the utility surcharge provided for in House Bill 6. FirstEnergy is named in the suit.
In a statement to the St. Louis Record, FirstEnergy spokesperson Jennifer Yong said: "It’s important to understand that both of the nuclear power plants in Ohio supported by HB 6 are owned and operated by Energy Harbor, a former subsidiary of FirstEnergy known at the time as FirstEnergy Solutions (FES.)
"FirstEnergy leadership has not had any decision-making power regarding the strategic direction of FES since November 2016, and FirstEnergy and Energy Harbor are now separate, unaffiliated companies. Additionally, FirstEnergy does not receive any revenues from the operation of these nuclear plants nor any of the nuclear funding provided through HB 6."