Not only does he intend to keep Dan McCarthy in his administration, Ohio Gov. Mike DeWine might use McCarthy to lobby the legislature for another nuclear bailout.
McCarthy, DeWine’s legislative affairs director, is a former lobbyist for FirstEnergy who set up a dark money group that funneled millions of corporate dollars into a second dark-money group that federal prosecutors say is at the heart of the biggest bribery scandal in Ohio history.
A primary aim of the conspiracy, prosecutors say, was passage of House Bill 6, an existing bailout that DeWine earlier supported, but now wants repealed because of the scandal surrounding its passage.
“I think it’s always important in this great country of ours not to leap to any conclusions or guilt by association,” DeWine said in a Tuesday press conference.
He later added: “There’s no facts that would indicate to me that Dan McCarthy has done anything wrong. If we see facts that anybody in my administration has done anything wrong we’ll deal with that. That’s not what we’ve seen. I have confidence in him and I think that people who know Dan McCarthy and have known him for many years believe he is a man of very great integrity.”
However, as president of the 501(c)(4) Partners for Progress, McCarthy was a conduit for corporate cash to flow into a scheme that resulted in one of the biggest scandals ever to rock the Ohio Capitol.
Such organizations are called “dark-money” groups because they don’t have to disclose their donors.
On July 21, House Speaker Larry Householder, an aide and three prominent lobbyists were arrested on federal racketeering charges. According to a criminal complaint, the group used $61 million — most of it from FirstEnergy and related companies — to corruptly influence several elections, make Householder speaker and ram through the $1.3 billion ratepayer bailout.
The lion’s share of that money is going to prop up two Northern Ohio nuclear power plants that have already received more than $10 billion in subsidies. Their owner, Energy Harbor, was formerly FirstEnergy Solutions, a FirstEnergy Corp. subsidiary that was spun off by the Akron-based company.
In announcing their charges, officials with the FBI and the U.S. Attorney’s office did not specify any criminal wrongdoing against FirstEnergy or EnergyHarbor officials. They also said that they hadn’t seen any evidence of wrongdoing on the part of the governor’s office.
But they also said their investigation was far from over.
They said they conducted the part that resulted in Householder’s arrest in extraordinary secrecy. Now that it was done, they said they planned to spend the next few weeks knocking on doors, executing search warrants and serving subpoenas.
Presumably, they’re also pressuring those already arrested to give evidence against others in exchange for a favorable plea deal.
The federal criminal complaint refers to Partners for Progress, McCarthy’s dark-money group, as “Energy Pass-Through.” It says that “Company A” — FirstEnergy — wired $5 million into the group’s account on Feb. 16, 2017, eight days after it was incorporated.
The complaint says that in 2018, while McCarthy was still president of Partners for Progress, it wired $1.2 million into Generation Now, Householder’s dark-money group that was alleged to have paid election expenses, paid for xenophobic TV ads and to enrich Householder.
In January 2019, McCarthy stopped lobbying for FirstEnergy and he stepped down as president of Partners for Progress. After he did, FirstEnergy wired another $20 million to Partners for Progress, which passed $15 million along to Householder’s group, Generation Now, the federal complaint says.
DeWine Press Secretary Dan Tierney didn’t answer directly when asked last week if, once he took a position in DeWine’s administration, McCarthy lobbied the legislature to pass HB 6, the bailout bill pushed by FirstEnergy, on whose behalf McCarthy had earlier been paid to lobby as recently as the prior year.
“Dan McCarthy is our legislative director; he carries out the policy goals of the administration regarding the legislature,” Tierney said in an email.
The day Householder was arrested, DeWine called on him to resign. But the governor said he wanted to keep HB 6 in place because he believed it was “good policy.”
A day later, the governor reversed himself, saying that because the process by which the bailout became law was allegedly corrupt, he wanted to “repeal and replace” HB 6.
On Tuesday, the governor wouldn’t answer directly when asked whether McCarthy would lobby for yet another bill to bail out the failing nuclear power plants.
“He will do what I ask him to do and what I tell him to do as far as he lobbies,” DeWine said. “That’s the way it works.”
The governor also dismissed the idea that running a dark-money group that passed money from FirstEnergy to Householder’s 501(c)(4) was grounds for dismissal from the DeWine administration
“These 501(c)(4) independent expenditures are perfectly legal,” DeWine said. “They’re used all the time. They’re used by Democrats. They’re used by Republicans. They’re used in every state in the union.”
Despite those comments, it’s not clear that McCarty’s use of Partners for Progress was in keeping with IRS rules, which are seldom enforced.
The rules say that such organizations “must be operated exclusively to promote social welfare.” They add that the groups “may engage in some political activities, so long as that is not its primary activity.”
In 2017, Partners for Progress filed an IRS Form 990 saying that the social welfare purpose of the group was “advocacy in support of nuclear power and the power industry in general, as well as policies that further the power generation industry.”
McCarthy didn’t respond to an email asking him to name any non-political, social welfare activity Partners for Progress engaged in while he was its president.
For his part, Tierney said, “my understanding is that a 501 (c)(4) donating to a fellow 501(c)(4) is qualifying activity.”