Court battle over Randazzo docs gets nasty

Sam Randazzo, the former chairman of the Public Utilities Commission of Ohio, isn’t even a defendant in a massive class-action lawsuit against Akron-based FirstEnergy. But a battle is growing bitter over documents regarding $4.3 million FirstEnergy paid a group controlled by Randazzo just as Gov. Mike DeWine nominated him in 2019.

The dispute arises from a bribery and money-laundering scandal that took place between 2017 and 2020. In it, FirstEnergy and other utilities paid more than $61 million to pass a $1.3 billion ratepayer bailout that mostly went to prop up two aging nuclear plants in Northern Ohio that FirstEnergy was trying to spin off.

Former Ohio House Speaker Larry Householder, R-Glenford, and former Ohio Republican Party Chairman Matt Borges in March were convicted of racketeering for their roles in the scheme by a federal jury sitting in Cincinnati. They’re scheduled to be sentenced at the end of June and now there’s rampant speculation about who might be indicted next.

FirstEnergy signed a deferred prosecution agreement and agreed to pay a $230 million criminal penalty. 

FirstEnergy’s former CEO, Chuck Jones, and its former Vice President, Michael Dowling, directed the $4.3 million payment into the bank account of a group controlled by Randazzo, the Sustainability Funding Alliance of Ohio. In a recent court filing, Radazzo’s attorney, Roger Sugarman, made a disclosure that seems to indicate that the Sustainability Funding Alliance didn’t have much of an existence beyond Randazzo.

“SFAO has never had, nor has it maintained an email account, email address, computer, or mobile phone (different from those used by Mr. Randazzo.),” Sugarman wrote. 

Randazzo, Jones, and Dowling deny paying or taking bribes, but in its deferred prosecution agreement, FirstEnergy said it “paid $4.3 million dollars to (Randazzo) through his consulting company in return for (Randazzo) performing official action in his capacity as PUCO Chairman to further FirstEnergy Corp.’s interests relating to passage of nuclear legislation and other specific FirstEnergy Corp. legislative and regulatory priorities, as requested and as opportunities arose.”

During the March criminal trial in Cincinnati, prosecutors put on evidence that even though he was supposed to be regulating FirstEnergy, Randazzo helped draft House Bill 6, the corruptly passed bailout law.

Neither he, Jones, or Dowling has been charged in the case, but the FBI searched Randazzo’s Columbus condo in the months after Householder was arrested and lawyers for the two former executives have made recent court filings saying they believe their clients are in the feds’ crosshairs. A judge in the class-action case against FirstEnergy denied a request by Jones and Dowling to delay sworn depositions even though she agreed that they faced the possibility of self incrimination.

Investors — including large public-pension funds — are suing FirstEnergy as well as Jones and Dowling personally. They’re arguing that their reckless conduct in the bailout scandal improperly cost investors big money.

And as an important part of the case, they want to know what Randazzo did with the millions he got from FirstEnergy and what he might have said about it in emails and text messages.

Lawyers for the plaintiffs and Randazzo’s lawyer, Sugarman, have been arguing over the past two months about whether the former PUCO chairman has turned everything over, and over the past few weeks, the argument has gotten nasty.

In early April, U.S. Magistrate Judge Kimberly Jolson ordered Randazzo to produce documents regarding what he did with the millions he got from FirstEnergy as he was poised to become the top Ohio official regulating the company. Third parties such as banks and accounting firms also produced records.

When plaintiffs lawyers complained to the court that it wasn’t enough, Randazzo on May 15 turned over more information. It said that he used FirstEnergy’s millions to pay more than $1.5 million in federal taxes, $1.4 million in mortgage payments, and he lent his daughter $100,000 for her restaurant.

Still, the plaintiffs lawyers complained, that wasn’t enough. They couldn’t know whether Randazzo had turned over all email or text messages because he and his lawyers didn’t explain what they did to look for them. They didn’t want just to know what happened with the money, they wanted to know what Randazzo told other people about it.

Judge Jolson agreed that Randazzo’s response was inadequate, writing, “Their reluctance to be transparent about their search methodology does not suggest good-faith compliance with their discovery obligations.”

On May 24, Sugarman filed a sworn affidavit with the court declaring that in 2021 he hired an outside firm to search phones and computers used by Randazzo and his wife to look for responsive messages between Jan. 1, 2015 and Nov. 2020 and turned them over. As for explaining how the search was done, Sugarman wrote that “search terms, search protocol and keywords” were confidential and asked that the judge review them in private.

Still not good enough, the class-action lawyers said late last week.

Lawyer Joseph Murray said that things like the search terms used aren’t confidential. He added that the outfit that conducted the 2021 “undescribed search is (not) identified, no searched email accounts are identified; no searched mobile phone numbers are identified; no searched computers are identified.”

Further, Murray wrote, Randazzo and his lawyers “unilaterally” decided to cut off their search at Nov. 20, 2020 — four months after the FBI made arrests in the scandal.

And Murray said, “the April 2021 date of their undescribed search efforts was during a period when Randazzo and (the Sustainability Funding Alliance) were contending that this $4.3 million dollar transaction was irrelevant. As such, the robustness of these efforts to satisfy the April 5 Order (to turn over material) is questionable. Indeed, it seems implausible that the unknown April 2021 search terms and custodians were designed to capture documents they maintained were irrelevant less than two weeks (earlier.) Moreover, these concerns are only heightened by the fact that only one email and no text messages have been produced since the April 5 Order.”

Murray and the class-action plaintiffs asked the court to provide them with the search terms Randazzo used and to be allowed to conduct an hour-long, sworn deposition of Sugarman to question him further about the search.

That provoked a fierce response from Sugarman, Randazzo’s lawyer, on Wednesday. 

“Plaintiffs’ relentless and factually baseless harangues, evolving complaints and parsing of words cannot and do not change the fact that Mr. Randazzo and (the Sustainability Funding Alliance) have produced (all) documents regarding the $4.3 million payment within their possession, custody, or control, and have complied with this Court’s Orders,” he wrote. 

As for the proposal to question him under oath, Sugarman took it personally. 

He wrote the “attack on the honesty, truthfulness, and accuracy of the certifications in the Declarations are particularly galling. But it does, however, show Plaintiffs’ true intentions — to harass, annoy, and waste the resources of Mr. Randazzo, (the sustainability alliance) and their counsel. The United States District Court for the Southern District of Ohio has never been a forum where ad hominem and unsupported personal attacks have been countenanced, and this Court should not start now.”

However, later on Wednesday, Judge Jolson again sided with the plaintiffs who are suing FirstEnergy — at least in part. She said that she had assumed that Randazzo had already shared the search terms with the plaintiffs, and based on her own review of the material, “no legitimate concerns about attorney-client privilege or work product preclude sharing the details of the search terms, protocol, and methodology with Plaintiffs.”

She ordered Randazzo to turn them over by Friday. 

As for the request to depose Randazzo’s attorney, Jolson wrote she “will not make any rulings on these issues in the present Order,” and added, “There is more work to be done by the parties… “

The judge ordered that a status report be filed by June 16.