COLUMBUS, Ohio – In an internal document, a then-executive at FirstEnergy made an unusually blunt assessment of the company’s favorite way to fund politicians.
“Our preferred manner of giving is through section 501(c) groups,” Michael Dowling wrote, referring to the IRS term for nonprofit organizations, “as these are considered ‘dark money’ because they are not required to disclose where the donations come from.”
Dowling’s comment, contained in a 2020 PowerPoint presentation that cleveland.com and The Plain Dealer recently obtained through a public records request, provides a rare and candid look at exactly how and why political practitioners use anonymous political giving to try to influence Ohio’s elected officials.
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The presentation was part of a cache of documents that became publicly available via litigation stemming from the House Bill 6 scandal, in which FirstEnergy admitted to using dark-money groups to bribe ex-House Speaker Larry Householder and others to ensure the bill’s passage in 2019. As part of a resulting federal corruption probe, Householder was sentenced to 20 years in prison last year, while Dowling and another former top FirstEnergy executive, ex-CEO Chuck Jones, were charged in state court this year.
The documents are years old. But many of the players described in them, as well as the tactics FirstEnergy used to conceal its political giving, remain mainstays in state politics today. The records reveal how FirstEnergy used dark-money groups to secretly write six and seven-figure checks meant to gain influence with state politicians, including Gov. Mike DeWine, Lt. Gov. Jon Husted and Ohio Senate President Matt Huffman.
The HB6 scandal renewed calls to reform state laws to require greater transparency in political giving. But bipartisan efforts have fizzled without action for more than a decade.
Catherine Turcer, a longtime Ohio advocate for campaign finance reform, said in an interview that she’s hopeful continued attention to the FirstEnergy scandal will pressure state politicians to act.
“At the end of the day, some of the elected officials for a long time have acted like House Bill 6 ‘just happened,’ or identify Larry Householder as some kind of bad egg,” said Turcer, executive director of Common Cause Ohio. “When in fact, he was just part of a corrupt system.”
History of dark money
The modern era of dark money kicked off in 2010 with the Citizens United case. The U.S. Supreme Court Supreme Court in a 5-4 decision said corporations and labor unions enjoy the same First Amendment protections as individuals. As a result, the court said these groups could accept and spend unlimited amounts of money on politics, as long as they didn’t directly coordinate with candidates.
The ruling struck down campaign finance reforms passed in the 2000s. It also spurred an explosion of anonymous political giving, usually routed through nonprofits that, under federal tax law, are allowed to spend money on politics while keeping their contributors private.
These nonprofit groups aren’t required to publicly disclose their contributors, but also face limitations on how much of their money they can spend on politics.
Most of these dark-money groups fall under a section of tax code called “501(c)(4),” which outlines a type of nonprofit called “social welfare groups.” Thousands of groups operate under that section of tax code – many of them arms of nonprofits that aren’t big political players. But politics has exploited the ruling, proliferating with nonprofits that have opaque names and vague missions, all in the name of secrecy.
They are supposed to be independent and not associated with campaigns. But David DeVillers, a former U.S. attorney who brought the House Bill 6 case, said that every Ohio politician seems to have their own.
“That and in and of itself is a violation of the tax code,” DeVillers said. “But everyone knows about it, so if you want to get access or get in the good graces of a person, you can just throw money into that 501(c)(4).”
DeVillers, who has become an advocate for campaign-finance transparency since he left the U.S. attorneys office in 2021, said the House Bill 6 bribery scheme wouldn’t have been possible without dark money. But he said politicians haven’t shown the willingness to change things.
“Via legislation, we’ve created the perfect money-laundering tool,” he said.
A surge in national dark money
Since that landmark case, dark money contributions have exploded. Dark money groups and associated shell companies gave $40.1 million to federal candidates in the 2014 midterm elections. By the 2018 election, that had more than quadrupled to $180 million. In the 2022 midterm, they spent $616 million, according to OpenSecrets, a nonpartisan group that tracks political spending.
In the 2020 presidential election alone, those groups gave $653 million to federal campaigns. This year’s presidential election is on track to exceed that number, said Anna Massoglia, OpenSecrets’ editorial & investigations manager.
Contributors enjoy anonymity because it helps them avoid public backlash for giving to controversial candidates, Massoglia said. And political parties like it because it makes it easier for them to raise money, a constant focus in politics today. Federal regulators are under-resourced, leaving only federal prosecutors to clean up after the most egregious violations, such as in in the House Bill 6 scandal, she said.
Part of what also explains the increase in dark money is that, now, everyone is doing it. While it initially was a tool used primarily by Republicans, Democrats have put aside their early misgivings and embraced it too, she said. In 2018, Democrats surpassed Republicans in dark-money spending and have done so each election since then.
It’s turned into an arms race, she said.
“When one side starts to benefit from dark money, it often times will trigger the other side to spend in more opaque ways. And so we’re seeing both sides driving innovations and the other side adapting to tactics they see from the other side, and adopting those,” Massoglia said.
Data source: OpenSecrets.org analysis of FEC data through 2023.
Ohio picture
While it hasn’t been documented as thoroughly, dark money is a standard feature in Ohio politics as well.
One recent example came in last year’s ballot issue campaigns involving the abortion rights amendment that voters ended up approving in November. Dark money groups funded campaigns on both sides of the issue, with campaigns raising $108.7 million in total.
Major contributors to the pro-abortion rights side were liberal dark-money groups that have emerged as a force in national politics, including the Sixteen Thirty Fund, a national political nonprofit that gave $12 million. It’s also one of the primary funders of a redistricting reform amendment that’s likely to appear on the November ballot this year. Another national group called the Tides Foundation gave $5.6 million. On the anti-abortion side, the conservative Concord Fund, set up as an answer to the Sixteen Thirty Fund and its associated network, gave $25.2 million.
Dark-money groups also have become a hallmark of state candidate elections on both sides of the aisle, including anonymously funded groups that popped up for Gov. Mike DeWine in 2018 and 2022.
But the most notorious example was in connection to the House Bill 6 scandal. Ahead of the 2019 passage of HB6, which bailed out two plants owned by a former company subsidiary, FirstEnergy set up a political nonprofit called Partners for Progress, which it used in 2017 and 2018 to secretly funnel $25 million of company money to groups supporting state politicians, according to an internal company document.
Much of the money ended up going to another dark-money group controlled by Householder, the imprisoned former House speaker, and became part of the HB6 bribery investigation. But $2.5 million went to a dark-money group backing DeWine. Another $1 million went to a dark-money group backing Lt. Gov. Jon Husted’s 2017 campaign for governor, which he abandoned to become DeWine’s running mate. Another $300,000 went to a separate pro-DeWine dark-money group while $75,000 went to one that supported DeWine’s daughter’s unsuccessful campaign for Greene County prosecutor.
Company records note amounts spent for other politicians too: $300,000 to a group described by a FirstEnergy lobbyist as Senate President Matt Huffman’s dark-money group; $515,000 to a pair of groups that a company ledger associates with Jim Renacci, who ran in 2018 for U.S. Senate; and $50,000 to a group that a company ledger associates with Secretary of State Frank LaRose.
A ledger documenting spending by Partners for Progress, a dark-money group controlled and funded by FirstEnergy. This is an internal company document that was obtained via a public records request, and made available due to civil litigation related to the House Bill 6 scandal.Office of the Ohio Consumers' Counsel
Reform efforts stall
In response to the Citizens United ruling in 2010, Husted, then a state senator, sponsored a bill rescinding state laws banning corporate contributions while imposing new transparency rules, including mandatory requirements that corporations engaging in politics disclose their donors.
It passed unanimously in the GOP-controlled Ohio Senate, but stalled in the House, which at the time was controlled by Democrats.
The vote turned out to be the high-water mark for modern attempts at campaign-finance reform in Ohio.
After the House Bill 6 scandal erupted in 2020, a bipartisan group of state lawmakers resurrected Husted’s proposal. It even was endorsed by LaRose. But it never even got a legislative hearing. The bill was introduced again with bipartisan support in 2022, but died in committee after a pair of hearings.
This session, Democrats are the only lawmakers calling for reform. House Minority Leader Allison Russo, of Upper Arlington, and state Rep. Bride Rose Sweeney, a Cleveland Democrat, have cosponsored a stronger version of the bill called the Ohio Anti-Corruption Act.
It’s only gotten a single, perfunctory hearing.
Sweeney said in an interview that Republicans picked up a single element of her proposal, passing a bill earlier this year in the Ohio Senate banning foreign money from funding ballot issues – a response to the $12 million the Sixteen Thirty Fund spent supporting the abortion-rights campaign last year – while ignoring all aspects having to do with dark money.
“The billionaire in Illinois that funded the Aug. 8 special election can be just as influential as a billionaire in another country,” Sweeney said. “I find it so hypocritical.”
This week, however, House Speaker Jason Stephens, a Lawrence County Republican, told reporters that he’s explored whether state laws could be changed to require dark money groups to disclose their donors.
“I think having more information for the voters where the money’s coming from is always a good thing,” said Stephens, who added that the Citizens United ruling poses a barrier.
The move came after a conservative out-of-state group called Make Liberty win spent $2 million ahead of the Republican primary election in March attacking House Republicans who supported Stephens’ bid for speaker over another rival candidate. Four incumbents ended up losing their seats, the most in recent state history. The group has some in-state contributors but got most of its funding from a group that doesn’t have to disclose its donors.
Sweeney said Citizens United and other U.S. Supreme Court rulings don’t prevent states from requiring tougher disclosure. States with similar laws to what she’s proposed include Arizona and Montana, according to the National Conference of State Legislatures.
She said the main problem is political, not legal.
“A lot of lawmakers in power get a significant amount of dark money and I think that’s why these bills often don’t go anywhere,” Sweeney said.
Andrew Tobias covers state politics and government for cleveland.com and The Plain Dealer
Columbus bureau reporter Jeremy Pelzer contributed to this story