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The Securities and Exchange Commission is investigating FirstEnergy Corp. after receiving documents from a purported whistleblower who was working with a contractor hired by the Akron utility, a federal lawsuit shows. Separately, the Public Utilities Commission of Ohio said it will review political and charitable spending by FirstEnergy and its utilities.
The SEC lawsuit involves FirstEnergy documents taken by a former employee who worked for a firm, Clearsulting, hired by FirstEnergy. The former employee apparently downloaded documents shortly after being terminated from his consultant job earlier this summer, according to the lawsuit filed in U.S. District Court in Cleveland.
Both the SEC and FirstEnergy declined to comment on the case.
In the lawsuit, FirstEnergy and Clearsulting seek a restraining order against Michael Pircio, a Chardon resident who was a Clearsulting employee from mid-March through July 30. The lawsuit seeks to prevent Pircio from disseminating FirstEnergy documents that the companies say he took after he was terminated from his job. Pircio was hired to take part in a Clearsulting audit of FirstEnergy processes and procedures as part of the utility’s compliance with federal Sarbanes-Oxley requirements.
The suit alleges Pircio unlawfully accessed Clearsulting computers after he was terminated and downloaded 57 files containing proprietary and confidential FirstEnergy information.
The court filings do not say what was in the FirstEnergy documents or why the SEC has started an investigation. But one source familiar with the case said it is related to the ongoing $60 million bribery and corruption scandal involving former Ohio House Speaker Larry Householder and others.
A letter from a Washington, D.C., law firm representing Pircio says in part, “Mr. Pircio is indeed in possession of a number of Clearsulting documents that potentially show a violation of law. …Mr. Pircio has not shared any company information or documents with anyone other than his counsel and, through his counsel, with government officials. Please bear in mind that, in light of these protected activities, Mr. Pircio is protected against any retaliatory conduct by Clearsulting and its employees under federal whistleblower laws.”
The letter writer, Vince McKnight of law firm Sanford Heisler Sharp, specializes in whistleblower cases.
Another letter from the law firm also filed as an exhibit with the court says FirstEnergy documents were turned over to the Securities and Exchange Commission.
The letter says in part:
“As we explained in a letter on August 21, 2020 addressed to Clearsulting that you received, Mr. Pircio has shared a number of Clearsulting documents that potentially show a violation of law with his counsel, and we in turn have shared these documents with a government agency.
“On August 7, 2020, we submitted information to the Securities and Exchange Commission (“SEC”) concerning FirstEnergy and Clearsulting. Since then we have been in communication with Brian D. Fagel, Assistant Director of the Public Finance Abuse Unit, and we intend to continue cooperating with the SEC in its investigation.”
In another matter, the PUCO said it has initiated a review tied to the ongoing federal investigation into Householder and others over the $60 million bribery and corruption scandal involving House Bill 6 legislation, FirstEnergy Corp., and its former subsidiary FirstEnergy Solutions, now Energy Harbor.
Earlier this month, the Ohio Consumers’ Counsel filed court motions seeking an investigation and management audit of FirstEnergy utilities, its corporate governance and activities regarding House Bill 6. The law provides ratepayer subsidies to two Ohio nuclear plants formerly owned by FirstEnergy and now owned by Energy Harbor.
The Consumers’ Counsel is calling for the hiring of an independent auditor to look at the case to see if FirstEnergy utilities improperly used money collected from consumers or violated utility regulatory laws, rules, or orders in its activities regarding House Bill 6.
The PUCO said it has determined that it should review the political and charitable spending by the FirstEnergy utilities in support of House Bill 6 and a subsequent referendum effort.
The PUCO is asking FirstEnergy and its subsidiaries to show cause by Sept. 30 that the costs of any political or charitable spending in support of House Bill 6 and related referendum effort were not directly or indirectly included in any rates or charges paid by Ohio ratepayers.