Bankruptcy judge halts $2.8 million payment to Akin Gump – Crain’s Cleveland Business

In a Tuesday, Nov. 24, ruling on the case of Pleasant Valley Corp., a debtor related to the FirstEnergy Solutions' bankruptcy in Akron, Judge Alan Koschik of the U.S. Bankruptcy Court Northern District halted a big payment to the lobbying firm Akin Gump Strauss Hauer & Feld.

Koschik said before he releases $2.8 million in fees claimed by the firm, he first wants Akin Gump's statehouse lobbyists to answer questions related to their potential involvement with House Bill 6.

That's the state law that provides former FirstEnergy Corp. nuclear and coal plants with $150 million a year in subsidies, with most of the money going to the Perry and Davis-Besse nuclear plants. It has since become the center of the largest bribery case in Ohio history.

In light of the federal prosecution and an ongoing investigation into bribery behind the 2019 energy law's passage and the arrest in the case of former Ohio House speaker Larry Householder Koschik said he wants to learn what four individuals who led Akin Gump's "Ohio statehouse team" did to earn $2.8 million for state lobbying work while the law was being considered.

"Based on the Court's review of the Debtors' invoices and time records, the Court's questions center on the work of four Akin Gump professionals: Sean G. D'Arcy, Henry A. Terhune, James R. Tucker, and Geoffrey K. Verhoff," Koschik wrote. "These professionals appear to be Akin Gump's 'Ohio statehouse team,' or at least the leaders of that team, and the 'boots on the ground' of the Akin Gump government relations operation in Columbus. They have never appeared in this Court during these Chapter 11 cases. Based upon the Court's review of the docket, they have never made written declarations in these cases.

"However, according to Akin Gump's invoices submitted in support of that firm's applications for compensation, these were the timekeepers involved who interacted with currently-indicted individuals or entities in the service of the Debtors."

In his order directing the four to make sworn statements in the case, Koschik stated what he wants to know. His list of questions for the four includes the following:

Generation Now is the nonprofit dark money group that paid for ads in support of HB 6. It also was indicted and pleaded not guilty to charges of taking part in the bribery scheme while being controlled by Householder.

It's not the first time Koschik has had to deal with fallout from the scandal, and alleged criminal enterprise in state government in the case, while dealing with Akin's fees.

In the Nov. 24 order, he referenced a hearing from the summer: "On the morning of July 21, 2020, minutes before the Hearing began, the Court became aware through published news reports that the United States Government had arrested and filed a criminal complaint against the Speaker of the Ohio House of Representatives, Larry Householder, along with certain other associated individuals," Koschik wrote.

Koschik has invited federal prosecutors to enter the case, at least to file something indicating whether they object to payments that might be related to their case.

In September, Koschik entered an order stating he would presume the federal government did not oppose to the payment of Akin Gump if federal officials did not act in the case. They did not.

He resumed the hearing Nov. 17 and "the United States again did not appear and did not file any objection or statement. The Court therefore presumes that the United States does not oppose the Final Fee Applications," Koschik wrote in the new order.

Koschik approved Akin Gump's fee application on an interim basis in the Nov. 17 hearing, but now wants to hear testimony from Akin Gump's statehouse four.

"Notwithstanding the lack of opposition from the United States, the Court remains concerned about the value provided to the Debtors in connection with their state-level lobbying work in Ohio, given the apparently expanding federal investigations, civil and criminal, regarding the passage of HB 6," Koschik wrote.

The court also has heard opposition to payment of the Akin Gump fees from outsiders, including Jeff Barge, a citizen advocate in Cleveland who filed an objection to the payments in August.

"It is too early to know for a fact to what extent Akin Gump participated in this racketeering 'Enterprise.' What is clear is that, once paid, this money would be awfully difficult to get back," Barge wrote then.

Akin Gump's director of communications, Benjamin Harris, said via email that the four Akin Gump employees mentioned by Koschik are aware of his new order, as is the firm. "Akin Gump is aware of the Court's order and will readily provide additional information to facilitate approval of the firm's fees," Harris wrote in response to questions on the matter.

Koschik said he will resume hearing the matter on Jan. 19.

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Bankruptcy judge halts $2.8 million payment to Akin Gump - Crain's Cleveland Business