Lawsuits over ComEd bribery scandal could cost company more than $400 million

[May 05, 2023]  By Brett Rowland | The Center Square

(The Center Square) – Exelon Corp., Commonwealth Edison's parent company, continues to spend money on lawsuits after a bribery scandal and is preparing to pay out another $173 million.

That's on top of the $200 million ComEd paid in July 2020 to resolve a criminal investigation into the years-long bribery scheme centered around former Illinois House Speaker Michael Madigan. As part of the deferred prosecution agreement, ComEd admitted it arranged jobs, vendor subcontracts and payments to associates of Madigan in a bid to influence the speaker on legislation affecting the utility's finances.

The utility also returned about $38 million to customers as part of an agreement with the Illinois Commerce Commission, a quasi-judicial body created by lawmakers to regulate utilities. That agreement resolved the question of whether customer funds were used in the scheme. The $31 million ICC refund is going to customers during the April billing cycle. The remaining money is under the jurisdiction of the Federal Energy Regulatory Commission.

The refunds can't be recovered in rates or charged to customers.

ComEd and Exelon have faced several lawsuits related to the bribery allegations since they become public in 2019. While some have been dismissed, others remain pending.

Customers filed four lawsuits alleging civil violations of federal racketeering laws and seeking class-action status in late 2020. The Citizens Utility Board, a nonpartisan nonprofit created by the state legislature in 1983 to represent the interests of residential utility customers, intervened. Those cases were combined and later dismissed by a judge.

Three additional lawsuits filed against ComEd and Exelon in late 2020 seeking restitution and damages in state court were combined and later dismissed, but the plaintiffs are appealing that decision.

A 2022 lawsuit against ComEd and Exelon for unjust enrichment and deceptive business practices filed in Lake County Circuit Court also remains pending. ComEd and Exelon filed a motion to dismiss that case in February and a decision is expected by or before June 9, according to Exelon's most recent quarterly Securities and Exchange Commission report.

In another case, a 2019 class-action lawsuit against Exelon and some officers of Exelon and ComEd alleging misrepresentations and omissions in SEC filings, Exelon reported that "based on recent developments, management has determined that a probable loss exists for this matter in the amount of $173 million." That is expected to be covered by insurance, according to the SEC filing.

The company is working to resolve three other lawsuits alleging breaches of fiduciary duties and other violations, according to the SEC filing.

A jury found four former Commonwealth Edison executives and lobbyists guilty of bribery-related charges on May 2 as part of an eight-year conspiracy scheme. The jury convicted former state lawmaker and lobbyist Michael McClain, former ComEd CEO Anne Pramaggiore, former ComEd lobbyist John Hooker and former contract lobbyist Jay Doherty. Prosecutors had alleged the four gave out $1.3 million in jobs, contracts and payments to associates of Madigan over eight years in exchange for favorable treatment on legislation in Springfield.

McClain faces could face another trial next year. In that case, prosecutors charged Madigan and McClain with 23 counts of racketeering, bribery, and official misconduct. That case could go to trial in April 2024.

Brett Rowland is an award-winning journalist who has worked as an editor and reporter in newsrooms in Illinois and Wisconsin. He is an investigative reporter for The Center Square.