Exelon Corp Settles Fraud Charges in Illinois Bribery Scandal
Exelon Corporation, the parent company of electric utility company Commonwealth Edison Company (ComEd), has reached a settlement after being charged with fraud in connection to a bribery scandal in Illinois. The Securities and Exchange Commission (SEC) accused Exelon, ComEd, and former ComEd CEO Anne Pramaggiore of participating in a multi-year scheme to corruptly influence then-Speaker of the Illinois House of Representatives Michael Madigan. As part of the settlement, Exelon will pay a civil penalty of $46.2 million, while the charges against Pramaggiore will be litigated separately.
According to the SEC, ComEd arranged for associates of Madigan to be given jobs, subcontracts, and monetary payments from 2011 to 2019. The purpose of these arrangements was to influence Madigan’s stance on legislation that would benefit ComEd. The SEC found that ComEd made payments to Madigan’s associates through third-party vendors to conceal the true nature of the payments and evade responsibility for oversight. In some cases, these associates did little or no work for which they were hired. The SEC’s order revealed that ComEd made indirect payments totaling over $1.3 million to Madigan’s associates. Additionally, ComEd acknowledged that Madigan’s support for legislation favorable to the company resulted in anticipated benefits of more than $150 million.
The SEC complaint against Pramaggiore alleges that she actively participated in and directed the bribery scheme. It further claims that she failed to disclose the scheme to investors and misled them by presenting ComEd’s lobbying activities as legitimate. The complaint also accuses Pramaggiore of providing false information to Exelon’s auditors and filing misleading certifications.
LeeAnn G. Gaunt, Chief of the SEC Enforcement Division’s Public Finance Abuse Unit, stated that Pramaggiore’s remarks to investors concealed the reality of the bribery scheme in which ComEd was involved. Gaunt emphasized that corporate executives should not mislead investors through omission when communicating about company activities.
Exelon and ComEd agreed to a cease-and-desist order from the SEC, which found them in violation of antifraud, books and records, and internal accounting controls provisions of the federal securities laws. As part of the settlement, Exelon will pay a civil penalty of $46.2 million.
The SEC’s complaint against Pramaggiore alleges that she violated antifraud, books and records, and internal accounting controls provisions of the federal securities laws. The SEC is seeking permanent injunctive relief, disgorgement with prejudgment interest, a civil penalty, and an officer and director bar against her.
The SEC’s investigation into the matter was conducted by the Public Finance Abuse Unit’s Natalie Garner, Sally Hewitt, and Kristal Olson, along with Will Saylor from the SEC’s Chicago Regional Office. Brian Fagel supervised the investigation, and the litigation will be overseen by Jonathan Polish. The SEC acknowledges the assistance provided by the U.S. Attorney’s Office for the Northern District of Illinois.
This settlement marks a significant development in the bribery scandal involving Exelon and ComEd. The charges and the subsequent settlement demonstrate the seriousness of the allegations and highlight the importance of transparency and honesty in corporate practices. The outcome of Pramaggiore’s litigation will further shed light on her alleged involvement in the scheme. As the legal proceedings continue, the implications for Exelon and its subsidiary remain significant, and the repercussions of this scandal may extend beyond financial penalties.
