Zahn, Wannamacher indicted by grand jury on fraud, conspiracy charges

Government

A federal grand jury indicted former JEA CEO Aaron Zahn and former Chief Financial Officer Ryan Wannemacher with conspiring to steal and obtain by fraud money that would have been generated from the sale of the city-owned utility.

The March 2 indictment was released to the public March 7.

Zahn and Wannemacher are scheduled for an initial appearance at 2:30 p.m. March 8, at the Bryan Simpson U.S. Courthouse Downtown in Courtroom 5C, according to a federal court filing. U.S. Magistrate Judge Monte C. Richardson will preside over what the filing says will be an arraignment and hearing to set bond.

If convicted on all counts, Zahn, 42, and Wannemacher, 40, face up to 25 years in federal prison.

An indictment is a formal charge that a defendant has committed one or more violations of federal criminal law. Every defendant is presumed innocent unless, and until, proven guilty.

The indictment stems from the abandoned effort to potentially sell city-owned JEA in 2019.

According to the indictment, Zahn and Wannemacher worked together to devise a Long-Term Performance Unit Plan that would have paid them and other JEA employees millions of dollars in bonuses had the utility been sold.

Ultimately, after information began to develop about the PUP and the bonuses that would have been paid, the JEA board of directors stopped the sale process on Dec. 24, 2019.

The indictment charges Zahn and Wannemacher worked together to craft the PUP formula using JEA’s financial statements to ensure that they would receive millions of dollars when JEA was sold.

The indictment also alleges that Zahn and Wannemacher made material misrepresentations about and otherwise hid the true nature of the PUP from the JEA board, members of the Jacksonville City Council, other JEA executives and members of the public.

The indictment said that during the Invitation to Negotiate, the process used for the potential sale of the utility, Zahn crafted minimum requirements that would appeal to the JEA board, members of City Council, and the public and, at the same time, ensure that the PUP bonus plan would pay out millions of dollars to holders of PUP units. The overwhelming majority those units would have been available to Zahn, Wannemacher and certain others if the utility was sold.

Zahn and Wannemacher were fired by JEA in 2019.

The case was investigated by the Federal Bureau of Investigation and the State Attorney’s Office for the 4th Judicial Circuit. It will be prosecuted by Assistant U.S. Attorney Tysen Duva.

Reactions

Statement from JEA:

Since 2020, several measures have been put in place under new leadership to ensure transparency at JEA and that the types of actions that caused the investigation in the first place won’t be repeated.

All of us, including the JEA Board of Directors and each employee, are focused on providing Northeast Florida with reliable utility service at reasonable rates.

We are intent on making sound financial decisions that will help us serve as a publicly owned not-for-profit utility for another 125 years.

JEA is foundational to our community.

It should not be lost on anyone that 2,000 committed JEA team members continue to provide exceptional service to our customers.

And when we do our jobs well, everyone else can do their jobs well.

Statement from Jacksonville Mayor Lenny Curry:

“My administration has, and will continue, to cooperate with all official inquiries into the management of our local utility. Beyond that, I will reserve further comment at this time out of respect for the ongoing legal process.”

Statement from State Attorney Melissa Nelson:

“In 2019, our office initiated an investigation into the attempted privatization of JEA. In conjunction with our federal partners, we determined the U.S Attorney’s Office and its utilization of a federal grand jury was the best mechanism to further pursue the investigation. After this transition, we continued to support the JEA investigation by assigning two State Attorney investigators to the matter. We appreciate our partnership with the U.S. Attorney’s Office for the Middle District of Florida and the hard work they invested to determine the facts behind the privatization efforts.”

Statement Rick Mullaney, director of the Public Policy Institute at Jacksonville University:

"The JEA indictments have been long anticipated and lay out serious and specific allegations against Mr. Zahn and Mr. Wannamacher. Mr. Zahn says he will be vindicated in the end and this case will be one Jacksonville’s most closely watched criminal prosecutions."