In a second day of questions to former JEA board members, defense attorneys for two fired JEA executives continued to target the government’s argument that the defendants deceived the board into voting to sell the city-owned utility so they could profit from a bonus plan.
Former board members Andy Allen, Alan Howard and April Green testified Feb. 28 in the criminal trial of fired JEA Managing Director and CEO Aaron Zahn and CFO Ryan Wannemacher. They are charged with conspiracy and wire fraud in connection with an alleged scheme to reap tens of millions of dollars in bonuses from the incentive plan through a sale of the city-owned utility.
Five former board members have testified, including Kelly Flanagan and Fred Newbill. All voted in favor of the incentive plan during a board meeting July 23, 2019, and all have testified that they believed the maximum value of the incentives would be $3 million to $4 million spread across the entire 2,000-plus members of JEA’s workforce. On the same day, the board also voted to begin a process that could have led to the sale of the utility.
The board members each testified that they would not have supported the incentive plan in light of a November 2019 memo by City Council Auditor Kyle Billy that the plan could have produced hundreds of millions of dollars in bonuses.
That memo came days after Zahn announced that JEA leadership was indefinitely postponing implementation of the bonus plan.
Among their lines of questioning, defense attorneys took aim at the government’s argument that Zahn and Wannemacher misled the board into thinking that the utility was failing financially and that selling it was the only way to save it.
Investigating options
Cross-examined by Eddie Suarez, an attorney for Zahn, Green said the purpose of the July 2019 board vote wasn’t to sell JEA but to investigate options to “recapitalize” the utility, such as transforming it to a cooperative, privatizing it or selling it.
As part of that vote, the board authorized Zahn to initiate an invitation to negotiate with private companies that could have led to a possible sale of the utility and in October 2019 the utility announced that nine companies accepted the invitation.
Green testified that any sale would have had to come back to the board after that process, and then to City Council for its approval.
“I want to make this very clear: The board — you yourself and your other board members — you never voted to sell JEA?” Suarez asked Green.
“No,” she said.
“And that was clear to each one of you that you were not (voting to sell), right?” Suarez said.
“It’s clear to me,” Green said.
“You asked management to bring you options, and then you were going to explore those options, fair?”
“Fair.”
Checks and balances
Another line of questioning involved a defense argument that the incentive plan and potential sale of JEA were subject to extensive checks and balances, making it absurd to think that the alleged scheme existed.
Former board members said they were aware that plan and potential sale would be refined and vetted by the city Office of General Counsel. Further approvals would have been required, including from the Council and Jacksonville voters via a ballot referendum.
Allen said he voted on the incentive plan under the assumption that before any payouts were awarded, he would have expected the proposal to be reviewed and finalized by the Office of General Counsel.
Green offered similar testimony in answer to questions from Suarez about “circuit breakers” that were put in place to ensure plans were reviewed.
“You knew the lawyers were going to continue to work on perfecting this until it was a final product that could be certified by the administrator, correct?” Suarez said.
“Yes,” Green said, adding that it was a “level of comfort” knowing that checks and balances were in place.
The trial is being held at the Bryan Simpson U.S. Courthouse in front of two separate juries, one each for Zahn and Wannemacher. Witnesses who are expected to testify Feb. 29 include Melissa Dykes, who served as interim CEO of JEA for a short time before Zahn succeeded her, and who recruited Wannemacher to the utility.