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Jax Daily Record Thursday, Apr. 23, 202007:20 PM EST

Federal grand jury casts wide net for JEA records, communications

Subpoena specifies 50 categories of documents dating to before the hiring of fired CEO Aaron Zahn.
by: Mike Mendenhall Staff Writer

A federal grand jury subpoena filed April 21 orders JEA to provide documents, communications and records from top utility and City Hall officials related to a failed push to privatize the city-owned utility and the hiring of former CEO Aaron Zahn.

Federal prosecutors also are looking for communications and documents from lobbyists, JEA’s contracted legal and financial firms and consultants involved in the utility’s invitation to negotiate and failed stock option style-employee bonus plan.

The government issued the subpoena for JEA to turn over the authenticated records by May 20.

The JEA board of directors ended the utility’s invitation to negotiate Dec. 24.  JEA accepted bids from 16 companies to explore selling some or all of the city-owned utility’s assets.

JEA and negotiators in Mayor Lenny Curry’s administration met privately in Atlanta with nine companies in November and December.

The subpoena specifies disclosure of the final proposals from eight companies that bid on the ITN:

• NextEra Energy Inc., including subsidiary Florida Power & Light Co.

• Duke Energy Inc. 

• Macquarie Infrastructure and Real Assets Inc.

• ARGO Energy Services

• JEA Public Power Partners

• Emera Electric

• American Water

• IFM Renewable Energy

• Any other entity that submitted an ITN related proposal

The JEA board terminated Zahn with cause Jan. 28 after city attorneys accused him of willful misconduct, gross negligence/gross neglect of duties and/or breach of fiduciary obligations following the city’s investigation. 

Among those points, the city General Counsel’s Office said Zahn allegedly altered a PowerPoint presentation submitted by third-party consultant Willis Towers Watson intended to provide an overview of long-term performance incentives programs offered by other public sector utilities.

What the U.S. Attorney wants to see

 The subpoena specifies 50 categories of documents filed from Jan. 1, 2018, to the date of the subpoena, April 21.

The U.S. Attorney’s Office has requested all communications related to the proposed bonus plan to and from Willis Tower Watson, include the PowerPoint presentation. 

The government wants all communications involving Zahn, former JEA CFO Ryan Wannemacher, now-Interim CEO Melissa Dykes, Chief Administrative Office Herschel Vinyard and “any member” of the JEA executive team and/or senior leadership team regarding the bonus plan, the invitation to negotiate and transitioning the utility to a cooperative or making an initial public offing for JEA.

The subpoena also requires records and communications to and from JEA contractors McKinsey & Company;  JP Morgan Chase & Co.; Morgan Stanley; Black & Veatch Holding Co.; and Deloitte.

The grand jury will review records and communications from former JEA Vice President and Chief Legal Officer Lynne Rhode and other city Office of General Counsel attorneys related to the failed bonus plan and the invitation to negotiate. 

The federal probe seeks records from the utility’s July 2019 compensation committee meeting and the July 23 board meeting where the possible sale process and bonus plan were approved. 

 The grand jury also will review payments, wire transfers and contracts for the 2018 Jax Infrastructure Innovation Summit that JEA planned with Innovation Alliance of Florida Inc., an affiliate of JAX Chamber. 

The subpoena cites specifically any record of payments to Tallahassee-based lobbying firm Southern Strategy Group — now The Southern Group — and the firm’s former Jacksonville office managing partner Deno Hicks and any returned funds from those entities. 

Curry administration

Jacksonville Mayor Lenny Curry’s administration is cited twice in the subpoena.

The government has requested all documents and records pertaining to the use of the smartphone app Confide by Zahn, or by any lobbyist, and/or any member of Curry’s administration in connection with the ITN or bonus plan.

Confide is an encrypted, screenshot-proof private messaging platform. 

The subpoena requests material reflecting all contact between any member of the mayor’s office and any JEA executive and senior leadership team members and/or board members regarding Zahn’s selection as CEO. 

Curry told reporters in his April 23 virtual news conference that he learned about the subpoena April 22 from the city Office of General Counsel and he will cooperate with federal investigators. 

“My understanding is it’s a widespread request for documents and any communication, potentially, between people in my office and the JEA team,” Curry said. “That’s not a surprise to me. If my office or I am asked to do anything, we’re obviously going to comply and be helpful.” 

When asked by a reporter, Curry said he’d never heard of the Confide messaging platform

Dykes was the utility’s chief operating officer during the push to privatize and was present during negotiations with bidders in Atlanta.

Curry named Dykes as a member of his 12-member advisory group to re-open Jacksonville from the COVID-19 economic shutdown. The mayor said she will remain on it.

“Melissa (Dykes) will remain a critical member of our reopening team,” Curry said. “She’s the head of one of our largest independent agencies, and it’s important that all the independent agencies and the city of Jacksonville are working together and collaborating to get people back to work and take care of our citizens.”

JEA response

JEA Media Relations Manager Gina Kyle released a statement April 23 regarding the subpoena and federal probe:

“Yesterday, JEA received a federal grand jury subpoena for records from the U.S. Attorney’s office. We received authorization to release this information publicly at 5:29 p.m. today.  JEA has been and will continue to be fully cooperative with all investigations and public records requests.”

State Attorney Melissa Nelson announced in a Jan. 13 email that she turned over her investigation of JEA to federal officials.

City Council member Rory Diamond, who chairs the Council’s Special Investigatory Committee into JEA, said in an April 23 interview the federal subpoena parallels the committee’s probe.

Many of the documents and communication requested in the grand jury subpoena are part of the Council’s 84-point public records request issued in February.

Dykes’ attorney, Hank Coxe of the Bedell Firm, and Council’s outside attorneys Stephen Busey of Smith Hulsey & Busey, reached an agreement April 20 allow her sworn deposition in the investigation.

JEA has agreed to provide the Council investigators nearly 3 million documents by May 1.

Diamond said the Council’s independent investigation will continue, but will not interfere with the federal grand jury investigation.

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