JACKSONVILLE, Fla. – Former JEA Chief Executive Officer Aaron Zahn and former JEA Chief Financial Officer Ryan Wannemacher entered not guilty pleas in federal court Tuesday afternoon on charges of conspiracy and wire fraud.
Zahn and Wannemacher were indicted by a federal grand jury, and federal prosecutors unsealed the indictment Monday. The men turned themselves into the FBI on Tuesday morning before the federal arraignment. They were led into the courtroom in handcuffs.
The case stems from a proposed sale of the utility and allegations of an attempt to take millions in personal profits through a controversial bonus plan, which would have cost taxpayers hundreds of millions of dollars.
Zahn and Wannemacher were each released on $100,000 bond, and their travel was restricted to the continental U.S. -- except that the judge is permitting Zahn to go on a prepaid family trip to the Bahamas next week. After he returns, he will be required to surrender his passport, as Wannemacher has already had to do.
A status conference was set for April 18 with the trial slated for May 2.
According to United States Attorney Roger B. Handberg, if convicted on all counts, Zahn and Wannemacher each face up to 25 years in federal prison.
The indictment says the two executives worked together to “devise a lucrative business plan known as the Performance Unit Plan (PUP) that would have paid millions to Zahn, Wannemacher, and others had JEA been sold during the Invitation To Negotiate (ITN) in 2019.”
In the fall of 2019, a city auditor’s report revealed that the true cost of the PUP would have been millions more than what the JEA board had initially been told. In December 2019, the JEA Board stopped the ITN process to review the bonus program and the JEA sale. The indictment alleges that Zahn and Wannemacher made material misrepresentations and hid the true nature of the PUP from the board.
On Monday, Zahn released this statement about the indictment through his attorney:
“Today, Aaron Zahn learned that grand jury had indicted him as a result of actions taken during his tenure as the CEO of JEA. Mr. Zahn affirms his innocence, denies any wrongdoing and is eager to present his case to a jury. Mr. Zahn has a lengthy and accomplished public record in the Jacksonville community as a father, husband, and business leader. This public record includes his acceptance of the role of CEO of JEA to serve as a change agent by bringing his extensive private business experience and know-how to JEA and develop innovative ways to improve the utility for the benefit of the community and its ratepayers. He challenged the stagnant conventional thinking that permeated JEA and looked for cost-effective and innovative ways, commonly used in private businesses, to diversify revenues and retain the talented employees of JEA. Throughout this process, JEA engaged well-regarded lawyers, consultants, and financial advisors to craft and vet both the lawfulness and ethics of employing these innovative ideas in a government setting. Mr. Zahn is confident that when the jury is presented with all the evidence, he will be vindicated.”
On Monday, JEA released this statement:
“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.”
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News4JAX Political Analyst Rick Mullaney, of Jacksonville University’s Public Policy Institute, said the impact from this will be historic.
“This appears to be the greatest scheme to defraud the taxpayers in the history of Jacksonville,” Mullaney said. “In fact, I will go further, it’s one of the greatest schemes in the country.”
Jacksonville City Councilman Rory Diamond once led a city council investigation into the wrongdoings of JEA.
“I think everyone wants to see this chapter in Jacksonville history come to a close,” Diamond said. “The good news about the indictment is we can finally get some justice for the people of Jacksonville and close the chapter on this and move forward as a city.”
Mayor Lenny Curry originally appointed Zahn to serve on the JEA board and had backed him for the CEO’s position. He issued a statement Monday concerning the indictments:
“My administration has, and will continue, to cooperate with all official inquiries in to the management of our local utility. Beyond that, I will reserve further comment at this time out of respect for the ongoing legal process.”
Inspector General Report
Last month, an audit report released by Jacksonville’s inspector general criticized JEA’s former leaders for overspending. The report identified red flags with travel, drinks and an “escape room” event. It also looked at more than 900 transactions in which corporate cards were used. More than half did not comply with JEA policies and procedures.
The spending and questionable reimbursements totaled more than $134,000. The charges included offsite meetings, alcoholic drinks at team lunches, out-of-town travel and charges not allowed or not documented properly.
As a result of the report, JEA is making 13 different changes to its policies and procedures. All changes will be made by March 15.