JACKSONVILLE, Fla. – Lawyers for two former JEA executives facing federal charges in connection with the attempted sale of the utility spent over two hours at a hearing Thursday morning questioning the FBI special agent who led the investigation about how the case was built.
Aaron Zahn, a former CEO of the utility, and Ryan Wannemacher, who served as chief financial officer under Zahn, are charged with conspiracy and wire fraud, in connection with a proposed bonus plan that would have paid out millions if the utility was sold.
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The hearing, now in its fourth day, is what’s known as a Kastigar hearing. The purpose of the hearing is for federal prosecutors to prove that their case is not built on or derived from statements that Zahn and Wannemacher gave to city attorneys in January 2020. The statements, which were part of an investigation into whether or not Zahn could be fired as CEO with “cause,” are covered by what’s called Garrity protections. Those are extended to public employees who are compelled to testify as part of a workplace investigation and protect those statements from being used against them criminally.
The FBI agent, Robert Blythe, first took the stand Monday afternoon. Prosecutors spent several hours Monday, as well as all of Tuesday and several hours on Wednesday, questioning Blythe about how he investigated the case. Testimony detailed the use of JEA board meeting videos and meeting packets, plus documents obtained through subpoenas issued to JEA and other entities.
Documents discussed have included spreadsheets labeled “Performance Unit Scratch Sheet” and “Notes.xlsx,” which prosecutors say outlined the potential payouts of the proposed bonus plan, in the event JEA was sold. One of the documents included a situation where $345 million could be paid out to JEA employees, with the payouts weighted toward members of the executive team.
During Thursday’s court session, Zahn’s defense attorney Eddie Suarez questioned Blythe about how he obtained the version of the Performance Unit Scratch Sheet that added an additional $4 billion to the value of the utility in calculations for the bonus plan, which led to the higher payouts. Blythe testified investigators had seen a version of the spreadsheet, which prosecutors say was created by Wannemacher, in documents obtained from JEA, but that they hadn’t noticed the version with the highest values until a member of the council auditor’s office brought it to their attention in July 2021. At that point, they found it among other documents they’d received.
A portion of the hearing also focused on potential testimony from former JEA board member Kelly Flanagan. Blythe testified that last week, Flanagan and her attorneys spoke with the prosecution team over concerns that information she had received from the city’s Office of General Counsel – whose attorneys who conducted the investigative interviews with Zahn and Wannemacher – could influence her responses to questions from prosecutors, with a reference to her testimony before the grand jury that eventually returned the indictment. When prosecutor Tysen Duva later questioned Blythe about the discussion with Flanagan, it was revealed that when Flanagan appeared before the grand jury, a juror asked if it was common that something like the performance unit plan, known as the PUP, would be approved so quickly, referring to the board’s July 23, 2019, meeting. According to the grand jury transcript discussed during Thursday’s hearing, Flanagan responded that it was a long meeting and the PUP had been the last agenda item, and her perspective in hindsight was that it was buried.
The bulk of the afternoon’s testimony came from attorney Kevin Blodgett, with the Smith Hulsey Busey firm, which worked with the city council’s Special Investigative Committee. The firm had worked with council members to help conduct its investigation into JEA as well as to develop any legislative solutions to any issues that came up. Blodgett described obtaining documents from JEA and bidders, as well as reviewing publicly available information such as board meetings and documents.
Blodgett testified that he had read the protected Garrity statements from Zahn and Wannemacher. When asked if the Garrity statements led him to find the spreadsheets that described the calculations for the PUP, Blodgett responded that he did not find the spreadsheets. Earlier, he had testified about reviewing the spreadsheets, after receiving them directly from the council auditor’s office.
A portion of Blodgett’s testimony was closed to members of the public and the prosecution team. Under the judge’s order, any time that the actual contents of the protected statements may be discussed, the courtroom would be closed. Standing in for the trial prosecutors during that time was a separate set of government attorneys, known as the filter team. In this instance, the courtroom was closed to the public for about 30 minutes.
The final witness of the day was former JEA CEO, Paul McElroy. McElroy started at the utility in 2006, then became CEO in 2012, serving until he was asked by the board to resign in 2018. McElroy later served as interim CEO for about six months in 2020, following Zahn’s ouster. McElroy testified to the financial and operational background of the utility and described the events that followed after then-board member Tom Petway raised the possibility of privatizing JEA in the fall of 2017.
McElroy is scheduled to return to the witness stand when testimony resumes Friday morning. The Kastigar hearing is expected to last into next week.
Zahn and Wannemacher are currently slated to stand trial in October.