JACKSONVILLE, Fla. – Jurors in the trial of former JEA executives Aaron Zahn and Ryan Wannemacher are now considering the testimony of more than 30 witnesses, which they heard over the course of 14 days of court proceedings, as they deliberate whether the two men are guilty or not guilty of conspiracy and wire fraud.
Zahn, the utility’s former CEO, and Wannemacher, his former chief financial officer, were indicted in March 2022 – nearly two years before the trial began. Prosecutors accused them of creating a lucrative bonus scheme, known as the performance unit plan, or PUP. Prosecutors said the PUP could have paid out hundreds of millions of dollars if the city-owned utility had been sold, a possibility the JEA board voted to explore in July 2019, at the same board meeting where they later approved the PUP.
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Here is a look at who testified over the course of the trial:
Paul McElroy (February 21-22):
Paul McElroy spent 16 years as a JEA executive until his 2018 retirement, with the last 6 years as CEO. He later came back to serve as interim CEO for six months in 2020. McElroy was the first witness prosecutors called, and he gave an overview of JEA’s electric, water, and wastewater systems, and the utility’s involvement with the Plant Vogtle nuclear power project in Georgia. He also testified that in the spring of 2018, the chair of the JEA board told him that the office of Mayor Lenny Curry wanted McElroy to resign. Soon after that point, Zahn became JEA’s interim CEO.
Elizabeth Columbo (February 22):
Elizabeth Columbo is a New York-based attorney with the law firm Nixon Peabody, which JEA used as its attorneys related to issuing bonds, which were sometimes needed to pay for large projects. She was contacted by JEA in March 2019 about the possibility of a possible incentive plan, by issuing bonds and compensating employees. Lawyers with Nixon Peabody researched the idea, and eventually prepared a memo for JEA in May 2019, informing utility officials that they did not believe the program would be able to clear legal hurdles under Florida law, in part because some people who could receive bonus payments would also be the ones controlling the metrics that would lead to the payments – creating a conflict of interest, according to Columbo.
John Zipperer (February 22):
John Zipperer, a longtime JSO detective who spent time in that agency’s Integrity Unit prior to his retirement in 2003, was an investigator with the state attorney’s office in 2019 and 2020, and was assigned to talk with people who were coming forward with concerns about the proposed bonus plan at JEA in late 2019. Zipperer discussed reviewing the November 2019 council auditor’s memo with another investigator in the state attorney’s office, Tim Adams, himself a former FBI agent. Zipperer told the court that when he reviewed the memo, which outlined potential payouts under the bonus plan, “it looked like some people were going to become very rich off the sale of JEA.”
Timothy McCrohan (February 26):
Timothy McCrohan, who retired from a 43-year career with the FBI in December, was a computer scientist in the Jacksonville office. He testified about his analysis of metadata from two Microsoft Excel spreadsheets, “Performance Unit Scratch Sheet.xlsx” and “Notes.xlsx.” He determined when they were created and modified, and who created and modified the documents.
Madricka Jones (February 26):
Madricka Jones is an executive assistant to the CEO at JEA, and was in that role in 2019, working for Aaron Zahn, as well as doing work for other executives, including Ryan Wannemacher and Melissa Dykes. She testified about the process of posting board meeting packets on an online platform prior to meetings, so that board members have a chance to review them. She testified that prior to the July 23, 2019 board meeting, hard copies of the packets were hand-delivered to each member, rather than the full packet being posted on the online platform ahead of the meeting.
MORE: Former JEA board member declines to answer more than two dozen questions related to trial of former JEA executives | Attorney testifies former JEA CEO said he would make $40 million if JEA was sold, and had backing of Mayor Curry | City lawyer testifies she saw issues with controversial bonus plan for JEA execs, even though she was set to benefit | JEA pushed for accelerated plan to sell utility to alter the narrative after public backlash, investment banker says
Pat Maillis (February 26):
Pat Maillis has been JEA’s director of employee services for more than ten years, handling matters including benefits, compensation, and labor relations. She testified that prior to Aaron Zahn’s arrival at JEA, long-term incentive plans had only been discussed at the utility as part of an overall compensation analysis. However, she said they’d never been able to put such a plan together, because being in a government environment, it wasn’t acceptable. Maillis then described working with the utility’s compensation consulting firm, Willis Towers Watson, as they were asked to look into a long-term incentive plan. She testified that she was never asked to work on any documents for the performance unit plan, something she would have expected she would be asked to work on, given her position. Maillis also said she watched the July 23 board meeting online, and was surprised when the board approved the PUP.
David Wathen (February 26):
David Wathen is a consultant with Willis Towers Watson, a firm that advises companies on benefits, compensation, and similar matters. JEA had previously engaged Willis Towers Watson on analyzing base salaries, short term incentives, and executive compensation, and in January 2019, formally engaged them for work on a long-term incentive plan. Wathen testified about the initial design of a long-term incentive plan, and a later version of a presentation that gave an estimated cost of $4 million a year. He also testified that a slide deck with the Willis Towers Watson logo that was part of a presentation from the June 2019 meeting of the JEA board’s compensation committee was not something his firm had prepared. Wathen said the words “Discussion Draft” had been removed from a prior version of a presentation, and some of the firm’s proprietary market data had not been redacted, as would have been needed for a public meeting. He testified he was also concerned about the document was represented as having been prepared by Willis Towers Watson.
Kim Taylor (February 26):
Kim Taylor is the Council Auditor for the city of Jacksonville, having worked in the office since 1995. In 2019, she was the assistant council auditor. She explained how in August 2019, another member of the council auditor’s office, Jeff Rodda, sent an email to Ryan Wannemacher and others, with 22 questions regarding the PUP. Rodda had been one of the first people in the office to be hands-on with documents from the PUP. Some of those initial questions asked the purpose of the PUP, what sort of modeling had been done, and what the maximum cost to JEA could be. Taylor also testified about the process of following up with Wannemacher, and the lead up to the eventual memo from the council auditor in mid-November.
Kyle Billy (February 26-27):
Kyle Billy joined the council auditor’s office in 1989, and served as council auditor from 2017 until his retirement in June 2020. He testified about authorizing Jeff Rodda to send a list of questions about the PUP to JEA in August 2019, and described a meeting between his office and JEA officials on October 31 of that year, a meeting he says his office called because they had not yet received answers to their questions about the bonus plan. Billy testified that in issuing his November 18 memo, even though Zahn had said the bonus plan was indefinitely postponed until the JEA board rescinded the plan, Billy viewed it was still a possibility, and felt a duty to inform the city council about their payout calculations.
Kelly Flanagan (February 27):
Kelly Flanagan, a former financial executive with the Jacksonville Jaguars, was a member of the JEA board from late 2015 to February 2020. She was the first board member to testify during the trial. During questioning about the July 23 board meeting, prosecutors played a clip from the meeting where Flanagan asked Ryan Wannemacher about any implications of Scenario Three – known as the non-traditional utility response – on the performance unit plan, and how they would interact. At the meeting, Wannemacher explained the only implication would be that if there’s a transaction, the performance period used to calculate payouts would end, when the transaction is finalized. Later in her testimony, she was shown the council auditor’s memo that showed the possibility of hundreds of millions of dollars in bonus payouts if JEA were sold. She told prosecutors that had she known of those potential payouts, she would not have voted for the resolution approving the plan.
Anton Derkach (February 27):
Anton Derkach is a senior partner with the consulting firm McKinsey & Company. He testified about how his firm came to work with JEA on strategic planning, starting in 2018. He testified that their goal was to help JEA become a leading municipal utility of the future. He testified their early work developed into what became known as Scenario One, or the status quo baseline, presented at the May 2019 JEA board meeting. The consultant testified that McKinsey supported JEA’s development of Scenario Two, the traditional utility response – the scenario that would have led to large layoffs and rate increases. When Derkach attended the June 25 board meeting where that was presented, he said he was there to continue with helping toward the goal of moving JEA toward being a leading municipal utility of the future. A few days after the meeting, Derkach got a phone call from Zahn, informing him that JEA management had decided to explore privatization. He said that surprised him, because they had not had conversations about privatization since December, when it was in the rear-view mirror. Derkach said McKinsey was not involved in the presentation of Scenario Three, the non-traditional utility response.
Rev. Fred Newbill (February 27):
Rev. Fred Newbill was another former JEA board member, testifying that he joined the board in 2017 or 2018, and served until 2020. During the trial, prosecutors played clips from the July 23 board meeting where Newbill likened Scenario One and Scenario Two to “writing your own obituary.”
Alan Howard (February 28):
Alan Howard, a longtime Jacksonville attorney with experience in mergers & acquisitions and finance, joined the JEA board in 2015. He was board chair in 2018, when he had to deliver a message to CEO Paul McElroy that the office of Mayor Lenny Curry was “interested in seeing a change in leadership at JEA,” leading to McElroy’s resignation. Like the other board members who testified, Howard testified that had he known of potential payouts of hundreds of millions of dollars, he would not have voted to approve the bonus plan.
April Green (February 28):
April Green, who was appointed to the JEA board in December 2017, took over as board chair after Alan Howard’s time as chair ended, in the middle of 2019. Green testified that she understood the $3.4 million figure from presentations to mean that was the total cost of payouts to all employees, including members of the senior leadership team. She said there were no conversations about how a sale or privatization might affect the payouts under the plan, only saying that at a compensation committee meeting, there was a discussion of how the plan was about employee retention, in the event of a sale. When asked if she would have approved the PUP had she known the payouts could be as high as $345 million, Green responded, “absolutely not.”
Jeff Panger (February 29):
Jeff Panger is an analyst with S&P Global, a firm that issues bond ratings for various entities, including JEA. Panger testified that while S&P had a “very strong” view of JEA’s financial metrics, the firm gave the utility a “negative” outlook at one point over JEA’s lawsuit over Plant Vogtle, a nuclear power plant in Georgia that was being expanded. In August 2019, as Panger learned about JEA’s ITN, he raised concerns about the projections the utility was making during the strategic planning process, trying to understand where it was coming from, because it didn’t match up with the other financial metrics. In the end, S&P Global issued a ratings bulletin that said the agency’s rating of JEA was unaffected by their exploration of a potential sale.
Melissa Dykes (February 29-March 1):
Melissa Dykes was a longtime JEA executive, serving as CFO under Paul McElroy, then briefly serving as interim CEO after McElroy resigned. When Zahn took over as interim and then permanent CEO, Dykes served as his chief operating officer. She served as interim CEO again for several months after Zahn’s termination. Dykes said she never thought the long-term incentive plan was going to happen, saying those plans don’t have a place in government. When the board approved the PUP, Dykes testified she was “very surprised,” because she though they understood the potential for large payouts and would not approve it. She also testified about a conversation she had with Zahn about his conversations with board members before that meeting. She asked if board members understood what they’d be approving, and says he told her, “Everybody who needs to understand it, understands it.” But, she later testified, she didn’t know exactly what those conversations were.
Pam Rauch (March 1):
Pam Rauch is the vice president of external affairs and economic development for FPL, whose parent company, NextEra, was one of the bidders for JEA. She described a meeting in July 17, 2019 at an airport in Palm Beach, attended by herself, two other FPL leaders, and Zahn. Rauch testified that Zahn did most of the talking at the meeting and that he mentioned they were looking at a possible sale of JEA. She testified that FPL was interested in buying JEA, as a lot had been publicized regarding the utility, and though she wasn’t personally involved in FPL’s process, she believed the company was trying to do as much due diligence as it could.
Joe Orfano (March 1):
Joe Orfano is currently JEA’s vice president of financial services, and was the utility’s treasurer from 2013 to 2019. He said he had concerns about the bonus plan, and during some meetings in early July 2019, directed his comments to Zahn, saying, “this isn’t my first rodeo in utilities,” and that to roll out a PUP in conjunction with a sale would be “untoward” or “unseemly.” He said Zahn didn’t respond. Orfano also testified to conversations he had with Wannemacher about the PUP, including one outside the parking garage at the utility’s downtown headquarters. He described his reservations in tying the potential sale to the PUP, and said Wannemacher told him, “we were not to discuss the potential value of the PUPs with anyone.”
Jason Gredell (March 4):
Jason Gredell an investment banker at J.P. Morgan. The firm was an advisor to JEA during its ITN process, but JEA has been a longtime client of the financial firm. Gredell said he became aware of the PUP from the board packet from the July 23 board meeting, and his initial reaction was concern – saying the form of the performance unit was complex, and he viewed any proceeds that didn’t go back to the city of Jacksonville as a potential obstacle in getting a deal done.
Eddie Manheimer (March 4):
Eddie Manheimer is an investment banker with Morgan Stanley, another firm that was working with JEA on the recapitalization process. He testified that they looked at several options for recapitalization in addition to an outright sale, such as an IPO, or a concession agreement, among others, but an outright sale was the best way to maximize the proceeds to the city. He also outlined how an IPO would have been challenging, because of the nature of an IPO, though it was investigated as a possible backup plan in case a sale didn’t go through. However, he said to his knowledge, nobody had contacted the Securities and Exchange Commission regarding a potential IPO.
Mark Hickson (March 4):
Mark Hickson is an executive vice president with NextEra, the parent company of FPL. Hickson oversees mergers and acquisitions for the company, and directed the team that prepared the company’s revised reply to the ITN process. NextEra was preparing to offer a little more than $11 billion for JEA, which Hickson said a lot of people refer to as a “donut hole,” as JEA’s service area is surrounded by FPL’s service area, which includes much of Florida’s east coast.
Lynne Rhode (March 5):
Lynne Rhode was an attorney in the city’s Office of General Counsel, and was assigned to JEA as its Chief Legal Officer. Because of her position at JEA, Rhode would have been able to participate in the PUP. Prosecutors repeatedly asked her if she knew the plan could bring millions of dollars in payouts to top executives, and she said she did not know that until she read it in the newspaper. She was involved in reviewing various documents related to the PUP, but said she had not looked at what payouts would be. She resigned in December 2019.
Jason Gabriel (March 5-6):
Jason Gabriel was the city’s general counsel in 2019. He testified that when the JEA board approved the PUP in July 2019, he was under the impression it met the requirements of a state law over incentive plans for public employees, and that the cost of the plan was $3-4 million. He said he thought that was the maximum based on the slides that went along with the resolution approving the plan. As time went on, and he learned more about it, he testified his gut told him the plan was “ridiculous.” He testified about a Nov. 5 meeting with other attorneys and Zahn, where Gabriel laid out that his office had a number of issues with the plan. A week later, as he was preparing a letter to Zahn outlining his concerns about the plan, Zahn sent Gabriel a letter saying the plan was “indefinitely postponed.”
Kevin Hyde (March 6):
Kevin Hyde, a former Jacksonville City Council president, is an attorney with the Jacksonville office of the Foley & Lardner law firm. The firm represented JEA during some parts of the process around the proposed sale and the PUP. He testified his firm had no idea the bonus plan’s payouts could have been so high. Hyde said he told Zahn that one plan that would use bond money to pay the bonuses would not work, and that Zahn replied, “tell your lawyers I’m not paying for that advice.”
Stephen Amdur (March 6):
Stephen Amdur is a New York-based mergers & acquisitions attorney with the Pillsbury law firm, which had been retained by JEA for work on the ITN and the PUP. Amdur had been a roommate of Zahn’s when the two were at Yale. Amdur told the court that Zahn reached out to him by phone and suggested the Pillsbury firm get involved in the potential sale. When questioned, Amdur said Zahn told him he had the support of then-mayor Lenny Curry to make $40 million if JEA had been sold. Curry has told News4JAX in the past, “that never happened.”
Tim Hunt (March 6):
Tim Hunt has been JEA’s director of customer and utility analytics since 2013, and has been with JEA for 26 years. He testified about data on solar adoption, something that played a role in the scenario planning process JEA undertook in 2019. At one point, he went to Zahn and said the process was creating fear among employees, and Zahn essentially responded, “sometimes you have to create extreme conditions to get the board to do what you want them to do.”
Jesse Ferraraccio (March 7):
Jesse Ferraraccio is a JEA lineman, and in 2019, was the local IBEW’s vice president. He attended some union leadership meetings. He kept handwritten notes of some meetings, and attended the July 23 board meeting. He said the only explanation of the PUP was that shares would cost $10, but he never heard any discussion of payouts.
Sam Mousa (March 7):
Sam Mousa was a longtime city of Jacksonville employee, serving as chief administrative officer at the end of his career, before retiring in 2019. He then launched a consulting business, and did consulting work for the city in the final months of 2019. Mousa detailed his work on a “super capital improvement plan,” or “super-CIP.” The concept for the plan was to develop a list of roads, drainage, parks, and other city projects, that could be done over a 20-year period, if you had $8 billion to spend. That figure is far greater than what the city traditionally plans in its yearly capital improvement plan. Mousa testified that nothing could have generated the money for that plan in one lump sum, other than the sale of JEA. He also testified about the importance of the JEA contribution to the city, saying the $120 million or so makes up about 10% of the city budget.
Jay Stowe (March 7):
Jay Stowe is the current CEO and managing director of JEA, stepping into the job in November 2020. He testified about what he faced at the start – rebuilding trust and building a new senior leadership team, all while dealing with the environment of COVID-19. His assessment of JEA’s finances when he came in was that they were in a “very strong position.” Stowe also gave an explanation for the flat electric sales since 2008, saying even though Northeast Florida has been growing, sales have remained nearly flat – with one of the largest reasons being that you can’t buy 100-watt incandescent bulbs anymore. Additionally, he said buildings and appliances are more energy-efficient – so people use less power. He addressed solar adoption, which has been a recurring topic during the trial. He said less than 1% of all electricity generated is through solar power setups on private homes, and that it’s generally more expensive to build your own solar than to buy energy from JEA – but the utility does try to support those customers who want to move toward solar.
Jon Kendrick (March 11):
Jon Kendrick had been the JEA vice president and chief human resources officer in 2019. He was asked about the presentation of the long-term incentive plan at the June 2019 JEA board compensation committee and at the July 23 meeting of the full board. He explained that he presented the first portion of slides, giving background on the compensation philosophy, but did not present on the design of the long-term incentive plan. During the July board meeting, that was the point where Wannemacher took over, explaining how the performance unit plan would work. Kendrick testified that at the time of his presentation, he had no idea what payouts under the plan could be in the event JEA were sold, and the city received proceeds of $4-6 billion. He said it wasn’t until November, when the council auditor’s report came out, that he learned the PUP could have paid out hundreds of millions of dollars in the event of such a sale.
Herschel Vinyard (March 11):
Herschel Vinyard, a longtime attorney who also once served as secretary of the Florida Department of Environmental Protection, joined JEA in April 2019 as chief administrative officer, testifying he was not acting as a lawyer in that role. He testified that he had concerns about the PUP, because as he understood the plan, employees would be given an opportunity to buy something like a stock in a government agency, and that wasn’t anything he had heard of, or was comfortable with. Vinyard explained that he didn’t have any conversations with Zahn about the potential of multi-million dollar payouts. He did recount one thing that was discussed with Zahn, in that he told him, “if he (Zahn) makes one dollar off this plan, that the public will light themselves on fire,” a conversation that has been recalled by other witnesses previously during the trial.
Ernest Dixon (March 11-12):
Ernest Dixon was the only witness called by Zahn’s defense team. Dixon, an accountant, was hired by Zahn’s attorneys as an expert witness, and was asked to review and analyze financial documents related to the case, following Generally Accepted Accounting Principles, or GAAP. Dixon testified that based on the PUP documents, calculations related to the PUP are done with the net position of JEA, a way of valuing the utility. He testified that the sale price of JEA would not have an impact on the PUP calculation, saying that since JEA is a part of the city of Jacksonville, the sale price of the utility would go to the city’s financials, not JEA’s. Dixon said there’s no mention in the PUP calculations related to how much the city is receiving from a sale of JEA, only that the calculations are based on JEA’s financial position. He also testified that when calculating how much the city would receive from a sale of JEA, approximately $4 billion would need to be deducted from any sale price, in order to account for what was owed under the Plant Vogtle power purchase agreement. Dixon also called the method for PUP calculations in the council auditor’s document “erroneous,” but said that using that method, and his calculations, the PUP payouts would have only been $31 million, for 30,000 performance units.
Jeff Rodda (March 12):
Jeff Rodda, an auditor with the city’s council auditor’s office, was called by prosecutors as a rebuttal witness, following Dixon’s testimony. In the auditor’s office, Rodda regularly deals with JEA, and started reviewing the PUP after it was approved. In August 2019, he began sending questions about the plan to Wannemacher, later re-sending the questions after not initially receiving answers. Later that fall, Rodda said he performed the calculations of the plan’s potential payouts. He testified that over email, Wannemacher confirmed that the methodology the auditor’s office was using was correct, though there was one formula error the CFO corrected. When asked if he used the GAAP or GASB accounting standards in calculating the PUP, as Dixon contended needed to be done, Rodda explained that they don’t apply to how the net proceeds to the city are calculated.