Lawyers: Ex-JEA CEO doctored PowerPoint slide to pitch controversial bonus plan
If proven, it could result in fraud charges against former JEA CEO Aaron Zahn
JACKSONVILLE, Fla. – Among the 24 reasons listed by city lawyers Tuesday to justify terminating Aaron Zahn for cause was a reference to a single slide in a PowerPoint presentation.
That slide, which investigators said was altered by Zahn and then presented to the JEA Board of Directors, could lead to criminal charges down the road, according to one City Council member and a local attorney who spoke to News4Jax.
City lawyers said during an eventful JEA board meeting Tuesday that the doctored slide involved the controversial and now-canceled long-term incentive plan that was created by Zahn and others and pushed as JEA was exploring a possible sale last year.
According to investigators, Zahn was interested in revamping JEA’s compensation plan and wanted to include a long-term incentive plan from the time JEA first started looking into selling JEA.
JEA then hired a third-party firm to look into the long-term incentive plan, also known as the “LTI” or “PUP.” The plan, which JEA eventually canceled after it was called out by members of City Council, would have allowed executives to get payouts of as much as 40 percent of their salaries.
In its research, Willis Towers Watson found that incentive plans were “uncommon, but used selectively” by public power utilities, according to emails obtained by News4Jax. That information was then put into a PDF and shared with Zahn. Zahn responded by asking for the PowerPoint document emails show.
“We then know that Mr. Zahn changed that slide by removing the word “uncommon” so that the slide then read long term incentive plans are ‘selectively used,’” Deputy General Counsel Sean Granat said Tuesday during the board meeting. “There is no question Mr. Zahn altered the slide and removed the word uncommon. He then presented the slide to the JEA Board in its altered form and the Board voted on it.”
Granat was then asked by a board member how he could say for sure it was Zahn who altered the document.
“We have him receiving the PDF which you can't alter. We then have him asking for the PowerPoint slide. We then have Mr. Zahn sending the PowerPoint slide to his assistant and we have metadata on that email that shows that that PowerPoint came from him,” Granat said.
Councilman Rory Diamond, who is leading a city council investigation into JEA, said Zahn could have potentially made millions of dollars off a sale of JEA had the privatization effort and bonus plan had gone through.
“It’s a disgusting grab of our public money for his own personal use, and it appears that he was willing to doctor documents and be dishonest with the board in order to get it,” Diamond told News4Jax on Wednesday.
Emails that show the exchange between Zahn and the firm were included in a trove of documents and emails that were posted on JEA’s transparency website last week.
Diamond said that changing the PowerPoint presentation could be considered criminal.
“If Aaron Zahn did it, and it looks like he did, that he was intentionally misleading the board and those are his bosses,” he said. “So if they were misled and they decided to support a PUP plan because of it, that’s fraud. That’s all the elements of fraud. You just can’t do that, especially in a public position.”
Diamond said it was a JEA board member who told him that the slide shown during a Dec. 16 City Council meeting involving Zahn was different than the slide they saw before.
Diamond then asked who changed the slide and Zahn said it was Willis Towers Watson that made the change.
Curtis Fallgatter, a prominent Jacksonville attorney and former federal prosecutor, agreed the changes could amount to fraud.
In a letter to News4Jax on Thursday, Zahn’s lawyer pushed back against some of the 24 accusations presented Tuesday, including the altered PowerPoint slide.
“Let’s set the record straight on this absolutely false allegation,” attorney John Mullen wrote. “The PDF version of the Willis Towers Watson report provided on May 9, 2019 is exactly what was presented to JEA’s Board members at the June 2019 Compensation Committee Meeting, the June 2019 Board Meeting, and the July 2019 Board meeting. Neither Mr. Zahn nor any other JEA employee, to Mr. Zahn’s knowledge, edited the final report produced by Willis Towers Watson prior to presenting the material to JEA’s Board of Directors.”
Mullen said there is nothing wrongful about Zahn suggesting edits to a consultant’s draft report.
“What is misleading is the OGC’s insinuation that there is something wrongful about Mr. Zahn “Altering a document” and “inducing the Board to take official action,” he wrote. “There is no crime and nothing to prosecute, only an ordinary drafting exercise now undergoing scrutiny because the policy ideas relating to privatizing JEA and providing long-term compensation for JEA employees have become so politically toxic.”
As the council-led inquiry into JEA moves forward, Diamond said he will start looking into who else may have been involved in wrongdoing in connection with the 24 accusations.
“A lot of those points could be directed at other senior leaders at JEA, many of which are still over there,” Diamond said. “So certainly we are going to be looking at who else at JEA was involved in those 24 points.”
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