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Councilman: Attempt to sell JEA was ‘swindle’ based on ‘biggest lie’ in city’s history

City Council committees investigate failed bid to sell city-owned utility, consider its future

JACKSONVILLE, Fla. – The ongoing JEA saga continued Monday with two special City Council committee meetings, one reviewing the utility’s dysfunctional recent past and a second looking at its future.

A special committee investigating the secretive and now-canceled effort to sell the utility met first. During the meeting, committee chair Rory Diamond described the misinformation the JEA executives provided to the city and its own board as “maybe the biggest attempt to swindle the people of Jacksonville based on the biggest lie ever told in our city’s history” and said it was “absolutely disgusting.” (Watch Diamond’s fiery speech at the meeting.)

“The people of Jacksonville were lied to over and over and over again to show that JEA was in this terrible position, but it actually wasn’t,” said Diamond, a former federal prosecutor. “It was actually increasing in value, not going down, and that’s just really a shame.”

Attorneys from the firm Nelson Mullins presented evidence that JEA management was presenting numbers showing dips in sales, but they weren’t given context, making it look like JEA was in worse shape than it was.

City Council members heard evidence that JEA executives purposely deceived their board, showing them numbers that made it look like JEA was in a “death spiral.”

‘Absolutely fraud’

The lawyers also broke down what management didn’t tell the board about the controversial bonus plan. Attorneys said the plan could have paid out $8,000 for every $10 unit purchased if JEA sold for $10 billion.

According to Nelson Mullins, city attorneys told JEA’s legal team in June that the bonus plan, in its then format, was illegal. And instead of telling their board that, they attempted to get around the restrictions that were laid out to them.

“If there were doctored documents, then it was absolutely fraud,” Diamond said. “It’s stepping right up to that line right now. It sure looks like they were intentionally misleading the board.”

The Nelson Mullins attorneys told the committee what others already believed -- that the bonus plan created financial incentives for management to push for a sale rather than keeping JEA publicly owned.

The director of employee services also testified Monday -- the first time a witness has been heard during one of the meetings. She explained how she learned that no other public utility in Florida had a bonus plan like the one proposed for JEA and said she voiced concerns about a letter explaining the bonus plan to employees. She felt it was confusing and that workers wouldn’t actually know what it was -- let alone how to participate.

City ‘bamboozled’

Some council members said they were dumbfounded by Monday’s revelation that numbers were ignored and presentations to the JEA board were changed in order to make a sale look good.

“I’ve got to tell you, I was very disturbed. I felt our city had been bamboozled,” City Councilwoman Ju’Coby Pittman said.

The committee plans to subpoena current JEA staff and former employees. There’s no word yet if fired CEO Aaron Zahn will testify, but there was discussion about bringing in members of the mayor’s staff and others to lay out what they knew about the deal.

Diamond said he’s going to leave it to the new JEA board to fire or keep on Senior Leadership Team members who knew about this plan. But he believes many of the current senior leaders at JEA need to go.

“I am going to weigh in. I’m going to give my opinion. I certainly think some of these senior leadership members should be gone that are there, but I’m going to let this new board come in and start to make up their own mind,” Diamond said.

The fate of many senior leaders is still in question but multiple council members said the attempts to leave out critical information about JEA’s financial future amount to fraud.

“I thank you for making it so easy for everyone to see it,” Diamond said to the attorneys who laid out the facts at the meeting. “This is as black and white as it gets.”

JEA released a brief statement Monday after the meetings:

Looking to the future

The second City Council committee’s mission is to look at possible changes for the city-owned utility going forward, including changing the city charter to require voter approval for how a JEA Board is appointed and operates.

“The focus really is cleaning up the charter and making sure that the issue of transparency is addressed,” City Councilman Michael Boylan said.

One of the plans the JEA could consider is “Scenario 3 -- The non-traditional utility response,” which would convert JEA into a nonprofit owned and operated jointly by its customers as members. They would share profits and benefits. Many electric co-ops operate in this way.

On Feb. 10, the committee approved a plan to send more than 80 public records requests to the utility.

Since then, three of the companies that expressed interest in buying JEA announced they’re suing the utility to block the release of specific details of their bids.


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