JACKSONVILLE, Fla. – A federal grand jury has issued a subpoena to JEA, seeking records related to the scuttled attempt to sell the city-owned utility.
The subpoena, first reported by the Florida Times-Union, was issued Tuesday.
It asks for copies of emails, text messages and documents from JEA’s senior leadership team regarding efforts to put the utility up for sale, along with those surrounding a controversial bonus plan that could have financially benefited utility executives.
The performance unit plan, or PUP, would have acted like a stock purchase plan. As City Council Auditor Kyle Billy found, it was uncapped and had the potential to award millions to investors in the event of a sale of JEA.
The subpoena also focuses on three other topics: the JAX Infrastructure Innovation Summit in 2018, the hiring of former JEA CEO Aaron Zahn that same year and the utility’s Initial Public Offering (IPO) process.
The subpoena includes 50 requests, including two to Mayor Lenny Curry’s office: one for all records of any contact between the mayor’s office and the JEA team, and the second for records of usage of an app called Confide by Zahn, lobbyists and Curry’s office.
Curry said he learned of the subpoena Wednesday evening from the city’s Office of General Counsel.
“As I’ve said before, if we’re asked -- my office or if I’m asked to do anything -- we’re, obviously, going to comply,” he said Thursday.
The mayor also said he had never heard of the Confide app, which allows users to discreetly send encrypted messages without worrying about their contents being saved, stored or shared.
I asked the Mayor if he knew about the app Confide and if he has ever used it to communicate about city business. He responded that he’s never heard of the app. @wjxt4— Kelly Wiley (@KellyWileyNews) April 23, 2020
Among other things, the subpoena’s requests focus on specific JEA executives including Zahn, interim Chief Executive Officer Melissa Dykes, Chief Administrative Officer Herschel Vinyard and former Chief Financial Officer Ryan Wannemacher.
News4Jax political analyst Rick Mullaney said this step by the grand jury is important.
“No. 1, it confirms what we’ve all believed all along: That there’s a federal grand jury investigation into this matter," Mullaney said. "And No. 2, the subpoena itself is very comprehensive. We would expect, and the subpoena does, take a look at the JEA executive team. It takes a look at the performance plan, which has been the primary focus of so much, but it goes well beyond that.”
The federal investigation is separate from a Jacksonville City Council probe spearheaded by Council Member Rory Diamond, a former federal prosecutor. Diamond told News4Jax on Thursday that it’s clear the federal subpoena is zeroing in on JEA’s senior leadership team.
“They were all knowledgeable about this,” Diamond said. “I’ve seen the documents that show they knew about the PUP. I think they will all be held accountable.”
The PUP, as it is commonly known, never came to fruition in part because it didn’t stand up to public scrutiny once the City Council began raising questions about how it was set up.
Diamond said he believes indictments could be coming.
“I am so sad for the city of Jacksonville that this has happened. The more we look at it, the bigger it gets. It’s clear that this is really the biggest scandal in the history of this city. They tried to lift a billion dollars right out of our pockets,” he said. “I think federal fraud is clear. I think there are other charges that will come along given the amount of money that was stolen or attempted to be stolen. You’re talking about significant charges and, certainly, I do think people will be indicted.”
View the subpoena below:
News4Jax attempted to contact Dykes and several members of the JEA Board of Directors but had not heard back as of Thursday afternoon.
For months, allegations of wrongdoing have surrounded the attempt to sell the utility, including allegations a former board member profited off the attempt to sell JEA after voting earlier to move forward with the sale process.
Multiple members of JEA’s senior leadership team announced their resignations, including Wannemacher, Chief Legal Officer Lynne Rhode and the entire Board of Directors, with the exception of one member who resigned following the decision to fire the former CEO.
Dykes announced her intention to resign from her position at JEA after the board finds her replacement.
The JEA Board of Directors formally voted in December 2019 to end discussions of a sale of the utility in response to public backlash shortly after Zahn was removed and placed on paid leave.
At the Office of General Counsel’s recommendation, the JEA board voted unanimously in late January to terminate Zahn’s contract for cause, meaning he would not receive the more than $800,000 in severance pay he was promised in his contract.
The decision came after a nearly six-week investigation by the Office of General Counsel in which 30 witnesses were interviewed and thousands of emails were reviewed.
City attorneys said they found 24 causes to fire Zahn, including evidence he altered a PowerPoint from a consultant. The board later took official action based on the altered information in the document, according to city attorneys.
City attorneys said they also found the former CEO misrepresented the bonus plan that had the potential to pay JEA’s senior leaders hundreds of millions of dollars if the utility was sold.
And, according to city attorneys, he failed to preserve text messages in which he discussed JEA business.
Zahn’s attorney denied the allegations in a statement following the board’s decision to terminate his employment for cause.