JACKSONVILLE, Fla. – A lawsuit filed in circuit court Friday accuses former JEA CEO Aaron Zahn of pursuing privatizing the city-owned utility against the express wishes of the board of directors and giving the board fraudulent information about the utility’s financial performance and outlook.
The suit is seeking to recover money paid to Zahn and reject that he is due any additional compensation which he claims he is owed.
“Because of his actions, Zahn’s 14-month tenure as JEA’s CEO was marred in a public scandal that has been described as ‘maybe the biggest attempt to swindle the people of Jacksonville based on the biggest lie ever told in our city’s history.’ The swindle was an attempt to sell JEA that would have netted the senior executives, including Zahn, hundreds of millions of dollars in payouts from a performance unit plan that was tied to the sale," the lawsuit reads.
The lawsuit alleges Zahn committed fraud, breach of fiduciary duty, breached the public trust and made false representations to the JEA board in his hiring process.
“Despite being ordered not to do so, Zahn continued to work toward positing JEA for a sale,” according to the lawsuit. “Rather than accurately portray JEA’s financial condition and lose any leverage he had to drive a sale of the utility, Zahn engaged with other JEA executives in a scheme that fraudulently concealed JEA’s true operational and financial results,” according to the lawsuit.
Zahn’s lawyer, John Mullen, JEA’s legal team is trying to cover their own tails because they were full participants in JEA’s controversial policy decisions last year.
During just over a year as CEO of the utility, JEA’s lawyers claim Zahn portrayed the utility was in a “death spiral” of increasing customer and decreasing revenues and said the utility would need to take draconian measures, including terminating 500 employees and moving its headquarters out of downtown Jacksonville despite knowing that management had no immediate plans to do either.
The lawsuit outlines a long-term incentive plan for employees developed by Zahn’s appointees that was unheard of among municipal utilities and “likely illegal" because it would have been open to management even though Florida conflict of interest laws prohibit participating of employees with decision-making powers to participate. The lawsuit claims this was created “to enrich the senior leadership team upon a sale of JEA.”
The suit asks that Zahn be compelled to return to JEA the amount paid to him in a retroactive salary increase and paying him any public funds that he continues to claim under his employment agreement since he was fired for cause.
“Mr. Zahn’s claim that he is entitled to nearly $1 million from JEA is disappointing given the damage he has caused to JEA and the Jacksonville community,” the suit claims.
Zahn’s lawyer responded:
“The claims of the lawsuit have no factual basis and are a rehash of largely disproven conspiracy theories,” Mullen said. “The OGC (Office of General Counsel), specifically Jason Gabriel, Sean Granat, and Lawsikia Hodges, are trying to protect their public and professional reputations by using a lawsuit to distance themselves from JEA policy decisions made with their full participation and approval," Mullen said.
Zahn himself didn’t make a statement in response to the lawsuit but sent News4Jax a copy of a letter dated Friday demanding that city lawyers comply with several requests for public records made five months ago.
News4Jax Political Analyst Rick Mullaney is a former General Counsel for the City of Jacksonville.
He has long been critical of the PUP and spoke with News4Jax about the City Council investigative committee looking into JEA.
“This Investigative Committee has also developed a chronology, looked at documents, and they’ve identified critical witnesses that need to be put under oath,” he said. “I’ve said a number of times, in my opinion, this is the greatest scheme to defraud the taxpayers in the history of our city. This committee is doing important work. They’ve done some very good work, and there’s some work that remains to be done.”
Zahn has demanded JEA fulfill his records requests by June 19.
JEA’s lawsuit demands a jury by trial.