Former JEA CEO fighting for private meditator to decide contract dispute

The ousted CEO of JEA fired back in response to a lawsuit filed against him by the city-owned utility.

JACKSONVILLE, Fla. – The ousted CEO of JEA fired back this week in response to a lawsuit filed against him by the city-owned utility.

Former CEO Aaron Zahn is responding to claims he was the “ringleader of perhaps the largest fraud in Jacksonville history” and JEA’s assertion that he is not entitled to arbitration to overturn the utility’s board’s decision to fire without termination pay.

JEA is being federally investigated regarding the attempted sale of the utility and a bonus plan tied to the deal that the city auditor found could have paid out hundreds of millions of dollars to the CEO and other members of the senior leadership team.

The former CEO was fired with cause in Dec.2019. The Office of General Counsel for the City of Jacksonville identified 24 separate reasons to fire Zahn, including claims that Zahn made “numerous false and misleading statements to JEA’s board of directors about JEA’s financial performance and outlook, altered documents, provided false testimony under oath, failed to disclose conflicts of interest and misused his public position.”

The move made the former CEO ineligible to collect the six-figure termination pay outlined in his contract.

JEA filed a lawsuit in early June after Zahn filed a demand for arbitration with the American Arbitration Association to overturn the JEA board’s decision to fire him without termination benefits. In the lawsuit, JEA alleged Zahn’s contract, including a provision that allows for arbitration, was unenforceable.

JEA claimed Zahn’s contract was against Florida law because of an illegal retroactive salary increase in the agreement. The suit claims Zahn was told it was unlawful by legal counsel Lynne Rhode, but that the former CEO failed to inform the JEA board of the illegality before they approved the employment agreement.

Zahn’s legal team filed a response to the claims on Tuesday.

The response stated JEA’s claims were “revisionist history concocted” to “publicly disparage and scapegoat Zahn.” The response claimed city attorneys “deny the fact OGC drafted, reviewed and approved” documents related to his employment agreement, the bonus plan and other resolutions and documents introduced at a July 23, 2019, JEA meeting.

Councilmember Rory Diamond, who chaired the council’s JEA investigatory committee, said Zahn misled the board in those decisions.

“What he is failing to tell you is that he wasn’t honest with OGC. He wasn’t honest with the board.,” said Diamond. “His attempt to point fingers at everyone else but himself is exactly what we saw when he was CEO. It was not a legal contract. He is doing what he was doing before. Trying to take this from a public forum where a jury is going to get to know about it and decide to a private, arbitration and hide it from all of us.”

Zahn’s attorney was not available for an interview Friday but did share a statement on behalf of his client:

“Mr. Zahn’s filing speaks for itself. We look forward to having an impartial and non-political audience review all of the facts relating to JEA over the last three (3) years (from 2017 to present). The filing is just the beginning of the public’s ability to see all of the facts surrounding JEA as well as understand how numerous political and non-government civic leaders interfere with JEA’s proper management for the benefit of its customers,” said attorney John Mullen. “As stated previously, we are confident an unbiased review will show Mr. Zahn and the entire Senior Leadership Team has been, and are being, scapegoated for political expediency. Mr. Zahn is proud to be the first CEO of JEA to tell the community the unvarnished truth.”

About the Author:

Kelly Wiley, an award-winning investigative reporter, joined the News4Jax I-Team in June 2019.