JACKSONVILLE, Fla. — A federal grand jury has indicted two former top executives at JEA, following a more than two-year criminal probe into the failed sale of the city-owned utility in 2019.
Federal prosecutors are charging JEA’s former Chief Executive Officer Aaron Zhan and JEA’s former Chief Financial Officer Ryan Wannemacher for their role in developing a controversial Performance Unit Plan, or PUP, that could have enriched JEA senior executives to the tune of millions of dollars in the event of a sale.
They have each been charged with one count of wire fraud and one count of conspiracy.
According to the indictment, “The PUP …that Zahn and Wannemacher created and designed … would have paid hundreds of millions of dollars in bonuses, primarily to the top JEA executives, including themselves, upon a sale of JEA’s assets and liabilities.”
It continues, “Aaron Zahn and Ryan Wannemacher did knowingly and willfully combine, conspire, confederate and agree with each other … too embezzle steal, obtain by fraud and otherwise … convert to their own use” city property.
“Zahn and Wannemacher would and did breach their fiduciary duty … by failing to disclose material information and making and causing to be made fraudulent representations to the JEA Board.”
Neither man has entered a plea. Calls to Zahn and his attorney were not immediately returned. It is not clear who will be representing Wannemacher. Arrest warrants have been issued for both men, but no court date has yet been set.
The indictments come more than two years after the Department of Justice launched a criminal investigation into allegations of wrongdoing by senior JEA executives following the failed sale of the 55-year-old city utility.
The scandal-plagued sale effort blew up in December 2019 after it emerged that JEA’s senior leadership stood to benefit enormously from the invitation-to-negotiate (or ITN) plan, due to a lucrative benefit scheme implemented by top JEA executives.
The Performance Unit Plan, or PUP, would have enriched JEA senior executives to the tune of millions of dollars if the utility was sold. At a Dec. 16, 2019 Jacksonville City Council hearing, Councilmember Rory Diamond labeled the plan “legal theft” and held both Zahn and Wannemacher directly responsible. Both men denied knowing who came up with the bonus plan concept.
The PUP was the focus of a Jacksonville City Council investigation in addition to the Department of Justice probe. The council’s investigative report issued in January 2021 found the ITN “ran afoul through Aaron Zahn’s greed, coupling the JEA sale effort to the PUP (bonus plan) -- designed to have senior JEA employees benefit exorbitantly from a JEA sale.”
The council report found Zahn engaged in a "purposeful lack of transparency" and used "intentional misrepresentations and omissions,” including advancing a narrative that JEA was in a financial death spiral.
The council report linked the debacle to Mayor Lenny Curry, who appointed Zahn to the JEA board. Zhan served at just one board meeting before resigning to vie for the job of utility CEO. Despite having no utility experience, Zhan was chosen as interim and eventually permanent CEO.
Mayor Curry has not been connected to the criminal Grand Jury probe and is not named in either of today’s indictments. First Coast News reached out to the Mayor's Office. He sent us the following statement:
"My Administration has, and will continue, to cooperate with all official inquiries into the management of our local utility. Beyond that, I will reserve further comment at this time out of respect for the ongoing legal process."
The council report called the JEA sale effort “the Mayor’s plan,” saying, “The Curry administration and JEA engaged in a multi-year effort, from at least 2017 through 2019, to explore selling the City’s municipally-owned utility.”
Curry denied involvement in the lead-up to the failed sale of JEA. Following the issuance of the report, he told reporters, "When the report talks about me, it uses words like 'appear.' They have no facts, they have no interviews, they have nothing that demonstrates their claim.” Curry said he supported the ITN in concept, but ultimately denounced the PUP plan and said he supported the board’s firing of Zahn.
The failed sale effort ultimately resulted in the removal of every single JEA board member and every senior level staffer. Only Zahn and Wannemacher have been charged in the federal investigation.
A lawsuit filed by JEA after Zahn’s ouster accused him of being “the principal architect and ringleader of perhaps the largest fraud in Jacksonville history.” It said Zahn’s goal was to “sell JEA and loot it for millions of dollars in the process” and estimated he could have personally collected up to $26 million through the bonus plan if a sale went through.
Wannemacher is believed by prosecutors to be one of the principal architects of the performance units benefit plan. The plan was approved by the JEA board of directors in July 2019 and would have allowed employees to purchase “shares” in the utility for $10. JEA executives told the board the plan had been vetted, but not about concerns raised by some who reviewed it. Among those concerns were the legality of the plan and the astronomical payouts it could yield for senior executives in the event of a sale.
The indictments come two weeks after the City Council Auditor released a report that found Zahn and his senior leadership team spent more than $135,000 on unauthorized and questionable expenditures, including booze and lavish hotels.
Zahn has consistently denied any allegations of wrongdoing and his attorney in the JEA lawsuit said Zahn acted "professionally, legally and ethically."
If convicted on all counts, Zahn and Wannemacher each face up to 25 years in federal prison.
Mayor Lenny Curry issued the following statement as a result of the indictments.
'My Administration has, and will continue, to cooperate with all official inquiries into the management of our local utility. Beyond that, I will reserve further comment at this time out of respect for the ongoing legal process.'