JACKSONVILLE, Fla — JEA’s chief administrator Herschel Vinyard, who was hired by the utility’s now-fired leader Aaron Zahn and is now on paid leave, has refused a demand for his resignation and is being investigated by the Office of General Counsel, according to a letter his attorney sent Monday to city attorneys.
Vinyard’s lawyer, Hank Coxe, instead accused a city attorney of threatening his client with a “prearranged investigation” to extort his resignation and provided a detailed retort to the Office of General Counsel’s claims that JEA created a controversial long-term bonus plan, which has since been abandoned but remains an interest to federal investigators, before city attorneys could determine whether it was legal.
General Counsel Jason Gabriel and Sean Granat, the attorney who told Vinyard he would be investigated if he didn’t resign, on Tuesday responded to Coxe in a letter, writing his “selective” quotations of last week’s meeting were “inaccurate, incomplete, and presented out of context (like much of the rest of your letter.)”
City attorneys investigated Zahn earlier this year and found evidence of misconduct that the board used to fire him for cause. In their letter to Coxe, Granat and Gabriel wrote that their investigation into Zahn uncovered information that could likely be used as cause to fire Vinyard and that Granat informed Vinyard of that during their meeting last week.
“Mr. Granat’s statements were no more improper than Mr. Coxe’s statements to Jason Gabriel this past Sunday morning, in which Mr. Coxe, as a matter of courtesy, told Mr. Gabriel that Mr. Vinyard would decline resigning without being offered a severance package, otherwise, a letter containing unfavorable allegations against OGC would be forthcoming,” according to the letter.
Granat and Gabriel said Coxe’s allegations related to OGC’s involvement in the bonus plan were “filled with inaccuracies and falsehoods.”
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Coxe alleged in his letter that JEA officials “worked closely” with city attorneys on every major decision about the bonus plan. He also disputed OGC’s statements that JEA executives failed to share a May 2019 memo they received from Nixon Peabody, an outside law firm working for the utility, that warned the concept behind the unusual bonus plan was legally problematic.
City attorneys have said they were not aware this memo existed until March 2020. JEA failed to provide the memo in response to a public records request made in December by City Council Members Rory Diamond and Ron Salem, and Vinyard and Zahn never mentioned the memo nor its findings while Salem and Diamond questioned them about the bonus plan during a meeting they held days after making their records request.
When asked about the memo last month, JEA officials confirmed it was viewed by Vinyard, as well as its then-attorney Lynne Rhode, who has since resigned, and Ryan Wannemacher, the utility’s former chief financial officer who was terminated earlier this year.
Instead, city attorneys have said they discovered the memo while reviewing the legal work conducted by outside law firms on JEA’s behalf during Zahn’s failed attempt in 2019 to privatize the city-owned utility.
“Neither the General Counsel, nor any deputy, nor any attorney currently employed at OGC knew of that memo’s existence until March of this year,” according to the letter.
Vinyard joined JEA in April 2019, overseeing a number of key departments and acting as a strategic adviser while Zahn and his executive team worked to sell JEA. JEA also created the bonus plan during Vinyard’s tenure, although he testified under oath that discussions about its creation “were not in my wheelhouse.”
Coxe wrote Vinyard has been inaccurately described as a supporter of the bonus plan. Instead, he said Vinyard warned Zahn that it was imprudent and advised him to not pursue it.
Federal investigators last month served JEA with a grand jury subpoena demanding documents related to JEA’s attempted sale, which cost the city-owned utility more than $10 million in consultant fees and other expenses, and the bonus plan, including the memo JEA received from Nixon Peabody.
Paul McElroy, a retired JEA CEO who was hired this month to be the utility’s interim leader, placed Vinyard on paid leave last week. JEA hasn’t said why it suspended Vinyard, although Coxe’s letter reveals McElroy gave Vinyard an ultimatum: resign, or face an investigation from the city’s Office of General Counsel.
Vinyard hasn’t resigned, and Coxe asked in his letter for JEA and city attorneys to consider reaching an “amicable separation” with Vinyard. Gabriel and Granat responded by telling Coxe they would contact him soon to schedule an interview with Vinyard.
Coxe’s letter disputes much of Gabriel’s memo and OGC’s version of events surrounding the creation of the long-term bonus plan, which dealt a fatal blow to JEA’s sale efforts and triggered a fallout that resulted in the firing of Zahn and termination of its interim CEO Melissa Dykes, who served as chief operating officer before Zahn was fired.
General Counsel Jason Gabriel wrote in an internal memo last November that city attorneys was only aware of the plan “in concept” when the board approved it in July and didn’t review it until later that year. Attorneys who reviewed the plan determined it wasn’t legal, which prompted Gabriel to advise Zahn on Nov. 5 to abandon the plan, according to the memo.
JEA announced shortly after the meeting that it would suspend the bonus plan.
Then-board member Kelly Flanagan, who is no longer on the board, told City Council members in December that JEA executives provided few details about the bonus plan before the board approved it. Instead, she said the main rationale for her voting to approve it was Rhode’s statement to the board that OGC had signed off on the idea.
Coxe wrote that JEA executives shared the memo with OGC within days of receiving it on May 20 and that at least four city attorneys, including three of the office’s five deputies, performed follow-up analysis recommended by the memo.
Coxe didn’t identify the JEA official who shared the memo or the OGC attorney who received it.
Instead, Coxe said OGC’s internal work logs show Hodges assigned a special project to another city attorney and that four city attorneys, including Hodges, participated in the project. Coxe claims the project was the legal analysis recommended in Nixon Peabody’s memo.
Granat and Gabriel wrote Coxe’s allegations were “purposefully nebulous” and the project mentioned in the worklogs stemmed from a separate discussion about a long-term compensation plan made by a JEA board subcommittee during a May 2019 meeting.
Coxe also wrote that OGC’s internal records of work show several attorneys, Gabriel and Hodges, performed work on July 23 and that it was presumable they watched the baord meeting, since there was no other significant events at JEA on that date.
“If OGC had any concerns about its position not being accurately represented to the JEA Board or any other deficiencies at the meeting, Mr. Gabriel, Ms. Hodges or the other OGC lawyers who watched the board meeting would have said so. They did not,” Coxe wrote.
Gabriel and Granat wrote that Gabriel didn’t watch the meeting while it happened and that Hodges wasn’t watching the meeting when Rhode made her comments.
“JEA is a multi-billion dollar corporation with a multitude of legal needs. It is not uncommon and quite expected for multiple OGC attorneys to assist JEA daily with its legal needs.”
An attorney for Rhode, Rutledge Liles, contacted a Times-Union reporter Tuesday to say that Rhode affirmed everything written in Coxe’s letter. He declined to answer any questions.
Coxe also complained in his letter about OGC’s refusal to share information about their investigation. Gabriel and Granat responded that their investigation would be thorough and fair.
“You indicated that Mr. Vinyard wanted to know specifics so that he could make a uniformed decision about whether to resign or “fight this.” That “specific” information would be available to your client after a fact-finding investigation is conducted and a report issued.”