JACKSONVILLE, Fla. — The lead FBI agent in the criminal case against two former JEA executives testified Monday afternoon that the origins of the probe began with investigative reporting. Agent Bobby Blythe, who testified before the Grand Jury that issued indictments against two former JEA senior executives, said reporting by the Florida Times-Union was a key animating factor in the case.
“A good public corruption agent reads the paper,” Blythe said. “If you’re not, you’re doing your agency a disservice.”
Blythe was one of several witnesses to testify at the first day of pretrial hearings in the case. The so-called “Kastigar” hearings require federal prosecutors to prove they did not rely on the protected, compelled statements that the defendants gave city officials investigating the failed sale of JEA. To that end, prosecutors are running through the evidence used to build their case, offering a glimpse into previously unknown areas of the federal probe.
Former Chief Financial Officer Ryan Wannemacher and former CEO Aaron Zahn are charged with conspiracy and wire fraud for crafting a performance payout scheme prosecutors say could have netted them millions in the event of JEA’s planned privatization. They have pleaded not guilty.
The Kastigar hearings are expected to last about eight days. Monday’s witness included former city attorney Lynne Rhode, who was assigned to JEA, and Wannemacher himself.
“We spent a lot of time reviewing news articles,” Blythe told Prosecutor Tysen Duva. “There was a ton of information. We spent months investigating.”
Blythe said the investigation began in December 2019 and accelerated during the pandemic lockdown. “It’s the first thing I did during Covid, when we were all sitting in our living room,” said Blythe. “Instead of redoing my kitchen like everyone did.”
One area that immediately caught the FBI’s attention and is at the root of the charges against Zahn and Wannemacher, is the Performance Unit Plan, or PUP, a pay for performance scheme prosecutors say could have netted JEA’s senior executives millions in the event of the utility’s planned privatization.
“My first reaction ... it sounded like an employee stock ownership plan to me,” Blythe testified. “It was confusing, and I didn’t quite understand it.”
Blythe said they began digging into records available on JEA’s website, including recordings of JEA Board and Compensation Committee meetings. Duva played a portion of one of those meetings, from November 2018, at which outgoing board member Top Petway urged other members to research privatization. Mayor Lenny Curry appointed Aaron Zahn to replace Petway in February 2018, at which point the privatization effort went into overdrive.
Blythe testified that then-CEO Paul McElroy sent a request to then-City Council President Anna Brosche that month, asking her to call a “special” meeting of the City Council to discuss privatization. Blythe said that Mayor Curry’s Chief Administrative Officer Staff Brian Hughes specifically asked McElroy to include that word, “because that means the council can take action at [a 'special'] meeting” without following the usual legislative process."
Blythe discussed the 40-plus subpoenas issued in the case, for the first time confirming the investigation’s focus on Florida Power & Light parent company NextEra.
“Why is it in your mind that FPL stood out?” Duva asked.
“FPL had partnerships with JEA in certain matters and contracts with them,” Blythe said. "JEA sits in the middle of their service territory – it was described to us in interview as a 'donut hole.'”
Blythe continued, “There was an allegation that 'the fix was in' for Florida Power & Light ... efforts to make sure FPL was the ‘winner’ [in bids for JEA].”
“That gave us reason to be concerned,” Blythe said -- that coupled with the fact that FPL "bid $2-million more than the other bids at that time.”
Blythe testified the government sent subpoenas to several FPL execs including former CEO Eric Silagy – a fact not previously known. Pam Rauch, a former FPL VP of external affairs, was also subpoenaed. She is expected to testify at hearings this week.
Others whom prosecutors have said they will call to testify include former JEA executive Kerri Stewart, Jacksonville City Councilmembers Ron Salem and Rory Diamond, and former city Chief General Counsel Jason Gabriel. The hearings are expected to run into next week.