JEA trial finishes closing arguments in federal case against two former executives

Prosecutors urged jurors to convict former JEA executives Aaron Zahn and Ryan Wannemacher by saying they conspired to "fleece the city of Jacksonville" and only got stopped because the City Council Auditor's Office figured out the astronomical amount of money at stake if the city had sold JEA.

Assistant U.S. Attorney A. Tysen Duva told jurors Wednesday that Zahn and Wannemacher worked together for months in 2019 to carry out a criminal conspiracy and wire fraud that concealed the potential for massive payouts to employees so the JEA board would approve the incentive plan at the same meeting when the board agreed to put the utility up for sale.

Duva said even though Zahn and Wannemacher never gained any of the windfall payouts they were hoping for, they "got way down the field."

"It doesn't have to be a good plan," Duva said of the conspiracy charge. "It doesn't have to be a smart plan. It just has to be a plan."

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Attorneys for Zahn and Wannemacher, who each face up to 25 years in prison if convicted on all counts, told jurors the government failed to prove its case. They said the incentive plan needed to go through many layers of approval that involved publicly available documents, a mathematical formula that others could work through, and extensive review by attorneys.

Zahn came up with the idea for the incentive plan but he didn't try to manipulate anyone or stop the review of it, his attorney Eddie Suarez said.

"There's no invisible hand of Zahn controlling anything," Suarez told jurors in U.S. District Judge Brian Davis's courtroom.

Jim Felman, attorney for Wannemacher, who was chief financial officer at JEA while Zahn was CEO, said Wannemacher was asked to to do the calculations for the incentive plan formula, make the presentation to the board in July 2019, and answer questions about it.

"That is all Mr. Wannemacher did," he said.

Prosecutors allege the incentive plan would have stolen money from Jacksonville taxpayers by taking money from the proceeds of a JEA sale and sending it to JEA employees with top executives getting the biggest paydays. Duva said Zahn "came up with a fake stock plan to enrich himself and Ryan Wannemacher went along with it."

The incentive plan, which witnesses testified was way outside what a governmental entity normally offers, would have allowed JEA employees to purchase a "performance unit" for $10 and then redeem it in three years based on JEA's financial performance or cash it in sooner if the city sold JEA.

At the July 23, 2019 board meeting, Wannemacher gave an example of how the value of a $10 performance unit could rise after three years to $1,000. When asked by a board member about the implications that selling JEA would have for performance units, Wannemacher said it would accelerate the payout but did not give any dollar figures. Zahn did not provide that information, either.

The City Council Auditor's Office issued a report in November 2019 that showed examples of a performance unit purchased for $10 having a redemption value of $3,150 if a sale of JEA netted $4 billion for the city and a redemption value of $6,366 if a sale netted $5 billion

The JEA board authorized up to 100,000 units to JEA employees with an initial round of 30,000 units so the total redemption value of the units could have been in the hundreds of millions of dollars if JEA had been sold.

Suarez said the incentive plan was one of many innovative ideas Zahn brought to JEA from the private sector during his time as utility CEO. Suarez said Zahn's leadership faced backlash from the "deep state, unelected bureaucracy" such as the City Council Auditor's Office and from people with vested interests in keeping JEA city-owned.

Suarez said that what's normal in the private sector might seem crazy in government but Zahn's mandate as CEO was to shake things up.

"Mr. Zahn was not willing to discard an idea just because it had never been done before," Suarez said. "That was not his style."

He said that just as Zahn had raised ideas such as JEA operating an automobile dealership for electric vehicles and then dropped those ideas after a legal review showed government ownership made them impossible, Zahn also halted the incentive plan in November 2019 when the legal review couldn't show it fits a government-owned enterprise.

"There's an army of lawyers looking at this with no interference from Mr. Zahn — none whatsoever," Suarez said.

Duva scoffed at the portrayal of Zahn as visionary innovator. He told jurors that JEA became a multibillion dollar enterprise since its founding in 1895 because of investments by taxpayers and the hard work of employees ranging from linemen to executives. Duva said Zahn saw the financially strong organization as way to "come in and cash in" by steering the board down the path of selling JEA and walking away with a $40 million payday.

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He said Wannemacher worked with Zahn over seven months while JEA developed the incentive plan that got approved by the board and then moved into what would have been the implementation stage. Duva highlighted for jurors a spreadsheet Wannemacher did in July 2019 before the board meeting that calculated how the incentive plan payouts would have worked.

"Was it his idea?" Duval told jurors. "No. It was Aaron Zahn's idea. But he (Zahn) needed a math guy to do it."

Felman said none of the evidence presented since the trial started Feb. 28 showed Wannemacher had lied to anyone. He said after the board approved the plan, Wannemacher met with the City Council Auditor's Office and answered questions from them. Felman said if Wannemacher had lied to the auditors, they would have flagged that in their report to City Council.

He said Wannemacher believed he was giving board members enough information at the July 2019 meeting for them to understand the performance unit payouts. He said it doesn't add up that Wannemacher was trying to commit a crime during that meeting when he was talking about math in a live-streamed board meeting.

"Rational people do not commit crimes unless there is at least some chance of getting away with it," Felman said.

Suarez and Felman told jurors the JEA board members who testified they were shocked to learn the value of the incentive plan could have figured it out themselves based on the documents they got for the board meeting.

Duva said it took digging by the City Council Auditor's Office to understand the incentive plan and its exhibits. The auditor's office sent a list of question to JEA in early August 2019 and wasn't able to get enough information to do the calculations until mid-November.

While Duva credited City Council auditors with forcing the JEA board to kill the incentive plan in December 2019, Suarez said the auditor's office "ran around like Chicken Little claiming that the sky was falling" when auditors knew JEA had already suspended the incentive plan. He said the City Council Auditor is part of the "deep state," an assertion that Duva said no one in Jacksonville believes.

By the time of the Nov. 18, 2019 auditor's report, JEA had launched the process of inviting bids for the utility after going through a summer of strategic planning that envisioned customers peeling away as they replaced JEA electricity with privately-installed solar power at their homes and businesses.

Suarez said it was "nonsense" for prosecutors to allege Zahn and Wannemacher used scenario planning as part of a criminal conspiracy so they could benefit financially from a sale or other privatization.

He said there is ample reason for jurors to conclude JEA engaged in responsible planning like any business would in preparing for future trends. He said Zahn and Wannemacher "have been scapegoated for having the foresight and courage to look at something on the horizon that was potentially bad for JEA" and putting a non-governmental option for the utility up for consideration.

Duva showed how the scenario used by JEA hasn't panned out for what's actually happened since then. He said Zahn used the scenario planning to put a choice before the board of laying off 30% of the JEA workforce or pursuing possible privatization. He told jurors the prosecution has nothing to do with scapegoating Zahn for the sales process.

"Dude, this is what happens when you try to enrich yourself off a city asset," Duval told Zahn. "There is a price for trying to fleece the city and in this case, the price is guilty on count 1 and guilty on count 2 against Aaron Zahn."

Jurors are scheduled to start those deliberations Thursday. Davis seated two juries for the trial and they have heard almost all of the testimony together, but they will deliberate separately. One jury will decide whether Zahn is guilty and the other jury will render a verdict on Wannemacher.

This article originally appeared on Florida Times-Union: Attorneys make closing arguments in trial of JEA executives