Federal judge to weigh arguments about evidence in case of former JEA execs

After eight days of testimony, it will now be up to a judge to weigh whether or not federal prosecutors used off-limits statements to build their case against two former JEA executives charged with conspiracy and wire fraud.

Former JEA CEO Aaron Zahn and his former chief financial officer Ryan Wannemacher were indicted in March 2022, in connection with a proposed bonus plan that could have paid out millions of dollars if the city-owned utility were sold.

The testimony came during an evidentiary proceeding known as a Kastigar hearing. The purpose of the hearing was for federal prosecutors to prove that their case is not built on or derived from statements that Zahn and Wannemacher gave to city attorneys in January 2020. The statements, which were part of an investigation into whether Zahn could be fired as CEO with “cause,” are covered by what’s called Garrity protections. Those are extended to public employees who are compelled to testify as part of a workplace investigation and protect those statements from being used against them criminally.

The final day of testimony began with prosecutor Tysen Duva continuing his questioning of Melissa Dykes. Dykes, who worked at the municipal-owned utility from 2012 to 2020, was named interim CEO in December 2019, after the board removed CEO Aaron Zahn. Dykes served in that role until April 2020, when the board removed her without cause.

The bonus plan, known as the performance unit plan, or PUP, was on the agenda for JEA’s board at its July 23, 2019 meeting – the same meeting where the board voted to move forward with exploring privatization. Thursday, Dykes testified she was aware of the plan to ask the board to approve the PUP, and she was asked of her thought process regarding whether the board would approve the proposal.

“I thought it was extremely unlikely,” Dykes responded, adding she was aware of how the proposed plan would work, and given JEA’s history of incentive plans, thought it was unlikely the board would approve. She also testified that there was a question from the board of how the mechanics of the plan would work if the utility was sold, but no questions of how much the payouts would be, and no questions of what would happen if JEA were sold and the city’s profits were anywhere between $3 and 5 billion.

Dykes, who testified she had read the protected Garrity statements given by Zahn and Wannemacher, was questioned by defense attorneys about whether she had been asked to make any memos or notes of what she learned from the protected statements, or from any media reports about the statements. Dykes responded that she had not been asked to do so.

A portion of the defense’s questioning of Dykes was closed to the public, because of the possibility the content of the protected statements could be discussed. A judge’s order before the trial put that procedure in place any time the statements could be discussed during the multi-day hearing, and the courtroom was closed several times over the span of the hearing.

One of the FBI special agents involved in the investigation, Angela Hill, was questioned for a short time. She detailed some of the steps in the investigation, such as watching JEA board meetings, crafting subpoenas to JEA and other entities, and reviewing documents to prepare for witness interviews. Hill also detailed steps taken to avoid exposure to Zahn and Wannemacher’s protected statements. She testified that Wannemacher’s interview transcript had been given to the FBI, but that she and another agent, Robert Blythe, avoided it, and that they took steps to eventually have it removed from the case file.

The government’s final witness was former city of Jacksonville general counsel Jason Gabriel. Gabriel, who in all spent a little more than a decade as an attorney for the city, was serving as general counsel during the time in question. He left the Office of General Counsel in 2021, returning to private practice.

It was attorneys working under Gabriel within the Office of General Counsel who conducted the investigative interviews with Zahn and Wannemacher, that are at the heart of the Kastigar hearing. Gabriel testified that while he had the right to review the transcript of Wannemacher’s statement, he did not. He said he did review Zahn’s statement, but only skimmed it, not reading it word for word. Questioned as to whether he had discussed either of those statement with the prosecution team, Gabriel testified he never did.

Gabriel also testified about the lead-up to the July 23, 2019 board meeting, as well as some of the discussions that followed regarding the PUP. The former city attorney stated that then-JEA chief administrative officer Herschel Vinyard had mentioned a long-term incentive plan, as the PUP was sometimes known, but that it was downplayed. Gabriel stated most of their discussions were about the possibility of privatization, but that they did discuss bringing in outside attorneys to look at the proposed incentive plan. Gabriel also testified about a meeting in late October 2019 with other attorneys from his office, where one attorney mentioned doing some rough calculations on the bonus plan, and discovering it could pay out millions of dollars.

In mid-November, as Gabriel and his attorneys were preparing a letter to Zahn and JEA detailing possible legal issues with the plan, Zahn sent Gabriel his own letter, saying the bonus plan was being postponed indefinitely. Gabriel testified that he wound up sending Zahn a revised version of his letter, but preserved a longer version in a file for posterity, to note for the record, the issues he saw with the plan.

Following the hearing, prosecutors and defense attorneys will have an opportunity to submit legal briefings on their arguments to the judge. As the two sides had different ideas for when those briefs should be submitted, the judge did not set deadlines during the hearing, saying he will do so at a later date. A ruling on the matter will then follow.

Currently, Zahn and Wannemacher are slated to stand trial in October. However, at a separate court hearing this week, attorneys mentioned delaying the trial to February 2024. The judge directed prosecutors and defense attorneys to submit a joint motion asking for the delay, which has not been filed yet.

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