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Ousted Jacksonville executive knew cost of benefit plan but didn’t disclose it

Former JEA chief Melissa Dykes testifies she had ‘multiple’ conversations with now-indicted colleagues about a lucrative benefit plan tied to the utility's sale.

JACKSONVILLE, Fla. — The former CEO of Jacksonville’s publicly owned utility understood the “arithmetic” surrounding an exorbitant benefit plan, but she didn't disclose that information to the JEA Board of Directors.

Melissa Dykes’ testimony comes on the eighth and final day of pretrial hearings in the criminal case against her two former C-suite colleagues, Aaron Zahn and Ryan Wannemacher.

Dykes is not charged in the case and appeared as a witness for federal prosecutors. However, on Thursday she acknowledged she knew the cost of a benefit plan that prosecutors say would have netted millions for JEA’s senior leadership team. That plan is the core of the federal corruption case against former CEO Zahn and former CFO Wannemacher. Both have pleaded not guilty.

Prior testimony suggests the defendants expected to collect between $10 and $40 million dollars apiece through the stock-like benefit program if the utility was sold, as planned. Dykes could have received a similar payout.

Thursday was Dykes’ second day of testimony in the case, breaking a three-year silence. 

The hearings, requested by attorneys for Zahn and Wannemacher, have offered a behind-the-scenes look at how federal prosecutors built their case.

In addition to Dykes, former city General Counsel Jason Gabriel testified at length Thursday about the Performance Unit Plan, or PUP, a long term incentive program approved by the JEA board in July 2019. The plan was approved at the same time the board gave the green light to pursuing privatization of the utility, which prosecutors say would have boosted the value of the PUP by tens of millions of dollars.

“I was mind blown,” Gabriel testified of learning the PUP’s cost.

In grand jury testimony read aloud in court, Gabriel told prosecutors he would later question the conversations he had with Dykes and former JEA board member Herschel Vinyard about the PUP and the proposed sale. He said he relied on them both as “the two big financial-minded folks” at JEA, but they never mentioned the multimillion-dollar windfall at stake. 

“I do look back and wonder sometimes ... I look back in hindsight now and wonder if that was deliberate.”

Gabriel said when he learned about the PUP, he had many questions, including “philosophically, how does a public agency create a faux stock?" adding, "There were major issues and perversions with that plan.”

Dykes testified she thought it was “extremely unlikely” the JEA board would approve the PUP at the July 2019 board meeting. But she acknowledged she knew the cost of the benefit plan's payout in the event of a JEA sale.

“There were multiple conversations about it given that it was prominent in our [JEA] board [meeting] packet in July,” she testified Thursday. 

She said she and Zahn and Wannemacher broadly discussed “the level of payout” as a “total bucket,” but did not discuss how much each member of the senior leadership team stood to make individually. She testified Wannemacher considered the payout a deserved reward for their efforts.

“There was a comment that there had to be something 'in it' for sacrificing as much [as we would] by going through the [sale] process,” Dykes told Assistant U.S. Attorney Tysen Duva. Asked what sacrifice she meant, Dykes said, “Just in term of what you give up in our personal life, it’s very time consuming.”

“We’d not see our family in morning, and get home when they’d be bed at night.” If successful, she said, “the most likely option is that you work yourself out of a job. [Wannemacher’s] comment was a recognition of that.”

Dykes later noted that if JEA was sold, Zahn hoped to take over as chair of JEA’s board and install Dykes as CEO.

First Coast News reached out to Dykes' attorney Hank Coxe to ask why she did not disclose what she knew to the JEA board, and if she had a fiduciary responsibility to do so. 

Coxe sent this statement: 

Ms. Dykes was not involved in the design or presentation of the PUP and testified yesterday that, in her opinion, it was “political suicide.”  She was informed before the July Board meeting that the board members understood the PUP, including the arithmetic.

In court Tuesday, Dykes was asked, hypothetically, if she’d get an attorney in a workplace situation where she’d done something wrong. She responded, “I haven’t been in my career in a position where I thought I’d done something wrong, so it’s a little difficult to speculate on that.”

The trial had been set for October, but attorneys for both sides have asked to continue the case until February 2024.

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