Federal Probe Alleges Pilot Flying J Defrauded Customers
Details have started to emerge following a raid by the FBI and IRS on the Knoxville, Tenn., headquarters of the truckstop chain Pilot Flying J.
Evan Lockridge・Former Business Contributing Editor
April 19, 2013
Pilot Flying J CEO Jimmy Haslam said in a statement responding to FBI allegations that "any willful wrongdoing by any employee of this company at any time is intolerable."
2 min to read
Details have started to emerge following a raid by the FBI and IRS on the Knoxville, Tenn., headquarters of the truckstop chain Pilot Flying J.
According to published reports, an FBI affidavit filed in Federal Court in Knoxville, which was used to secure multiple search warrants that were executed earlier this week, says that the bureau’s investigation was into a potential “conspiracy and scheme to defraud...to deceptively withhold diesel fuel price rebates and discounts from Pilot customers ... without the knowledge or approval of the customer, for the dual purposes of increasing the profitability of Pilot and increasing the diesel sales commissions of the Pilot employees...”
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The warrants were not only for the company headquarters but also for three residences, one in Nashville, another in Kentucky and the third in Iowa.
The FBI alleges the company sales people “targeted unsophisticated trucking companies” for years by cutting the amount of rebates they received for buying certain amounts of fuel.
The affidavite names more than 30 current and former employees of Pilot Flying J, including CEO Jimmy Haslam. The investigation is based on many talks with company employees; one confidential source told the FBI that Haslam and company president Mark Hazelwood discussed the alleged fraud during sales meetings.
The document says one trucking company lost nearly $150,000 because of the alleged scheme and refers to a “confidential informant” who blew the whistle on the company’s practices.
The investigation began nearly two years ago.
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“I maintain that the foundation of this company is built on its integrity and that any willful wrongdoing by any employee of this company at any time is intolerable,” said Haslam in a statement released Thursday evening. “I value the relationships we have with our customers, our vendors and our team members across this country and regret that they have to go through this with us, but I trust and believe their faith in this company and its principles has never been misplaced.”
The IRS is reportedly involved due to how Pilot Flying J accounts for money that it gives back in rebates to customers so it can be properly accounted for and tracked.
Haslam is the owner of the NFL’s Cleveland Browns football team and is also the brother of Tennessee Gov. Bill Haslam. Gov. Haslam earlier this week said he has not been involved in the business of the company in 15 years but still has an interest in the privately owned operation, which is managed in a blind trust.
Pilot Flying J has more than 650 truckstops in the United States and Canada and did more than $29 billion in business last year.
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