Two Plead Guilty to Pilot Flying J ScamMay 30, 2013
Two employees of Pilot Flying J just pleaded guilty to so-called “jacking,” or scamming the company’s customers out of gas rebates. Tennessee’s governor, Bill Haslam, and Jimmy Haslam, owner of the Cleveland Browns, own the truck stop chain.
Court documents detail the plea deals and indicate that the regional sales director, Arnold Ralenkotter, and the regional accounts representative, Ashley Smith Judd, collaborated on the conspiracy to increase profits and pad commissions at Pilot Flying J, according to CantonRep.
The two are the first to be charged in the federal investigation—both pleaded guilty to conspiracy to commit mail fraud—and were charged in a document that is used when defendants are cooperating with investigators, CantonRep explained. The conspiracy charges carry up to 20 years in prison.
FBI documents reveal that Pilot Flying J had been involved in a fraudulent scheme that bilked customers out of millions of dollars. Court documents recently filed in federal court indicate that: Pilot Flying J had long engaged in the fraud by withholding millions of dollars due to customers in gas rebates; Mr. Haslam was aware of the fraud committed by top sales officials at his family business; and employees stole from what were described as “unsophisticated” trucking companies through its rebate program. The FBI explained that under the rebate program, trucking firms that met specific minimum purchase requirements were promised rebates; however, rebates were reduced for some customers, USA Today previously wrote.
Mr. Haslam denies wrongdoing and has indicated that he suspended a number of his sales team staff, but has not named any; he also adds that an internal review suggested some 5 percent of Pilot Flying J’s customers received less rebate money based on Pilot employee adjustments, according to CantonRep.
“The statements released by the federal court today do not come as a surprise, given what we’ve been learning in our own internal investigations, but are nonetheless disappointing,” Pilot Flying J spokesman Tom Ingram said in a statement. “We want to assure our customers that we are taking every step to correct any wrongdoing that has occurred and to make certain that it does not happen again.”
Court documents indicate that the fraud was well understood among sales staff. In fact, according to the documents, Pilot’s national account sales director taught employees how to defraud trucking companies without getting caught, wrote CantonRep.
Brian Mosher, director of sales for national accounts, spoke with employees during a sales meeting in November that was recorded by a cooperating FBI witness. Mosher said, according to Cleveland.com, citing court documents, “Some of ’em, some of ’em don’t know what a spreadsheet is. I’m not kiddin’. So, again, my point is this: Know your customer. If the guy’s sophisticated and he truly has gone out and gotten deals from other competitors and he’s getting daily prices from us, don’t jack his discounts, ’cause he’s gonna know, okay?” The documents indicated that in cases in which a customer was due a $10,000 rebate, Mosher would slash the rebate to $7,500. An informant said Mosher, who was not named in the plea deal, cut client rebates “because it made more money for Pilot, and it increased the commission that Mosher and any other Pilot sales person responsible for the customer would receive,” according to Cleveland.com.
Court records also indicate, according to CantonRep, that it was challenging for trucking firms to track what they were entitled to due to the many variables that were part of the diesel price discount program. The documents also indicate that Ralenkotter threatened to take an account away from a subordinate if the worker did not comply with the fraud.
Pilot may have defrauded more than 50 companies in a scam the FBI and IRS have been probing for two years. The agencies, said CantonRep, have secret recordings of Pilot officials talking about the scheme. To date, at least eight trucking firms have brought lawsuits against Pilot.