FBI: Pilot worker says Haslam knew of rebate fraud
ADRIAN SAINZ and ERIK SCHELZIG
Apr 18, 2013 at 8:34 PM
NASHVILLE, Tenn. (AP) — A Pilot Flying J employee told investigators that CEO Jimmy Haslam, who is also the owner of the Cleveland Browns, knew about rebate fraud at the truck stop chain his family owns, according to an FBI affidavit unsealed Thursday.
The 120-page document filed federal court in Knoxville, where Pilot is based, alleges that members of the company's sales force preyed on smaller trucking companies by reducing the amount of rebates they were owed for buying certain amounts of fuel.
Special Agent Robert H. Root in the affidavit alleged a "conspiracy and scheme to defraud executed by various Pilot employees to deceptively withhold diesel fuel price rebates and discounts from Pilot customers ... for the dual purposes of increasing the profitability of Pilot and increasing the diesel sales commissions of the Pilot employees participating in the fraud."
The affidavit was filed to secure the search warrants used in Monday's raid on the Pilot Flying J headquarters.
One employee identified only as a confidential source told investigators that the rebate scheme was discussed during sales meetings attended by Haslam and Pilot President Mark Hazelwood.
Haslam, who in a press conference earlier this week denied any wrongdoing, said in a written statement Thursday evening 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."
He said the company would continue to cooperate with authorities and conduct its own investigation.
Haslam was in Cleveland on Thursday to help prepare for next week's NFL draft. League spokesman Greg Aiello declined to weigh in on whether the investigation would affect Haslam's role as team owner.
"We must respect the process of a federal investigation and decline comment," Aiello wrote in an email.
The company headquarters was raided Monday by FBI and IRS agents. Pilot Flying J is a private company mostly owned by Haslam; his brother Tennessee Gov. Bill Haslam; their father and company founder Jim Haslam; and other family members.
Pilot Flying J is the nation's No. 1 retailer of diesel fuel, and its customer rebate program with trucking firms is at the center of the investigation.
The affidavit claims top sales officials engaged in a conspiracy and scheme to defraud customers by withholding diesel fuel price rebates in order to increase the profitability of Pilot and the sales commissions of Pilot employees who participated in the fraud.
The informant said the practice was known by a variety of euphemisms ranging from "manual rebates" to "screwing."