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Pilot Flying J strikes deal with feds in hopes of avoiding prosecution of company

“We, as a company, look forward to putting this whole unfortunate episode behind us, continuing our efforts to rectify the damage done, regaining our customers’ trust, and getting on with our business,” said CEO Jimmy Haslam.

The Trucker Staff

7/14/2014

KNOXVILLE, Tenn. — Pilot Flying J has struck a deal with federal investigators that will allow the mammoth truck stop chain to avoid prosecution over its rebate scam if it continues to cooperate with the ongoing investigation of its employees and pays a fine.

Pilot Flying J, which is owned by the Haslam family, including Tennessee Gov. Bill Haslam and Cleveland Browns owner Jimmy Haslam, will have to pay a penalty of $92 million.

“Pilot Flying J has reached an understanding with the U. S. Attorney’s office, Eastern District of Tennessee, and the U. S. Department of Justice, that the company will not be prosecuted, assuming it follows the terms of the agreement, including paying a monetary penalty over the next two years and fully cooperating with the federal government’s investigation of fraudulent conduct within the company’s diesel fuel sales discount programs,” stated a news release from Pilot Flying J.

“We, as a company, look forward to putting this whole unfortunate episode behind us, continuing our efforts to rectify the damage done, regaining our customers’ trust, and getting on with our business,” said CEO Jimmy Haslam.  “We’ve been committed from the beginning of this to doing the right thing, and that remains our commitment.”

However, according to a U.S. Department of Justice news release reported in the Nashville Business Journal, the deal specifically states that it “provides no protection from prosecution to any individual and moreover, imposes a continuing obligation on Pilot to provide complete cooperation with the ongoing federal investigation of current and former Pilot employees.” The agreement was made with both the DOJ and the U.S. attorney’s office.

“The terms of this agreement, including the significant monetary penalty and the very serious consequences if Pilot fails to comply, demonstrate quite clearly that no corporation, no matter how big, influential or wealthy, is above the law,” wrote U.S. Attorney Bill Killean in the news release. “In addition, the company’s agreement to fully cooperate with the United States, including its obligation to identify its employees’ criminal conduct, will assist in the ongoing federal investigation.”

Since the FBI and IRS raided the Knoxville, Tennessee, Pilot Flying J headquarters in April 2013 after transcripts of secretly recorded conversations between sales staff indicated the company short-changed several customers on rebates, Haslam has released several statements denying his involvement. Pilot is the nation’s largest diesel retailer, bringing in about $30 billion annually.

In November, a federal judge in Arkansas approved a settlement that pays $84.9 million to 5,500 trucking companies that were cheated out of promised rebates by Pilot Flying J.

The rebate program was an incentive for trucking companies to fuel at the truck stops. However, records indicated the program was complicated, with discounts varying by truck stop, making it hard for companies to keep track of the money they were owed by Pilot.

To date, 10 Pilot employees have pled guilty to the scheme. Pilot President Mark Hazelwood left the company in May, the highest official to resign after the raid.

In June, the accounting firm Horne LLP, with offices in Alabama, Louisiana, Mississippi, Tennessee and Texas, released its findings that Pilot’s internal auditors correctly identified the customers that were owed money and reimbursed them, including 6 percent interest and attorney’s fees, per the settlement.

Horne said Pilot audited 7,853 accounts active between Jan. 1, 2005 and July 15, 2013, which was three months after the FBI and the IRS raid on Pilot offices.

The settlement resolved some but not all of the lawsuits against Pilot. The company still faces seven lawsuits that have been consolidated in a federal court in Kentucky.

Also in June, Haslam donated $1.25 million on behalf of Pilot Flying J to the industry-wide image campaign, Trucking Moves America Forward, to be paid throughout the next five years.

The Trucker staff can be reached to comment on this article at editor@thetrucker.com.

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