By Clarissa Kell-Holland, staff writer
Pilot Flying J continues to field hits from all sides as more trucking companies file lawsuits against the truck stop chain, alleging they were victims of a fuel rebate scam first uncovered by federal investigators in mid-April.
As of press time in June, an estimated 400 to 500 trucking companies potentially owed money have been called by Pilot CEO James “Jimmy” Haslam III or other employees, according to Rachel Albright of the Ingram Group in Nashville, a spokeswoman for Pilot.
In May, Haslam had called between 250 and 300 trucking companies, offering to “make it right” if they are owed money.
As of press time, at least five Pilot Flying J employees have pleaded guilty to their roles in a scam that was known as “jacking the discount” among Pilot diesel fuel sales staff. The scheme targeted customers it considered “too unsophisticated” to catch on.
Kevin Clark, regional sales manager for Pilot, Jay Stinnett, senior regional sales manager, and Holly Radford, an accounts representative, have all pleaded guilty to conspiracy to commit mail fraud in mid-June.
Ashley Judd, a regional account representative at Pilot, pleaded guilty to one count of mail fraud for knowingly mailing out fraudulent rebate checks that had been discounted from the original amount the trucking companies were supposed to receive.
In Judd’s plea agreement, it states that “employees in Pilot’s direct sales division have expressed to (Judd) that reducing a customer’s rebate without the customer’s knowledge was wrong, but that they were just doing what they had been told to do, thereby creating a culture of fraud-acceptance within Pilot’s direct sales division.”
According to court documents, she was directed to discuss the “fraudulent reduction” of customer rebates on the phone, not through email, but she kept handwritten spreadsheets at her desk and directed agents to where the information was stored during the execution of the search warrant.
Arnold “Arnie” Ralenkotter, a regional sales director for Pilot, pleaded guilty to conspiracy to commit mail and wire fraud for his role in approving rebate check amounts that had been fraudulently discounted and sometimes further reducing the rebate amounts to boost company profits and pad sales commissions.
In April, the Federal Bureau of Investigation and the Internal Revenue Service raided Pilot’s corporate headquarters in Knoxville, as well as the homes of three regional sales directors supervised by Pilot Vice President John Freeman.
As of press time, federal investigators were still combing through data seized in the raid to find out just how high up in the food chain the fuel rebate scam goes.
At least 12 lawsuits have been filed so far against Pilot. Two of the class-action lawsuits name Haslam, along with Freeman; Brian Mosher, national sales director; and Mark Hazelwood, president of Pilot, as defendants in the action.
Attorneys seek to consolidate mounting lawsuits against Pilot Flying J
Attorneys for one of the trucking companies claiming to have been financially affected by the fuel rebate scheme have filed a motion to consolidate all of the federal lawsuits against Pilot Flying J into just one.
In late May, attorneys for Ohio Auto Delivery of Grove City, Ohio, filed a lawsuit to transfer all of the “related” Pilot Flying J rebate actions to the U.S. District Court for the Northern District in Cleveland, Ohio.
According to court documents filed with the U.S. Judicial Panel on Multidistrict Litigation, the attorneys argue that the transfer of the related cases is warranted because “the Northern District of Ohio has the expertise and efficiency to manage this complex, multidistrict litigation” and is a “centrally located, accessible forum to parties and witnesses.”
The Multidistrict Litigation Panel consists of seven sitting federal judges, who are appointed to serve by the Chief Justice of the United States, according to its website. Their purpose is to “avoid duplication of discovery, to prevent inconsistent pretrial rulings and to conserve the resources of the parties, their counsel and the judiciary.” The panel is expected to rule on the complaint sometime in July.
Ohio Auto Delivery entered into a “direct bill” agreement with Pilot for its fuel purchases with the truck stop chain in August of 2004, according to court documents. The agreement states that at the time Pilot had “developed and maintains a proprietary billing system for daily or weekly billings for fuel purchases by Pilot’s trucking company customers.”
Only one Mississippi trucking company, Bruce Taylor, has filed a response to the motion to consolidate the cases, but wants to have the cases consolidated and transferred to Jackson, Miss.
Pilot has hired special investigators to conduct an internal investigation into the alleged fuel rebate scam.
John Ingram, spokesman for Pilot, told Land Line in June that “special counsel has begun its investigation.”
“It will be completed when completed, will take as long as needed, and will be reported directly to the board,” he said.
He said it isn’t clear if that report will be released to the public once it’s finished. LL