Deal … or no deal?
Legal maneuvering continues as more trucking companies file suits, claiming they are victims of Pilot’s alleged fuel rebate fraud scheme

By Clarissa Hawes, staff writer

Following the announcement of a criminal investigation launched by federal officials into Pilot Flying J’s alleged fuel rebate program more than five months ago, dozens of lawsuits have been filed in state and federal court on behalf of trucking companies claiming they are owed money.

Early on, some trucking companies signed on to a proposed class action settlement in federal court in Arkansas, which is scheduled for a fairness hearing in November, while other trucking companies have said “no deal” and want their day in court.

This is where it gets complicated. Pilot claims that some of the trucking companies that have filed lawsuits against the company are not owed money, may possibly owe the truck stop chain money, or did not even have fuel rebate agreements with Pilot.

The truck stop chain launched its own internal audit into the alleged rebate scheme, but the results of the audit were not complete as of press time. And Pilot has not come forward with the names of the companies that may have been affected by the alleged rebate fraud.

Rachel Albright of The Ingram Group, the public relations firm that represents Pilot Flying J, told Land Line that she is not sure, once the audit report is complete, whether its findings will be made public. That decision, she said, will be made by Pilot’s board of directors. Some board members are also working on Pilot’s internal audit team.

Seven former Pilot sales employees have pleaded guilty to their roles in the alleged scam to defraud trucking companies out of rebates they were owed as part of agreements to purchase so much fuel per month.

After saying they wouldn’t file a lawsuit against Pilot, Western Express of Nashville, Tenn., filed its complaint in late August, claiming it was defrauded out of $2.5 million, which resulted in losses of more than $75.5 million in the alleged fuel rebate scam.

In its complaint, Western alleges that Pilot sales staff knowingly withheld funds “which (Pilot) knew Western needed to operate its business and meet its obligations.”

The company claims it purchased more than $1 billion worth of fuel from the truck stop chain from 2005 through 2013. Western Express alleges it was overcharged by as much as 9 cents per gallon as a result of Pilot’s fuel rebate program.

According to court documents, Western Express claims that “Pilot’s fraudulent deprivation of Western’s rebates created a shortfall in Western’s business that dramatically impacted Western’s finances.”

As a result, Western Express claims that it was forced to default on a loan covenant with its lenders, which required them to enter a consulting agreement with Knight Management Services Inc., and enter into a stock option investor rights agreement with Knight Capital Growth Inc., as well as “enter amendments and waivers to their credit facilities with JP Morgan Chase and Key Principal Partners.”

Western Express was one of the trucking companies targeted by Pilot Flying J sales staff, according to the 120-page affidavit. The Federal Bureau of Investigation and the Internal Revenue Service raided Pilot’s headquarters on April 15.

In the affidavit, one of the FBI informants, who worked for Pilot Flying J, recorded a conversation with John Freeman, who was the vice president of sales for Pilot. Freeman is recorded as saying that Pilot overcharged Western Express by approximately $450,000 per month.

Freeman stated that after the rebate fraud was detected he bought an airplane belonging to Western Express for $1 million, instead of refunding the money by check to the trucking company. LL