Eighteen lawsuits filed so far: Pilot Flying J's legal troubles continue

By Clarissa Kell-Holland, Land Line staff writer | 7/9/2013

Since news of the investigation into Pilot Flying J’s fuel rebate scandal broke in April, at least 18 lawsuits have been filed against the truck stop chain and some of its executives.

Pilot spokesman Tom Ingram of the Ingram Group told Land Line on July 8 that Pilot’s Chief Executive Officer James “Jimmy” Haslam and other employees have contacted “in the neighborhood of 400 (trucking companies) personally” as well as many more through written communication.

Since the FBI and Internal Revenue Service raid in mid-April, questions continue to arise about how high up in the food chain the alleged fuel rebate scam goes.

According to the FBI affidavit, an executive at the center of the rebate scam claims it goes all the way to the top.

Haslam also owns the Cleveland Browns’ football team. Football fans as well as the trucking community are questioning what will happen to the truck stop chain and the Browns if Haslam is indicted in the alleged fuel rebate scheme. Haslam has denied knowledge of the alleged scam.

“We are staying in close contact with the NFL during the investigation,” Ingram told Land Line in a statement on Monday. “We expect no change in Mr. Haslam’s relationship with the NFL and/or his ownership of the Browns. Any other statement is unfounded media guessing.”

A confidential informant, who was also a Pilot Flying J employee, secretly taped conversations with diesel sales staff who knew about the alleged fuel rebate scam, known to insiders as “jacking the discount” or “managing the discount.”

In a taped conversation with John Freeman, vice president of sales for Pilot, Freeman claims Haslam knew that he was manually reducing the rebate amounts one of his trucking company customers Western Express was supposed to receive. When Western Express discovered the discrepancies, Freeman said he personally “called Jimmy and told him I got busted at Western Express,” according to the FBI affidavit.

The informant then asked Freeman what Haslam said during the phone call.

“I mean, he knew all along that I was cost-plussing this guy,” Freeman said in the taped conversation with the informant. “He knew it all along. Loved it. We were makin’ $450,000 a month on him.”

According to the affidavit, instead of writing Western Express a check for the amount they were owed, Pilot agreed to buy a plane owned by the trucking company for $1 million.

As of early July, five PFJ employees have pleaded guilty to fraud charges, admitting their involvement in an alleged scheme to manually reduce the rebate amounts trucking company customers were supposed to receive.

Trucking companies affected by the alleged rebate scheme had contracts with Pilot to either receive a rebate check each month or be direct billed and sent an invoice for fuel purchases.

Recently, three more trucking companies have filed lawsuits. Arka Logistics, headquartered in Markham, Ill, filed a class action lawsuit, alleging Pilot Flying J “fraudulently reduced and withheld fuel rebates or discounts owed to the trucking company since approximately 2008. Arka has 89 power units and 79 drivers, according to the Federal Motor Carrier Safety Administration’s SAFER website.

R & R Transportation, Inc., which has 107 power units and 99 drivers, also filed a class action lawsuit on July 3, alleging it was defrauded by Pilot.

According to the complaint, the trucking company purchased approximately 140,000 gallons of fuel per month from Pilot. At one point, R&R “felt that its rebate checks seemed to be less than it thought they should be.” The trucking company then contacted sales staff at Pilot and was told there wasn’t a problem with the rebate check amount, the complaint states.

After news of the alleged rebate scam broke, Pilot sales staff immediately switched R&R “from a rebate-based discount to a discount administered at the pump.”

The trucking company also asked for an audit of its accounts, according to the complaint.

On July 1, the trucking company received a check for an undisclosed amount related to “a potential discrepancy” in its account.

The trucking company, which is headquartered in North Dakota but has its principal place of business in Audubon, Minn, filed its class action complaint two days later. Besides Pilot Corp. and Pilot Flying J, the complaint also names Haslam, Freeman, Brian Mosher, director of national sales, Mark Hazelwood, president, and Mitch Steenrod, chief financial officer, as defendants.

Townes Trucking of Coffeeville, Miss., which has seven power units and seven drivers, also filed a lawsuit in federal court in Louisiana, alleging it was defrauded by the truck stop chain.

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