Since federal investigators raided Pilot Flying J’s headquarters nearly 18 months ago, a criminal probe into the company’s alleged fuel rebate scam has been ongoing.
According to news station WBIR, former PFJ President Mark Hazelwood received a “target letter” in August. The U.S. Department of Justice typically sends out these letters to notify a subject that they are a target of a grand jury investigation.
Hazelwood, who left the company in May after 29 years with the company, reported directly to Pilot CEO James “Jimmy” Haslam III. Haslam, who also owns the Cleveland Browns, has not been charged in the investigation and has not received a target letter.
An informant worked at Pilot and cooperated with the Federal Bureau of Investigation. The informant secretly recorded a series of meetings with Pilot’s national sales staff, which Hazelwood attended, to discuss a plan known as “manuels” or “mannys.” The manual rebate program was designed to prey on “unsophisticated” trucking companies who may not have been monitoring their rebate checks closely. The alleged scam also targeted those deemed more vulnerable because of a language barrier, including Hispanic-owned companies.
In July, the largest truck stop chain in the U.S. entered into an agreement with federal officials to pay a $92 million penalty over the next two years, as well as cooperate with the ongoing criminal investigation into Pilot’s rebate scam.
In November 2013, Pilot also agreed to pay $56 million to its customers as part of a class action settlement reached with trucking company customers over its manual rebate program.
So far, 10 former employees in the company’s direct sales division, including those with supervisory roles, have been cooperating with federal investigators. The employees have pleaded guilty to mail and wire fraud charges in connection with their involvement in the “fraudulent reduction of diesel fuel price discounts owed to Pilot customers,” said William C. Killian, U.S. Attorney for the Eastern District of Tennessee.
Other high-ranking executives, who have been let go as part of the ongoing criminal probe, include John Freeman, vice president of sales at Pilot, as well as Vince Greco, who was the former director of sales for the company’s western region. Scott Wombold, vice president of national accounts, and Brian Mosher, former director of sales for national accounts, are also no longer with the company.
A criminal investigation was launched on April 15, 2013, after questions were raised concerning the company’s rebate and discount fuel programs. The Federal Bureau of Investigation and the Internal Revenue Service raided the company’s Knoxville, Tenn., headquarters, seizing computers and other documents relating to the alleged rebate fraud program. The home offices of some of the company’s sales personnel were also searched.
Copyright © OOIDA