A massive data cache containing data from search warrants served in four states, audio recordings, and tens of thousands of documents seized during a 2013 raid of the corporate headquarters of Pilot Flying J are among some of the evidence uncovered by an investigation into the company’s massive rebate fraud, court records show.
Federal prosecutors filed the document in U.S. District Court in Knoxville, as part of a memorandum for a protective order that would keep the case under seal. Prosecutors say such an order is necessary to protect federal law enforcement’s criminal investigation into the rebate scam.
The documents “contain a significant amount of information about individuals who have not been charged, who may be witnesses, subjects, targets and who may not have been advised of their status in the ongoing investigation,” and the public dissemination of such materials could harm the ongoing investigation.
More than 5 terabytes of electronically stored information collected from search warrants in Iowa, Kentucky, Tennessee and Texas, which translates to “tens or potentially hundreds of millions of pages;” more than 55,000 pages of documents seized in a raid on corporate headquarters by FBI and IRS agents; and more than 200 hours of recorded conversations between confidential informants and numerous individuals during the course of a criminal investigation are among the evidence disclosed by federal prosecutors in a supplemental filing in the case. The evidentiary disclosures represent some, but not all of the material prosecutors say they have collected.
Eight former high-ranking PFJ employees, including former president Mark Hazelwood, were indicted last month on federal charges in connection with the rebate fraud scheme that first came to light in 2013. Hazelwood, fellow executives Scott “Scooter” Wombold and John “Stick” Freeman, as well as Vicki Borden, director of the direct sales division and supervisor of co-conspirators John Spiewak, Katy Bibee, Heather Jones and Karen Mann are all charged with conspiracy to commit wire fraud and mail fraud.
No individuals are named in the filing.
Pilot owner Jimmy Haslam has not been charged and has denied any knowledge of any wrongdoing. He is not named in either the recently filed documents or the indictments.
According to the indictment, the conspiracy began on or about Feb. 1, 2008, and continued through April 2013 when federal investigators raided the company’s corporate headquarters in Tennessee. The alleged conspiracy involved fraudulent and false pretenses, promises and representations made to the targeted trucking companies, including fraudulently generated invoices and rebate amounts. The indictment alleges the conspiracy involved either or both “off-invoice fraud” where the represented discount amount was not submitted to Pilot’s billing system for the customer’s invoices and “rebate fraud” where customers who received monthly rebate checks had portions of the full rebate amount “deliberately and fraudulently” withheld by various means.
A jury trial has been set for Oct. 24, 2017, after the defendants waived their right to a speedy trial.
Pilot agreed to pay $92 million in fines and accept responsibility for the criminal conduct of employees in exchange for an agreement with federal prosecutors to avoid prosecution. The agreement does not prevent individual employees of the company from being prosecuted, however. The Knoxville, Tenn.-based travel plaza chain also agreed to an $85 million restitution plan to more than 5,000 rebate customers.
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