Haslam fighting subpoena order in rebate lawsuit

By Greg Grisolano, Land Line associate editor | Monday, April 18, 2016

An Alabama judge’s ruling could force Pilot Flying J CEO Jimmy Haslam to testify in court for the first time in connection to the company’s fuel rebate fraud scheme that was uncovered in 2013.

A judge in the circuit court of Mobile County issued an order on April 15 compelling Haslam to appear for deposition at 8:30 a.m. on May 11, in connection to a lawsuit filed by Wright Transportation against the truck stop chain, Haslam and some of the company’s former executives.

According to a report in The Tennessean, Haslam’s attorney Joseph McCorkle, Jr., filed a motion asking the judge to reconsider, amend or vacate the deposition order.

The paper notes that among several claims, the defendant’s motion argues that Circuit Court Judge Sarah Hicks Stewart granted the petition to depose Haslam less than 42 hours after it was filed without scheduling a hearing or allowing Haslam a reasonable opportunity to respond.

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.

Alabama-based Wright Transportation is the last one of seven companies that opted out of a settlement with Pilot Flying J and filed suit instead.

The lawsuit alleges that Wright Transportation had been involved in the rebate program since 2007, and that Pilot targeted smaller trucking companies like Wright Transportation for the rebate program, only to cook the books to skim some of the discount moneys for itself and to pay lavish bonuses and benefits to its officers, managers and employees, including Haslam.

“They tried to identify mom-and-pop companies because they felt like they wouldn’t be sophisticated enough to identify or figure it out,” said Stephen Tunstall, attorney for Wright Transportation, in an interview with Land Line last December. “Then they would laugh and make fun of their own customers about it.”

Wright Transportation was one of several trucking companies to file suit against the chain and its owner Jimmy Haslam after a 2013 raid by the FBI and the IRS. The raid exposed what law enforcement officials alleged was a scam involving fuel rebates paid to trucking companies that had the company’s fuel cards.

Eight former high-ranking employees of Pilot Flying J, including former president Mark Hazelwood, were indicted in February on federal charges of fraud connected to the rebate scheme. Haslam has not been charged with any crime and has repeatedly denied any knowledge of the scam.

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.

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