Much is not known about the federal investigation into Pilot Flying J employees and CEO (and Browns owner) Jimmy Haslam, and no charges have been filed against anyone.
Friday afternoon, Haslam said he had no plans to step down from Pilot because he had done nothing wrong.
But a 120-page affidavit that the FBI filed to obtain search warrants alleges Pilot engaged in fraud for years, with Haslam’s knowledge.
A reading of the affidavit illustrates a disturbing culture where corruption was not only taking place, but accepted and encouraged. In often profane ways, Pilot employees boast about the scheme, which the affidavit alleges was directed at companies not sophisticated enough to understand what was taking place.
At one point, Pilot higher-ups discussed installing a two-tiered pricing structure that, the affidavit states, “would impose higher prices on less sophisticated Customers.”“Our advantage,” a Pilot employee says, “is their ignorance.”
To which an employee named Jay Stinnett says: “Yeah, AKA, we’re f---in’ em.”Fraud is a serious crime, especially as alleged in the affidavit. This document alleges that Pilot was increasing its profits by not paying full rebates promised to small trucking customers. The affidavit portrays a culture that seemed proud of its actions because it was increasing its profits.
The affidavit was written and presented by FBI Special Agent Robert Root, and states: “This affidavit is intended to show only that there is sufficient probable cause for the requested warrant and does not set forth all of my knowledge about this matter.’
In a transcript of a recorded conversation between an informant and Pilot Vice President of Sales John Freeman, Freeman brags about the amount of money he (allegedly) cheated people out of, and says Haslam knew of it.
“Absolutely,” Freeman is quoted saying when asked if Haslam was aware. “I mean, he knew all along that I was cost-plussin’ this guy. He knew it all along. Loved it. We were makin’ $450,000 a month on him.”
When the informant expresses surprise, Freeman states: “Why wouldn’t he (Haslam) love it? … Did it for five years, cost us a million bucks. I mean, we made $6 million on the guy, cost us a million bucks. … If his discount was gonna end up bein’ 38 cents? (Shoot), I’d make it 29 cents.”
At another, Pilot salesman Chris Andrews says: “I got a company in, uh, Florida called Honey Transport. They cannot grasp the concept of a rising market and shrinked margins.”
Freeman also states: “I know Jay had an account over in North Carolina, the guy was a f---in’ blowhard. I mean a f---ing blowhard. 50,000 gallons. … there’s no way for the guy to know.”
Conversations were recorded several times by an informant inside Pilot.
A former federal investigator intimately familiar with the way investigations work offered his opinion on the issue, based on what he’s read and seen in the media, not based on any intimate knowledge of this case (think TV analyst on defense issues, or someone similar).
“There has to be substantial and solid information that a crime has been committed before they can get a search warrant,” the investigator said.
When the warrant is executed for a business, what is considered relevant evidence in a criminal case can be touchy. The IRS’ involvement is to check on tax evasion, and their presence makes almost any financial record relevant, the investigator said.
The investigator was asked if he thought the government would pursue a case against Haslam.“Absolutely,” he said. “How do you not?”
The key is the allegation -- and statement -- that Haslam knew what was taking place.
The investigator chuckled at the possibility of Haslam escaping with a plea deal if it’s proven Haslam knew what was taking place.
“What does his lawyer say?” the investigator said. “‘Yeah, he was involved and knew about it, but can you put somebody else in jail?’”
Businesses are fined when their actions are judged illegal, but when individuals commit crimes while working for a business they can be charged criminally. Federal sentencing guidelines would then apply.
The investigator said that sentencing guidelines depend on the amount of money involved; the higher the amount the longer the sentence.
In this case, he said, “there’s the very real possibility of substantial jail terms.”
As for Haslam escaping with a fine, the investigator simply said: “Good luck with that.”
