Pilot Flying J engaged in years of rebate fraud, feds say

| April 18, 2013

pilotFederal documents released April 18 allege that Pilot Flying J has been engaged for years in a fraudulent scheme of withholding rebates owed to customers on fuel purchases.

The documents further allege that Pilot Flying J CEO Jimmy Haslam — the majority owner of the Cleveland Browns — knew about the scheme.

A statement from Haslam did not directly dispute the affidavit, but said “any willful wrongdoing by any employee of this company at any time is intolerable.”

The affidavit says that the company and certain Pilot Flying J salespersons withheld the rebates in order to receive larger commissions on fuel sales and increase PFJ profits.

PFJ affidavitAccording to the affidavit, some customers didn’t receive tens of thousands of dollars a month in rebates, and during the years the fraud allegedly occurred, tens of millions of dollars owed to customers went unpaid.

The company’s headquarters were raided on Monday by dozens of agents from the FBI and from the IRS — all said to be connected to the company’s fuel rebate program.

Linked to the right — and here — is the full 120-page document released by a federal court, which say that Haslam was in on meetings in which the tactics of charging certain clients higher than agreed upon prices, concealing that information and then pocketing extra money were discussed.

Much of the affidavit includes conversations between an informant (a Pilot employee the FBI refers to in the affidavit as Confidential Human Source) and Pilot Flying J salespeople, where some of the more blatant knowledge of fraud appears to be exposed.

A few highlights from the affidavit include one carrier realizing they were owed $1 million in rebates, a salesperson telling the informant that his scheme was costing another carrier $70,000-$90,000 a month and even another carrier being shorted $146,564 over a 7-year period.

Haslam’s statement was released after the affidavit was made public. Here it is in its entirety:

“I’ve read the affidavits.  I now understand more clearly the questions the federal investigators are exploring.

I maintain that the foundation of this company is built on its integrity and that any willful wrongdoing by any employee of this company at any time is intolerable.

We will continue to cooperate with the federal investigation and continue our own investigation in these allegations.

I value the relationships we have with our customers, our vendors and our team members across this country and regret that they have to go through this with us, but I trust and believe their faith in this company and its principles has never been misplaced.”

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