VOL. 128 | NO. 78 | Monday, April 22, 2013
Pilot Flying J CEO Haslam Won't Step Aside Amid Probe
ERIK SCHELZIG & STEVE MEGARGEE | Associated Press
NASHVILLE (AP) – Cleveland Browns owner and Pilot Flying J CEO Jimmy Haslam on Friday again denied any wrongdoing and said he wasn't stepping aside, a day after an FBI affidavit alleged his truck stop chain had defrauded customers with diesel fuel rebates.
According to court documents, leaders of Pilot's sales team derided some clients as unsophisticated, lazy and undeserving of rebates. Sales team members said Haslam, who is the older brother of Tennessee Gov. Bill Haslam, was aware of at least some instances of employees withholding diesel fuel price rebates and discounts from Pilot customers to boost the company's profits and sales commissions, FBI special agent Robert H. Root said in an affidavit. He said the practice was known by a variety of euphemisms including "jacking the discount" and "screwing" the customer.
Haslam shrugged off suggestions he might step down.
"I thought to myself, 'Well, why would I do that?' Candidly, I haven't done anything wrong, No. 1," Haslam said at the company's headquarters in Knoxville. "No. 2, if there's ever a time the company needs our leadership, it's right now."
No charges have been filed in the case.
While the affidavit doesn't specify how much money or how many customers were involved, it makes clear the fraud was widespread and brought in millions of dollars to the Haslam family business over at least six years.
The FBI and Internal Revenue Service agents raided the company's headquarters Monday. Haslam has said "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."
The NFL said it had no plans to ask Jimmy Haslam to step aside while the FBI investigates his involvement in the alleged fraud.
Court documents detailed how vice president of sales John "Stick" Freeman, said in a training session for the sales team that he did not want to discuss "moral or ethical" issues involved with the practice.
"Hey, this is a game," Freeman said, according to recordings made by an FBI informant. "We're playin' (expletive) poker with funny money, and its liar's poker with funny money."
Brian Mosher, the company's national sales director, was recorded telling colleagues that he had engaged in cutting rebates since Pilot's nearest competitor filed for bankruptcy in 2008. Pilot purchased Flying J's truck stops in 2010.
Mosher said if a customer didn't understand the nuances of pricing and rebates, he wasn't going to give him a good deal.
"Frankly, he's lazy, and he doesn't care. ... That guy does not deserve premium pricing from us, in my opinion, because he's not willing to go back and do all the work on it," he said, according to the recordings.
An unnamed FBI informant said Haslam in 2007 instituted a monthly ranking of sales representatives based on the profits they generated. That system encouraged the sales force to withhold rebates to clients in order to boost their figures, the informant said.
Mosher said he was careful to target unsophisticated clients.
"Some of 'em don't know what a spreadsheet is. I'm not kiddin'," Brian Moshe said. "So, again, my point is this: Know your customer."
Fewer than 10 percent of customers would ask for copies of how the rebates were calculated, another company official said. For those who asked for those details, Mosher said he and a colleague would "have to go through this gyration" to redo the figures to match the decreased rebate paid to the customer.
One customer, Omaha, Neb.-based Morehouse Trucking, complained and received an $80,000 check in May after Pilot said it had made a mistake.
"We had a feeling that the error was not an accident, but had no proof," manager Curt Morehouse said in a statement. "It is now obvious from the affidavits that it was not an accident.
"We hope that Mr. Haslam has the courage to make whole the other companies that his company defrauded," he said.
Megargee reported from Knoxville. AP Sports Writer Tom Withers contributed from Cleveland.
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