Tuesday, July 15, 2014 12:41 am
Haslam-owned truck-stop chain won't be charged
In an agreement with prosecutors, the nation's largest diesel retailer acknowledges that employees cheated trucking companies out of promised fuel rebates and discounts. Pilot has agreed to pay a $92 million penalty, which is within the range of what the company would be expected to pay if convicted at trial.
Nashville criminal defense attorney and former prosecutor David Raybin, who is not involved but has followed the case, said the agreement most likely signals that Knoxville-based Pilot's CEO Jimmy Haslam, who has said he had no knowledge of the scheme, will not face charges.
"No prosecutor would enter into an agreement like this, ask for this kind of sanction, unless they didn't have enough evidence to indict Haslam," he said. "Also, Pilot would not agree to pay unless they felt the government would not prosecute him."
Gov. Bill Haslam holds an undisclosed ownership share in the company but has said he is not involved in Pilot's day-to-day operations. Pilot has annual revenues of around $30 billion.
The agreement is good for the company, Raybin said, because, "if a company gets indicted, that's ruinous, even if they're not convicted."
But although the worst may be over for Pilot, there could still be further prosecutions of current and former employees.
The agreement signed by U.S. Attorney for the Eastern District of Tennessee Bill Killian requires Pilot to comply with several conditions, including cooperation with the ongoing investigation of people who may have been involved in the fraud. The agreement does not protect any individual at Pilot from prosecution.
Also, several individual trucking companies are suing Pilot for fraudulently withholding discounts and rebates, although the majority of customers participated in a class-action settlement in which Pilot agreed to pay out nearly $85 million last November.
Since federal agents raided Pilot's Knoxville headquarters in April 2013, 10 former employees have pleaded guilty to the scheme, which was known by a variety of euphemisms including "manual rebates."
FBI special agent Robert H. Root said in an affidavit filed in federal court last year that the scheme involved sales team members reducing the amount of money that was due to trucking company customers they deemed too unsophisticated to notice. The scheme was widely known in the sales department, according to court documents, with supervisors teaching other employees how to do it.
Court records said the scheme lasted from at least 2007 until an FBI raid in April 2013.
In May, several top executives abruptly left the company. Pilot officials have not said why the employees left, but the agreement with prosecutors acknowledges that the company has terminated or placed on leave employees who violated company policies. It also acknowledges that Pilot acted quickly to investigate problems with the rebate program and repay cheated customers with interest.
Through a spokesman, Jimmy Haslam declined to comment on the agreement with prosecutors, but issued a statement.
"We, as a company, look forward to putting this whole unfortunate episode behind us, continuing our efforts to rectify the damage done, regaining our customers' trust, and getting on with our business," it said.