Pilot Flying J Investigation Leads 'Top Tenn.' News List

AP: Raid, rebate scandal "sent shockwaves through business, sports, political worlds"

Published in CSP Daily News

Jimmy Haslam

KNOXVILLE, Tenn. -- When federal agents stormed the Knoxville, Tenn., headquarters of Pilot Flying J in April, it sent shockwaves through the business, sports and political worlds. The investigation into a scheme to defraud customers at Pilot, a truckstop chain owned by the family of Cleveland Browns owner Jimmy Haslam and Tennessee Gov. Bill Haslam, has been voted the state's No. 1 news story of 2013 by reporters and editors of the Associated Press, AP member newspapers and broadcast subscribers.

John Guillon, managing editor of The Citizen Tribune in Morristown, noted on his ballot that the Pilot investigation involves "one of the state's highest-profile businesses, run by the governor's family, high-ranking donors to the University of Tennessee.

"It's a huge news story," he said.

Jimmy Haslam, who bought the Browns in a $1 billion deal last summer, was at first dismissive of the raid, telling reporters that the investigation involved a "very insignificant number of customers."

But the company's approach shifted shortly after a judge unsealed a 120-page affidavit that included transcripts of secretly recorded discussions among senior members of the sales team that candidly--and often crassly, said AP--outlined the scheme to defraud trucking company customers deemed too unsophisticated to notice that they were being cheated out of rebates and discounts they were entitled to.

Pilot moved quickly to settle a class-action lawsuit that paid 5,500 trucking companies $85 million in reimbursements and interest for the money they were cheated out of. A federal judge approved the settlement last month, though several Pilot customers opted out and continue to pursue their own claims against Pilot.

Two former members of the Pilot sales team agreed to cooperate with investigators and seven others have pleaded guilty to fraud charges. A Pilot lawyer recently said more guilty pleas are likely. Jimmy Haslam has denied any prior knowledge about the scheme, and no charges have been filed against him or the company.

Pilot was founded with a single gas station in 1958 by family patriarch Jim Haslam, a former University of Tennessee tackle who played on the 1951 national championship football team under Gen. Robert R. Neyland, who built the Volunteers into a football powerhouse.

Jim Haslam credits his sons with expanding the chain from mostly gas stations and convenience stores to a "travel center" concept featuring branded fast-food service that launched a period of rapid growth for Pilot. Company revenues have grown at a rapid pace, from $2 billion in 1998 to more than $30 billion last year.

Bill Haslam eventually left his position as Pilot president to run for mayor of Knoxville in 2003, and was later elected Tennessee governor in 2010. During that campaign, Haslam was criticized for refusing to disclose his personal income from Pilot. He argued that releasing his earnings would reveal personal information about the income of family members not running for office and proprietary information about the privately held company.

His brother's electoral success isn't Jimmy Haslam's only close political link. He has long been close friends with Republican U.S. Sen. Bob Corker, dating back to when they were roommates at the University of Tennessee.

The two men's families have vacationed together on Nantucket in Massachusetts, and Haslam was Corker's finance chairman for the then-Chattanooga mayor's successful bid for the Senate in 2006.

Click here to view CSP Daily News' coverage of Pilot Flying J.

Keywords: 
diesel, financial