Pilot Flying J's RICO Wrangling
Published in CSP Daily News
Says suit fails to specify "who, what, where, when" required for racketeering charges
KNOXVILLE, Tenn. -- Pilot Flying J is fighting back against claims that the alleged diesel fuel rebate fraud scheme for which it is being investigated constitutes a violation of federal racketeering laws, reported The Knoxville News Sentinel. On Monday, the truckstop chain filed a memo in an lawsuit in which it said the plaintiff, Wright Transportation, Mobile, Ala., had failed to adequately state a claim under the Racketeer Influenced & Corrupt Organizations Act (RICO).
Since the FBI and IRS raided Pilot Flying J headquarters in Knoxville, Tenn., on April 15 to investigate the alleged scheme to cheat trucking companies out of rebates for diesel fuel purchased at the chain's more than 650 truckstops, seven Pilot Flying J employees have pleaded guilty in federal court to fraud-related crimes and nearly 30 trucking companies have filed lawsuits. At least 11 former employees already are cooperating with the FBI and offering evidence. Seven of them have entered guilty pleas to fraud charges, and four have obtained immunity from prosecution in return for their cooperation.
"As a threshold matter, plaintiff's RICO claims are merely dressed-up breach of contract or fraud claims and do not state an independent cause of action," the memo said.
In motions filed in federal courts in Alabama and circuit court in Knoxville, lawyers for Pilot Flying J and CEO James Haslam are asking that the suits filed by a half-dozen trucking firms be dismissed because they say the suits have not established that any fraud occurred, said a report by reported The Tennessean.
Joining in the motions to dismiss are two one-time top Pilot Flying J sales executives who are at the center of the rebate allegations, the report added. In a motion filed in U.S. District Court in Alabama, the attorney for John Freeman and Brian Mosher seconded the arguments of Pilot Flying J's lawyers in asking that the suit by Wright be dismissed.
In a separate motion, lawyers for Haslam also sought dismissal, citing the Pilot Flying J motion.
A brief filed by Pilot Flying J's attorneys states that the racketeering charges in the suit are backed only by the affidavit of an FBI agent. The brief says the suit fails to state with specificity "the who, what where and when of the alleged fraud as required."
In its filing in the Arkansas case, lawyer charged that the Wright suit should be dismissed because it failed to allege sufficient facts to support its claims of fraud.
Pilot Flying J president Mark Hazelwood, also named as a defendant, filed his own motion to dismiss the case on the same grounds.
The Wright case is one of a few that has not been placed on hold or dismissed outright pending a Nov. 25 hearing in Little Rock, Ark., on Pilot's proposed settlement, which could pay truckers up to $40 million. An additional $12 million could go to lawyers for the plaintiffs in the case.
Pilot Flying J has more than 650 retail locations and is the largest operator of travel centers and travel plazas in North America. Its network provides customers with access to more than 60,000 parking spaces for trucks, more than 4,400 showers and more than 4,000 diesel lanes, of which more than 2,800 offer diesel exhaust fluid (DEF) at the pump. Pilot Logistics Services is one of the largest independent energy logistics companies in North America, selling and distributing more than 1.3 billion gallons of refined petroleum products and serving more than 15,000 customers. Together, Pilot Flying J and Pilot Logistics Services generate sales of approximately nine billion gallons of petroleum annually.