(WBIR - Knoxville) One year after federal agents raided Pilot Flying J headquarters in Knoxville, all signs point to a fraud investigation that is far from over for the Haslam family's truck stop empire.
On April 15, 2013, the FBI raided the headquarters of the nation's largest truck stop chain and diesel dealer as part of an investigation into fuel rebate fraud. Affidavits indicated the feds began investigating in May 2011 after receiving a tip from a Pilot employee that the sales team implemented a scheme to short-change "unsophisticated" trucking companies on rebates.
In the last year, 10 people employed by Pilot Flying J have pleaded guilty to conspiracy and fraud charges in federal court. None of the employees who pleaded guilty had actually been charged with a crime at the time of their admission.
"It's very unusual. It is the only case in my 40 years on the bar that I can recall where people just happened to drop by the U.S. Attorney's office and plead guilty. They were not arrested. They were not indicted," said Dennis Francis, a Knoxville attorney and panelist on WBIR's Inside Tennessee. "All of these people hired very good lawyers and would not have pleaded unless there was some clear evidence that it was in their best interests to admit their guilt."
Francis said it is not unusual that many of the guilty pleas came relatively soon after the FBI raid. The charges people pleaded guilty to carry penalties of up to 20 years in prison. Cooperating could reduce the punishment to five years, according to Francis.
"You'll remember there was a flurry of people pleading guilty last May and June. We call it 'getting on the bus.' There are only so many seats on the bus and you want to be the first one on the bus. People will testify to save themselves. The earlier you get on the bus and cooperate with an investigation, the more likely prosecutors will provide some incentive when it is time for sentencing," said Francis.
All of the plea agreements called for the defendants to cooperate with and assist federal investigators. None of the people who pleaded guilty have been sentenced as of yet. Francis said it is unlikely anyone will be sentenced until after the entire investigation is over.
The most recent guilty pleas in January came from Pilot employees who were higher up the corporate ladder than previous employees who confessed.
"They [investigators] are going 'up the food chain.' It is this way in every conspiracy case. They take the low-level person and squeeze them dry, so to speak. Get them to say what did you know, when did you know it, and what can you tell me I don't already know. So that person then goes up to the next level. You just literally move up the food chain."
The 10 employees who have pleaded guilty are Brian Mosher, Christopher Andrews, James Stinnett, Arnold Ralenkotter, Scott Fenwick, Kevin Clark, Janet Welch, Holly Radford, Lexie Holden, and Ashley Judd.
None of the employees who pleaded guilty have been punished yet. Francis interprets the lack of sentencing as a clear indication the federal case has more targets beyond the 10 employees who have already confessed.
"Why would the government not be moving forward on these cases unless there was something else they were looking for? If this case were over, these people would have sentencing dates and the government would move on to something else," said Francis. "It looks to me like more is to come. That becomes the big mystery. What else is it that they [prosecutors] want?"
Francis said there is no way to predict how far up the Pilot corporate hierarchy the criminal charges will go.
For now, the only thing certain one year after the FBI raid is that investigators continue probing a company where annual revenues of more than $30 billion were not enough to prevent several sales staff members from stealing from customers.
Jimmy Haslam, CEO of Pilot Flying J, said the company has paid back everyone who was short-changed on rebates with interest.. Haslam has consistently said he has "not done anything wrong" and had no knowledge of the rebate scheme prior to the FBI raid. However, as CEO Haslam also stated he takes responsibility for the wrongdoing by his employees and has worked to "make things right."
Forbes ranks Haslam as one of the 400 richest people in America with a net worth of $1.5 billion. He owns the NFL's Cleveland Browns and is the older brother of Tennessee governor Bill Haslam. The fuel company was founded by the brothers' father, Jim Haslam.
Reporter's Note: You can view WBIR's entire coverage of the rebate fraud investigation and an interactive timeline at the section of our website dedicated to the Pilot Flying J case.
