The Star Beacon; Ashtabula, Ohio

World, nation, state

June 19, 2013

Three more plead guilty in probe of Pilot Flying J

NASHVILLE, Tenn. — Three more employees of the truck stop chain owned by the Cleveland Browns’ owner and Tennessee’s governor pleaded guilty Tuesday in what authorities call a scheme to cheat trucking firms out of rebates.

Regional sales manager Kevin Clark pleaded guilty to mail fraud in federal court in Knoxville. Local media reported that account manager Holly Radford and salesman Jay Stinnett entered similar pleas later in the day.

Court records state Clark “knowingly and voluntarily joined and participated in the conspiracy” with others at Pilot Flying J, the country’s largest diesel retailer, to short-change trucking companies between 2009 and this spring  in order to increase Pilot profits and boost sales commissions.

Federal agents raided the privately held company’s Knoxville headquarters in April. Pilot is run by Browns owner Jimmy Haslam, the brother of Gov. Bill Haslam. Jimmy Haslam has denied any personal wrongdoing.

“We are disappointed in the actions of these employees towards our customers,” Pilot spokesman Tom Ingram said in a statement. “We assure our customers that our five-step plan to correct any wrongdoing and to make certain these actions do not happen again is ongoing.”

The governor maintains he is not involved with operating Pilot Flying J, though he continues to hold an undisclosed ownership stake in the company posting annual revenues of $31 billion.

As part of the plea agreement, prosecutors said they will only hold Clark responsible for rebate reductions he personally approved, rather than all of the alleged fraud committed as part of the conspiracy. Clark has agreed to cooperate with the investigation and testify on behalf of the prosecution.

Clark’s attorney did not immediately return messages seeking comment. Radford’s and Stinnett’s court records had not been unsealed by Tuesday evening, and information about who their lawyers are was not immediately available.

Secret recordings made as part of the investigation show that members of the Pilot sales team derided some clients as unsophisticated, lazy and undeserving of rebates they had negotiated when signing a deal to buy fuel from Pilot. An FBI affidavit indicates millions of dollars were unfairly withheld.

According to the transcript of a Nov. 28 conversation, Clark recounted how managers of Omaha, Neb.-based Morehouse Trucking had failed to keep track of how much money was due in rebates.

“The dumb (expletive) never checked, I guess,” Clark said. “I felt like sayin’, ‘Well you’re the moron that didn’t check it!”’

Jimmy Haslam in one of his first public appearances following the April raid told reporters that he had called Clark to obtain a phone number for Morehouse and made arrangements to reimburse any rebates the company had failed to pay.

Manager Curt Morehouse said in a phone interview Tuesday that he had always had a good impression of Clark before the details of the rebate allegations began to surface.

“Everything about him was positive, until I read the affidavits,” Morehouse said.  “At that point my opinion of him changed.”

 

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