KNOXVILLE, Tenn. -- Since the FBI and IRS raided Pilot Flying J headquarters in Knoxville, Tenn., on April 15 to investigate an 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 Pilot employees already are cooperating with the FBI and offering evidence against Pilot. Seven of them have entered guilty pleas to fraud charges, and four have obtained immunity from prosecution in return for their cooperation. Late last month, federal prosecutors, in a major signal, arranged to postpone the sentencing of the seven to allow the FBI to continue its probe. The delay shows that the investigation is growing beyond earlier expectations, say lawyers and an investigator involved in the probe who spoke to ESPN.com on condition of anonymity. The court cases are now scheduled for a report to the judge on Feb. 3.
According to an ESPN report, the sequence of guilty pleas shows that the federal agents are working their way up the ladder of Pilot management. Cathy Giesick, one of the sales executives at Haslam's 2009 meeting, already has agreed to offer evidence against Pilot and has received immunity from prosecution. If others from the senior management at Pilot join her, company president and CEO Jimmy Haslam himself will become the focus of the investigation.
And ESPN is reporting that three lawyers involved in the investigation, speaking anonymously because of their obligations to their clients, told the sports news network that they expect Haslam--who also owns the Cleveland Browns professional football team--to be charged in the case.
Haslam has maintained that he was not aware of the scheme.
The company did not respond to a CSP Daily News request for comment by press time.
Meanwhile, Columbus, Ohio, trucking company FST Express has filed a lawsuit against Pilot Flying J, it said in a press statement. FST is one of several trucking companies that has chosen to opt out of a class-action settlement that has received preliminary approval by a federal judge in Arkansas.
Pilot Flying J customers have until Oct. 15, 2013, to opt out of the proposed settlement. If they do not opt out by that date, they will automatically be included in the settlement.
"FST Express has opted out of the proposed settlement because there are serious questions about whether the settlement provides a sufficient benefit to Pilot Flying J's customers who have been harmed by the rebate scheme," said Shawn J. Organ, FST's attorney. "Unfortunately, under the settlement agreement, trucking companies will not learn whether they have received a fair settlement until after the opt-out deadline. But by then it will be too late for those companies to get out of the settlement and pursue their own lawsuits."
According to Organ, Pilot Flying J pushed for a settlement before all the facts are known.
"The FBI investigation is still ongoing," he said. "Federal investigators are still uncovering details about how widespread the fraud was. Although Pilot certainly benefits from a quick settlement, we have serious concerns whether such a hasty deal is good for the victims of Pilot's fraud."
Organ said that FST's lawsuit is just the first of many he will be filing over the next several weeks. "Many trucking companies that have serious doubts about the settlement have contacted us to help them opt out of the settlement and pursue their individual claims against Pilot. We plan to vigorously pursue their claims," he said.
Pilot Flying J 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. 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.