UPDATE: Pilot Flying J CEO Jimmy Haslam has responded to reports citing FBI affidavits alleging that he knew about fuel rebate fraud at the truckstop chain.
Haslam has released a statement Friday afternoon:
"All of you are well aware of what happened here on Monday afternoon, and most of you have read all or part of the two affidavits released Thursday night as part of a federal investigation of Pilot Flying J.
"The timing of the release of the affidavits was sooner than we would have expected but otherwise not terribly surprising.
"The affidavits didn't present a very flattering picture of our company, and were not representative of what our company is all about, but taken on the whole, they were consistent with our previous impression of the federal government's investigation.
"It still appears to us that this investigation is focused on a very narrow band of a very large company--questions about how rebates were handled to a very small percentage of our trucking company customers."
He added, "On a personal note ... I want to say how sorry I am that our team members, our customers, our suppliers, vendors and our friends have to go through this with us. It's been traumatic for some, but it's important to remember that probably 99% of our people aren't even in the scope of this inquiry."
"Our relationships with our customers, our suppliers and vendors, our team members and our friends in the communities in which we live and work are very important to us, and I trust and believe their faith in this company and its principles has never been displaced."
Click on File Attachments below to read Haslam's complete statement.
KNOXVILLE, Tenn. -- An FBI agent's affidavit says a Pilot Flying J employee told authorities that company CEO and Cleveland Browns owner Jimmy Haslam knew about rebate fraud at the truckstop chain his family owns, according to a report by the Associated Press.
The company headquarters in Knoxville, Tenn., was raided Monday by FBI and IRS agents. Pilot Flying J is the nation's leading retailer of diesel fuel, and its fuel rebate program for trucking firms is at the center of the investigation.
The 120-page document cited by the news agency was filed Thursday in federal court in Knoxville. It identifies the employee only as a confidential source. The document alleges that members of the company's sales force preyed on smaller trucking companies by reducing the amount of rebates they were owed for buying certain amounts of fuel, the report said.
In the affidavit, Special Agent Robert H. Root alleged a "conspiracy and scheme to defraud executed by various Pilot employees to deceptively withhold diesel fuel price rebates and discounts from Pilot customers ... for the dual purposes of increasing the profitability of Pilot and increasing the diesel sales commissions of the Pilot employees participating in the fraud."
The affidavit was filed to secure the search warrants used in Monday's raid on the Pilot Flying J headquarters, the report said.
The source told investigators that the rebate scheme was discussed during sales meetings attended by Haslam and Pilot president Mark Hazelwood, the news agency said. The affidavit claims, according to the AP report, that top sales officials engaged in a conspiracy and scheme to defraud customers by withholding diesel fuel price rebates in order to increase the profitability of Pilot and the sales commissions of Pilot employees who participated in the fraud.
Although it did not specifically address the allegations, Haslam issued the following statement Thursday:
"I've read the affidavits. I now understand more clearly the questions the federal investigators are exploring. I maintain that the foundation of this company is built on its integrity and that any willful wrongdoing by any employee of this company at any time is intolerable. We will continue to cooperate with the federal investigation and continue our own investigation in these allegations. I value the relationships we have with our customers, our vendors and our team members across this country and regret that they have to go through this with us, but I trust and believe their faith in this company and its principles has never been misplaced."
In a press conference earlier this week, Haslam denied any wrongdoing.
Separately, trucking industry official Burt Newman, the vice president of Professional Transportation Partners, told Cleveland newspaper The Plain Dealer that rebates based on volume of fuel purchased are a standard practice in the industry. Pilot Flying J's rebates are better than its competitors, he said. "They offer rebates that are outrageous and impossible to compete against" because of the company's size, with approximately 650 truckstops and travel centers nationwide.
Pilot Flying J has more than 650 retail locations and is the largest operator of travel centers and travel plazas in North America. The Pilot Flying J 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.