Accusations: What exactly do investigators think Pilot Flying J did?

8:12 PM, May 2, 2013   |    comments
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CLEVELAND -- The hits just keep on coming for Jimmy Haslam's family business as another lawsuit is filed.

This is the fifth class action suit filed against Pilot Flying J since the company headquarters was raided. 

The new suit, filed in Illinois, by Edis Trucking of Wisconsin is the first to mention Jimmy Haslam by name. The suit says Haslam either engaged himself or caused his employees to scheme against trucking companies, defrauding them with "false promises."

What exactly do federal investigators say Pilot Flying J was doing wrong?

Once you understand just how complicated the rebate process and scheme is, it's easier to see how the trucking companies themselves often didn't notice.

Federal investigators say Pilot Flying J was effectively promising one thing and paying another.

An FBI affidavit accuses sales executives of fraudulently withholding money from rebates promised to certain trucking customers each month.

Called, "jacking the discount," some of the most powerful people at Pilot Flying J allegedly cheated dozens, even hundreds of customers out of millions of dollars.

When buying gas, trucking companies could get automatic discounted fuel prices at the pump, like you would with a Giant Eagle card at a Get-Go gas station.

Other customers received a monthly rebate check, sort of like a cash back credit card.

In a simple analogy, let's say for every gallon of gas purchased, you should have saved 10 cents.

Instead, a sales rep calculated your rebate by hand, sending you only 5 cents back. The other 5 cents pooled back into Pilot's profits.

Do it over and over again with lots of customers, and those nickels added up, bumping up the company's return on investment and the commissions these sales reps took home as pay.

Only unlike your credit card, the rebate or discount varies from truck stop to truck stop and also varies with the price of diesel, and with the amount of fuel you buy.

For companies, it can be hard to keep track of just what rebate they'd been promised. And often times, either trusting, or just happy to see any money back, companies didn't pay attention.

Some did though, according to the affidavit.

Trucking companies who calculated their own discounts as well noticed when they were being shorted, sometimes tens or hundreds of thousands of dollars each month.

When caught red handed, Karen Crutchman, a senior account rep in Knoxville, is quoted in the FBI affidavit as saying: "I've told them, like, sorry, it was a computer glitch. I'll fix it."

Trucking companies, like Edis, now suing Pilot Flying J and its top executives, accuse them of racketeering or violating the RICO act, profiting off this illegal enterprise.

What's to stop this from happening again? Jimmy Haslam outlined those steps April 22 in a statement.

First, in four to eight weeks time, all of Pilot Flying J's 3,300 contracts would be examined and miscalculations addressed.

Second, all diesel fuel customers will be converted to electronic calculation and payment, so sales reps don't have the ability to input their own discounts. 

That should be finished by June 30, said Haslam, which is months, maybe years before any criminal case or civil lawsuits could be settled.

WKYC-TV

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