'We kind of slid into it,' former Pilot Flying J supervisor says of fraud scheme

CHATTANOOGA, Tenn. – Tim Prins was already uneasy about ripping off trucking firms, but the former Pilot Flying J salesman was downright worried about stealing from a company he suspected was owned by the mob, testimony Thursday showed.

► More: Testimony: Pilot execs tell sales staff their customers deserve rip-off

“You’re my boss, and I’ll do what you tell me to do,” Prins wrote in an email. "I want to make it clear I do not agree with the adjustments we are making to many of the (diesel fuel) rebates.

“… Specifically, I am not comfortable with the adjustments to Dynamic (Express trucking company),” he continued. “I get nervous playing around with anything that will go to the Gambino family. Who knows if the rumors are true, but why gamble with them over $8,000.”

‘I’m not looking for your approval’

But Arnie Ralenkotter, who was then director of sales for trucking firms in Pilot Flying J’s northeast region, told Prins he could either get on board with the fraud scheme being carried out at the nation’s largest diesel fuel retailer or find himself another job.

“I’m not looking for your approval,” Ralenkotter responded. “Frankly, you are looking for mine … As it stands right now, I intend to stay with the $8,000 reduction.”

Ralenkotter threatened to pull the Dynamic Express account from Prins.

“OK,” Prins responded. “I’ll take care of the adjustments.”

It wasn’t clear from testimony Thursday in U.S. District Court in Chattanooga when and why Prins left Pilot Flying J. But an organizational chart shown by defense attorney Jonathan Cooper of Ralenkotter’s subordinates showed Prins listed as a salesman in 2008 — when federal prosecutors say a scheme to rip off truckers by shorting them on promised discounts on diesel fuel was launched — but was no longer on the list by 2010.

There also was no proof presented Thursday about whether the “rumors” of mob ownership of Dynamic Express, a New Jersey trucking firm, were true.

Prins is not charged in the conspiracy to commit wire and mail fraud case filed against, so far, 18 Pilot Flying J employees. Of those employees, 14 including Ralenkotter have pleaded guilty. Standing trial beginning earlier this week are the remaining four: former Pilot Flying J president Mark Hazelwood, former vice president of sales Scott Wombold and former regional account representatives Heather Jones and Karen Mann.

‘It was wrong’

Ralenkotter spent all of Thursday on the witness stand testifying against the quartet. Each of the four are charged with conspiracy to defraud trucking firms they considered too unsophisticated to figure out they were being cheated with rebate payments far less than promised them by the Knoxville-based truck stop giant.

Ralenkotter, 56, was among the first to cooperate with the FBI and IRS Criminal Investigation Division after those agencies raided Pilot Flying J’s Lonas Drive headquarters on Tax Day 2013. He told jurors he “rationalized” the fraud as “managing my business.”

“It was wrong, but I didn’t think it was illegal,” he said under cross-examination from attorney Rusty Hardin, who represents Hazelwood.

Behind closed doors

Hardin on Wednesday had elicited testimony from another former Pilot Flying J staffer who has since confessed guilt that Hazelwood was, in her view, an “industrious workaholic.” It was part of Hardin’s ongoing effort to convince jurors Hazelwood was a hard-working executive with so many irons in the fire he didn’t know his subordinates were running a multi-million dollar fraud scheme.

Prosecutor Trey Hamilton, in turn, sought Thursday to elicit from Ralenkotter testimony of a darker nature about Hazelwood’s character. Hardin asked for a hearing out of the view of both the jury and the public. U.S. District Judge Curtis Collier agreed and called Ralenkotter and attorneys on both sides into his chambers.

A court reporter transcribed the hearing in chambers, but Collier later ruled that neither the jury nor the public would be allowed to hear or read in a transcript just what Ralenkotter revealed about Hazelwood.

Although the judge acknowledged the U.S. Supreme Court has repeatedly said “there is a very strong presumption of openness of court hearings and court records,” Collier said a public airing of whatever was said would be so “prejudicial” as to deny Hazelwood a fair trial.

‘We kind of slid into it’

Ralenkotter began his career at Pilot in 1997. By 2008, he was a sales supervisor. It was then, he said, that the fraud scheme began in earnest. At the time, Flying J was a competitor, and it offered discounts to truckers. Ralenkotter said Pilot executives decided to borrow the idea and quickly realized the “spread” in fuel rates fluctuated so much and so often, it “created an opportunity for us to keep some of that spread.”

“We kind of slid into it,” he said of the fraud scheme.

Jimmy Haslam, chief executive officer of Pilot Flying J and owner of the Cleveland Browns, has denied any knowledge of the fraud scheme and has not been charged.

Hazelwood’s defense team has repeatedly reminded jurors that it was Haslam, not Hazelwood, who controlled Pilot Flying J and its employees. Hardin on Thursday asked Ralenkotter about Haslam’s relationship to former vice president John “Stick” Freeman, who has confessed his role as one of the leaders in crafting the fraud scheme.

“I think the relationship between one of the conspirators and Jimmy Haslam will be highly relevant,” Hardin said in front of jurors when Hamilton tried to block his query as irrelevant to Hazelwood’s guilt or innocence. Collier sided with Hardin.

“Mr. Freeman was particularly close to Jimmy Haslam, wasn’t he?” Hardin asked.

Ralenkotter responded, “It appeared that way.”

“There was some jealousy about that?” Hardin continued.

Ralenkotter answered, “Seemed so.”

“John Freeman made it clear he wanted to be that man (president) below Mr. Haslam,” Hardin said.

Ralenkotter agreed.

The trial continues Monday.

© 2017 USATODAY.COM


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