KNOXVILLE -- Federal officials have unsealed the search warrants and affidavits used in Monday's raid on Pilot Flying J headquarters in West Knoxville and filed them in court.
The documents, a 120-page report and a 55-page affidavit, were the items filed. In the affidavit for the search warrant, Robert H. Root, a special agent with the FBI, said the investigation started on May 4, 2011.
It isalleged that a rebate fraud scheme at Pilot Flying J occurred with the knowledge of top executives, including CEO Jimmy Haslam.
Federal agents raided the company headquarters on Monday.
Theaffidavit says a Pilot Flying J employee told authorities that Cleveland Browns owner Jimmy Haslam knew about rebate fraud at the truck stop chain his family owns.
It identifies the employee only as a confidential source. Haslam issued a statement saying the foundation of the company is integrity and pledged to cooperate with the investigation.
The company headquarters was raided Monday by FBI and IRS agents. Pilot Flying J is a private company mostly owned by Haslam, his brother Tennessee Gov. Bill Haslam and other family members.
It is the nation's No. 1 retailer of diesel fuel, and its customer rebate program with trucking firms is at the center of the investigation.
In response to the court filings, Pilot Flying J CEO/Cleveland Browns owner Jimmy Haslam released the following statement Thursday evening:
"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."
Reporter Bobby Allyn with Gannett's The Tennessean, also filed the following story in Knoxville:
Pilot Flying J CEO Jimmy Haslam was in sales meetings where a rebate fraud scheme was discussed, according to a federal search warrant affidavit, which was made public on Thursday.
The affidavit outlines the investigation by the FBI and was filed to obtain the search warrants that allowed the raid on Monday at the Knoxville company.
The affidavit stated that the FBI's investigation was into a potential "conspiracy and scheme to defraud...to deceptively withhold diesel fuel price rebates and discounts from Pilot customers ... without the knowledge or approval of the customer, for the dual purposes of increasing the profitability of Pilot and increasing the diesel sales commissions of the Pilot employees..."
The employees, according to federal officials, were deliberately charging some customers a higher price than what was contractually agreed upon.The FBI said in its affidavit that one of its confidential sources within the company said the rebate, or discount, fraud was discussed in sales meetings where Haslam and company President Mark Hazelwood were present.
Cathy Giesick, a former regional sales manager for Pilot, told federal investigators that she was "encouraged to participate in this fraudulent conduct," according to the affidavit. She said she eventually left the company because the illegal behavior made her uncomfortable.The affidavit also stated at least one company had complained to Pilot that it had been shortchanged in diesel rebates.