On Thursday, sealed affidavits for Pilot Flying J were released.  The 120-page affidavit shows that a “rebate fraud scheme” may have involved the company’s top officials.

According to the affidavit, in May of 2011, a former Pilot Flying J employee contacted the FBI with claims that the company was engaging in a scheme to “withhold diesel fuel price rebates from Pilot customers…without the knowledge or approval of the customer….increasing the profitability of Pilot and increasing the diesel sales commissions of the Pilot employees.”

More than 35 Pilot employees are named in the affidavit that states the scheme has been ongoing for five years, but one instance may date back 8 years.

On October 4, 2012, a current Regional Director of Sales was contacted by the FBI regarding the case.  The employee agreed to cooperate with the FBI and to wear a wire to tape conversations with Pilot employees regarding the scheme.

The affidavit includes many recorded conversations between a current Pilot employee who was was working with the FBI to help expose the scheme.  Many of the conversations are with high-ranking sales officials within the company and detail how the schemes were carried out and what a sales person should do if he or she is caught shorting the companies.  The employees were told to blame the issue on a computer glitch.

John Freeman,current vice president of sales, and Brian Moser, current director of national sales, could be heard on tape discussing fraudulently withholding a portion of the rebate amounts due to their customers.

During one taping, Freeman could allegedly be heard talking about being caught by a carrier saying, “…So coming here for 12 moths and helping manage my business and getting my operating ratios and stuff in line, blah, blah, blah, blah.  And I guess it was Dave Jackson that discovered that during a 3– I mean, every month leading up to that and ever month after that 3-month strip, we were pretty close to where Knight was when they got their deal managed through the system.  Anyway, that three months I basically cost them $1 million.”

In June 2012, Morehouse Truckline discovered that it had been shorted out of $146,000 in rebates over the course of seven years.

On December 17, 2012, Scott Fenwick, regional sales manager, told the FBI informant that he was engaging in rebate fraud that was costing customers $70,000 to $90,000 in lost rebates each month.

The employees mentioned several carriers: Knight Transport, Raider Trucking, Western Express, Schneider, Nastic, Morris, Big Iron, Transway, Texas Freight, The U.S. Postal Service, Bee Trucking, Casson Transport, Honey Transport, Mesilla Valley Trucking and Schrock Trucking

Rebate fraud resulted in higher profits for the company and higher commission for the salesmen.

On Thursday, Haslam said, “I’ve read the affidavits. I now understand more clearly the questions the federal investigators are exploring.

“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.”

Read the 120-page affidavit here.  

*All suspects are innocent until proven guilty in a court of law.