NASHVILLE, Tenn. — A Pilot Flying J employee told investigators that CEO Jimmy Haslam, who is also the owner of the Cleveland Browns, knew about rebate fraud at the truck stop chain his family owns, according to an FBI affidavit unsealed Thursday.
The 120-page document filed federal court in Knoxville, where Pilot is based, 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.
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.
One employee identified only as a confidential source told investigators that the rebate scheme was discussed during sales meetings attended by Haslam and Pilot President Mark Hazelwood.
The informant said the practice was known by a variety of euphemisms ranging from "manual rebates" to "screwing."
Haslam denied wrongdoing in a news conference earlier this week. He said in a statement Thursday 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."
He said the company would continue to cooperate with authorities and conduct its own investigation.
Informants secretly recorded conversations among Pilot employees holding frank —and often profane — discussions about the rebate scheme, and agents interviewed current and former members of the sales team.
The investigation began after agents were contacted in May 2011 by a confidential informant who said they had been told about the scheme by a Pilot Flying J employee. The investigation continued through this month. Jimmy Haslam bought the Cleveland Browns in a $1 billion deal last summer.