8 Former Flying J Execs Indicted In Fuel Rebate Scamby Jana Ritter - Published: 2/10/2016
Nearly 3 years after the FBI and IRS raided the corporate headquarters of Pilot Flying J in what became a highly publicized alleged fuel rebate scandal, federal indictments were unsealed on Tuesday revealing charges against the company’s ex-president, Mark Hazelwood, and 7 other former executives. The indictment list does not include Pilot Flying J’s famous owner, Jimmy Haslam.
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What the indictments do say however, is that Hazelwood and the other executives had allegedly agreed on a fuel program to purposefully defraud small trucking companies by promising rebates as part of their fuel contracts and only rebating a portion of the promised amount. The fraud scheme continued for 5 years and the 8 people indicted are now being charged with conspiracy, fraud, witness tampering and lying to federal agents. Meanwhile 10 other employees have pleaded guilty and have been cooperating with the investigation, providing authorities with key evidence involving things that essentially became part of performing their "job." So far, the presented evidence includes an email from the company’s former sales Vice President, John Freeman, instructing others how to deal with customers and play along with the scheme. “Say one thing, do another,” he instructed.
The indictment also outlines how sales staff often promised customers a certain discount but gave them a lesser one and it provides several examples of employees and their bosses discussing how to coordinate the lies they were telling customers and to not to get caught. In one email, an employee quotes Freeman’s instructions as "we just need to sing from the same hymn book." There are also other emails where employees discussed the need to determine which customers were likely sophisticated enough to catch on to the fraud and to only prey on the less sophisticated ones.
Despite the evidence, Freeman, Hazelwood and the other 6 indicted former employees all pleaded not guilty on Tuesday. However in July 2014, Pilot Flying J had signed to an agreement with prosecutors to pay the government a $92 million penalty, accepting responsibility for the criminal actions of its employees. Then Pilot paid another $85 million to settle a class action lawsuit involving 5,500 trucking companies. Owner Jimmy Haslam has continuously denied any knowledge of the fraud or any personal involvement, as he says he is not involved with the company’s day-to-day operations.
Pilot Flying J’s new officials issued a statement saying they were "disappointed and saddened" by news of the indictments. "We can say that since this unfortunate episode began, the company has put in place policies and procedures unparalleled in the industry to prevent anything like this from happening again."