KNOXVILLE, Tenn. -- A federal grand jury is now investigating allegations of fuel rebate fraud involving Pilot Flying J Inc. WEWS-TV has learned that the grand jury has been hearing testimony from witnesses connected to the alleged fraud that first surfaced publicly following the April 15 raid at the company's headquarters. And a top executive at Pilot Flying J who has been linked to the scandal has been replaced. In a letter to customers, Pilot CEO Jimmy Haslam said the company has named a new vice president of sales, reported The Knoxville News Sentinel.
The Knoxville, Tenn.-based truckstop company has been the subject of intense scrutiny since April 15, when agents of the FBI and the IRS raided its headquarters, and seized documents, emails and computer files. Authorities have accused Pilot Flying J sales staff of a scheme to defraud trucking-company customers that buy diesel fuel at its more than 650 truckstops by shorting rebate money it owed them.
A spokesperson for the U.S. Attorney's Office for the Eastern District of Tennessee that is overseeing the case told WEWS that "the United States Attorney's Office never confirms or denies any activity regarding a grand jury, so we have no comment at this time."
A spokesperson for Pilot Flying J declined to comment on the grand jury investigation, the report.
Separately, Haslam's letter said David Hughes has been named the new vice president of sales. Hughes joined Pilot last year and previously worked for Covenant Transportation Group, Chattanooga, Tenn.
The letter also said that Scott Nelson, formerly the president and CEO of Premier Trailer Leasing Solutions, Grapevine, Texas, has been hired as a vice president, and that Dave Rewers will be in charge of the inside sales department. The letter said Rewers until recently was group vice president for fleet sales at Fleet One LLC, Nashville. The letter said Steve Vanderink has moved from his role as a division director of operations to Northeast/Midwest director of sales.
The letter was dated July 12, said the News Sentinel, and it and outlines new details about the company's response to an ongoing federal investigation that has already netted guilty pleas from five employees.
Haslam's letter said six members of the company's sales team have resigned or were terminated, while three more are on administrative leave.
The letter didn't name those employees, but Pilot's former vice president of sales, John Freeman, was featured prominently in a government affidavit made public in April after agents from the FBI and Internal Revenue Service raided the company's West Knoxville headquarters and other sites.
Transcripts filed with the affidavit showed Freeman discussing the alleged scheme, often in profane language, including a situation in which Nashville trucking company Western Express learned it had not been getting the full rebate it was due from Pilot.
According to the transcripts, which were secretly recorded by a "confidential human source," Freeman described how he offered to cut the company a check, but a Western official instead suggested that Pilot buy an airplane from him.
An attorney for Freeman could not immediately be reached for comment, said the report.
The letter said Pilot's audit team completed an initial manual diesel rebate review on June 30, and that the company has sent letters to all of its manual diesel rebate customers.
"Those accounts who had a discrepancy in the customer's favor received checks for the amounts of the discrepancies, plus interest," the letter said, adding that "numerous" accounts had a zero balance and some accounts owed money to Pilot.
Pilot Flying J did not reply to a CSP Daily News request for comment by press time.
Pilot Flying J is the largest operator of travel centers and travel plazas in North America. Its network provides customers with access to more than 60,000 parking spaces for trucks, more than 4,400 showers and more than 4,000 diesel lanes. Pilot Logistics Services is one of the largest independent energy logistics companies in North America, selling and distributing more than 1.3 billion gallons of refined petroleum products and serving more than 15,000 customers. Together, Pilot Flying J and Pilot Logistics Services generate sales of approximately nine billion gallons of petroleum annually.
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