Thu
Apr 18 2013
07:19 pm

Cleveland Plain Dealer:

Cleveland Browns owner Jimmy Haslam's travel center company for "many years'' engaged in a fraud scheme to keep money owed to customers as gas rebates, according to documents filed in federal court Thursday.

The documents further say Haslam knew about the fraud committed by top sales officials at his family business, Pilot Flying J, in which employees targeted unsophisticated trucking companies through a rebate program. Federal documents unsealed today also say he was present for discussions about the rebate fraud activities.

Meanwhile, the Knoxville News Sentinel reported earlier today that Rebates give Pilot a major competitive edge...

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R. Neal's picture

I [FBI Special Agent Robert

I [FBI Special Agent Robert H. Root] have been assigned to an investigation of employees of Pilot Corporation, Pilot Travel Centers, LLC, and PilotFlying J (hereinafter "Pilot," which is again defined below) for devising and conspiring to devise a scheme to defraud by use of the mail and the transmission of wire communication in interstate commerce, in violation of 18 U.S.C. §§ 371 (conspiracy), 1341 (mail fraud), 1343 (wire fraud), and 1349 (conspiracy).

(link...)

Andy Axel's picture

Wow

Was Pilot/Flying J used to leverage the deal that put the Browns in Haslam's hands as owner?

Shades of Boots Del Biaggio. You know the NFL has to be concerned about the outcome of all of this (as I'm hopeful that the Cleveland Plain Dealer keeps the Knoxville News-Sentinel on their toes).

Factchecker's picture

Yep, just like Gibson. A

Yep, just like Gibson. A Republican administration obviously would never go after corporate criminal wrongdoing. (/half-snark)

Average Guy's picture

To the 53%,

you know, you working folks. Here's a lesson from the 1%, the ones who will let you join their 1% club, if you just reduce their taxes.

Page 49;

FREEMAN: Okay, so, again, just kind of going through this, my next comment was say what you do and do what you say,-- on the surface. Say what you do and do what you say. Meaning again, I'm the biggest manual guy, well maybe not the biggest, I've had the biggest blunder in manuals but I am a huge fan of, when you're in front of a customer and you get his fuel report and you say you're gonna do something, you fucking have to do it.
You cannot have a case where you don't do what you say in that business. And I am not talking about manual stuff. Hey, this is a game. We're playin' fuckin' poker with funny money, and its liar's poker with funny money because of all this cost-plus stuff. So, you know, I'm not, I don't want to get into a moral or ethical conversation, because I believe that if a guy's gonna butt-fuck you then we got to go to butt-fuckin' him harder than (UI).
***
FREEMAN: I know everybody says fuck, I'm doin' it, but just say what you do and do what you say.
STINNETT: Don't get too cute.
FREEMAN: Yeah, I mean, there's different levels of cute. Some people are tits and some people are ass guys and some people want their discount managed through the system and some people like a big check. I mean, fuck, sell it to 'em the way they wanna buy. And understand, the fucker's got the ability to know what the hell you're doing to 'em. Okay?
Does everybody know what I'm talking about 'bout the airplane? I know you do, everybody know, do you know what I'm talking about an airplane?
WOMBOLD: I figure it's something to do with Western
FREEMAN: Yeah. Yeah, Western Express liked-- they were not on direct-bill, they bought fuel from us, they were on a cost-plus/retail-minus deal, and I manually calculated the discount. And for life, you know, my pencil probably wasn't as sharp maybe as it could've been, but in July of '8, July of'08 when crude was $147, on July the 6th or whatever it was, was it '08 when the market dumped?
CHS-2: Urn-hum.
FREEMAN: And it went from $147 to -- CHS-2: 32.
FREEMAN: -- by the end of the month, down to about $90, and the next month down to $60. And it wasn't, you know, it dropped just dramatically. That average versus the day to day, I mean, mother fuck, it was (UI.) I mean it, whatever. So, everything was golden, really for the next year. Until Western, for whatever reason, contracted Knight Transportation to help them. They did a management contract--
CHS-2: Well Knight was gonna buy it.
FREEMAN: Yeah, that's right, that was, that was the start of an acquisition. So coming here for twelve months and helping manage my business and gettin' my operating ratios and stuff in line, blah, blah, blah. And I guess it was Dave Jackson that discovered that during a three -- I mean, every month leading up to that and every month after that three- 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 almost $1 million. I mean, I was playin' with 4-112 million gallons and there was, you know, a 13-cent spread between the average and the actual during that huge down tum. And it was like $300,000 a month. And I sent the fucker a $2 million check, but there was 3, I just kept the $300,000 part of that, and so, at the end of three months, you know, I owed 'em. I owed 'em a million bucks, wasn't it? It was some number. But anyway, I'm like, oh fuck, you know. It crushed me and it hurt his feelings, but we got past all that.
And I said, alright, I'm gonna get you a check. And he said, "Nah, I've got this airplane over here on the books for $7 million, I owe $1 million bucks on it, why don't you just buy this airplane?" And I'm like, "What....." So I bought the fuckin' airplane.
MALE: He couldn't fly to Knoxville, he --
FREEMAN: It was so broke; it was so broke the mother-fucker wasn't air-worthy, so we had to sell it in Nashville. So when I make my manual comments about havin' to buy an airplane that was me, so....
CHS-2: That's funny.
FREEMAN: Yeah.
RALENKOTTER: But you do have to kinda almost, though, sometimes you have to be careful. Becauseifyousettheexpectation,ifyouhaveablowout,mostof'emdon't know where the numbers come from --
FREEMAN: That's right.
RALENKOTTER: If the guy's been getting $100,000, $100,000, $100,000, now you send him $180,000, and then the next month you send him 75.
FREEMAN: He thinks you're fuckin' 'em.
RALENKOTTER: He thinks you're fuckin' em. So you might as well be fuckin 'em.
FREEMAN: See. Fuck 'em early and fuck 'em often..

(link...)

And here I thought the behavior of Pi Kappa Alpha was just the youthful indiscretion of boys being boys. Turns out, what's learned in the Frat house provides better corporate insight than the classroom.

Factchecker's picture

Sorry, I can't help it. (giggle, giggle)

OK, I've downloaded it and looked through names. These people must be Obama-ites who framed the company to send Lt. Gov. Bill a political message. Just like they did with Gibson.

Andy Axel's picture

Although I worry somewhat

Although I worry somewhat about the integrity of the Eastern District Court, I'm less worried than I would be if this was something that the Shurf's office had anything to do with. These federales, Jimmy... they don't play. NLT a 90% conviction rate for nigh on 100 years.

If they're offering a plea? Plead. Out.

Just ask Bernie Ebbers how a first federal conviction for fraud is working out for him in Yazoo.

FCI YAZOO CITY MEDIUM
ATTN: BERNARD EBBERS III
FEDERAL CORRECTIONAL INSTITUTION
P.O. BOX 5888
YAZOO CITY, MS 39194

Rachel's picture

Lot of folks hiring lawyers

Lot of folks hiring lawyers this week.

R. Neal's picture

Fuck 'em early and fuck 'em

Fuck 'em early and fuck 'em often..

Hey, sounds like our new state government motto!

metulj's picture

Lets see... Who has taken

Lets see... Who has taken haslam money?

Factchecker's picture

My thought too. Ill-gotten

My thought too. Ill-gotten gains could wield a lot of political power! Hypothetically, at least.

Andy Axel's picture

The Cleveland Browns. You

The Cleveland Browns. You have to know that Roger Goodell is reviewing that particular transaction. (How does Jimmy continue to recruit players and run a professional sports franchise if there's an open question as to whether his money is any good, or if his fortune may be subject to asset forfeiture proceedings?)

michael kaplan's picture

someone should put that on a

someone should put that on a bumper sticker ...

CE Petro's picture

After going through the 120

After going through the 120 page affidavit, if I were a trucking company that used Pilot and wasn't tracking my fuel usage/rates, I'd be hiring a CPA to do a forensic audit.

And, sadly, the cynic in me is saying that there will be no jail time coming out of this investigation.

R. Neal's picture

Seems like there was

Seems like there was speculation a while back about Pilot doing some window dressing in preparation for going public, and bringing in a new CEO may have been related to that.

Hard to imagine that the type of accounting and billing practices described in the search warrant affidavit would survive SEC scrutiny. Wonder who their auditors are?

R. Neal's picture

The affidavit reads like a

The affidavit reads like a white collar crime novel. And the FBI says it's only a sampling, just enough to get search warrants.

redmondkr's picture

"I believe in America.

"I believe in America. America has made my fortune."

Treehouse's picture

Actually

my favorite line is, "He thinks you're fuckin' em. So you might as well be fuckin 'em." If this wasn't so ugly and embarrassing for corporate America as well as Tennessee, it might be funny. But getting fucked by these people surely hurts.

Factchecker's picture

No better proof of

No better proof of performance for modern MBAs and the 1%. What a cuntry! (With new meaning to the term.)

Factchecker's picture

Seriously, this sure fits a

Seriously, this sure fits a pattern of how so much of the 1% systematically f*cks the country while lobbying to keep the rules favorable to them to do it more easily and widespread (heh). All while pushing a well-funded faux populist narrative around them being the ones are the self-reliant job creators, always being unfairly badgered by the federal government. Badgered to dial down the f*cking of everyone else, yes, why not?

Average Guy's picture

But, but, but,

But these people are for the little guy. The ones who pull themselves up by their boot straps and start their own business. The engine of America.

I’m sure there are plenty of truck company owners and truckers who just loved Romney’s little behind scenes speech about the freeloading 47%.

If after hearing that and reading this, if anyone still believes it’s the corporate elite who are looking out for their best interest, well then..,

bend over.

Elwood Aspermonte's picture

Don't think we'll see any more press conferences by Haslam

In my opinion, he got some very, very bad advice about going in front of the camera earlier this week to talk about integrity, doing the right thing, talking about a sliver of the companies they do business with. Typical pinhead small mind approach from the local spin shops which are used to mowing people over because they are speaking for Pilot, not because they have anything special or creative to say.

I thought the feds pulled the cover off the affidavit used to obtain the search warrants to pipe Haslam down and save Haslam any more public embarrassment from these chessy pressers with the local media, most of which have been bought and paid for by Pilot over the years.

In my opinion, the Haslam mystic cuts both ways in this town, their political and financial influence has brought us such duds as Victor Ashe, Don Sundquist, Lamar!, Fred Thompson, no baseball stadium downtown (only to buy it when it was successful in Sevierville), a convention center that doesn't hold conventions (which Pilot does not use) and the city cannot afford, and the biggest dud and duffuass of them all, SuperChamber Pontiff, Mike Edwards, who couldn't recruit or relocate a busines to Knoxville and Knox County unless Jimmy Haslam did it for him.

This company and their principles have done a lot of good in this community, however, in my opinion, they have done a lot of bad and continue to support unqualified/incompetent local officials because they can control them and that is worth more to them than anything else. When these guys named in the affidavit get indicted and come up for trial here in Knoxville, they are not going to garner any sympathy or other public concern, throwing money around when you stole it from your customers is still stealing, even though it makes everybody in the community feel good and bow down to your wishes and desires.

rocketsquirrel's picture

There's a lot to digest here,

There's a lot to digest here, but a couple of important points:

1. During Haslam's run for gov, he refused to release his taxes, citing that it would "put family members under intense financial scrutiny." In retrospect, this was a very bad decision.

2. In 2011, after becoming governor, Bill Haslam put his assets in a blind trust, except for his Pilot holdings. That is going to prove problematic in trying to stay an arm's length from a company he owns a portion of. An undisclosed portion. He is an owner.

3. There are a lot of recipients of Haslam money in this town, and a lot of good organizations which have relied on Haslam money for years stand to get hurt by this. A CPA friend who couldn't believe this was happening kept repeating, "but the Haslam's gave the West High football team $5000. They are good people."

Pottersville is dead.

AnonymousOne's picture

This could also be a point of

This could also be a point of debate if Haslam in the next campaign says he has "business experience."

SBL's picture

remember the enron language?

the guys who talked about screwing grannies in california?

same attitude. same tone.

cwg was live tweeting as she read the affidavit last nite. it was fascinating. i was reading it out loud at the pilot light, which seemed kinda appropriate.

cwg's picture

Here's a Storify of all the

Here's a Storify of all the tweets, in case you watch to read them.

(link...)

Factchecker's picture

Jon Stewart voice

Go ON?!!!

cwg's picture

WANT to read them, I mean.

WANT to read them, I mean. Sorry.

Rachel's picture

Enron

That's exactly what I said this morning. Same gleeful tone at how smart they are to be cheating people.

I really don't want to prejudge this entire affair, and I'm sure there will be more info coming out, but geez.

Average Guy's picture

This is the point of my

This is the point of my Romney correlations. This isn’t about energy barons; it’s about the Republican Party.

The moral is; if you’re not smart enough to keep us from taking your money, we’re entitled to it.

In all likelihood, the amount to Pilot’s overall operation probably is “insignificant”. Which means this wasn’t done because they had to do it; it was done because they could do it.

michael kaplan's picture

it’s about the Republican

it’s about the Republican Party

I'm sure one could find plenty of examples of this kind of behavior among Democrats as well.

Average Guy's picture

No doubt. The 1%’ers like

No doubt. The 1%’ers like money, and like to keep it regardless of their political stripe.

But the 1% Democrat supporters I know of (Gates, Buffett, Spielberg) tend to advocate social fairness and social safety nets in public and at $25K a plate dinners.

You’ve seen the Romney video and now have a glimpse at what our local elite think in private conversations.

There may be bipartisan overlap for the exceptions, but the “rule” seems a little different for the GOP.

Factchecker's picture

It's a lot easier to connect the dots to the GOP

I'm sure one could find plenty of examples of this kind of behavior among Democrats as well.

I'm sure that's true, but not to the same degree, frequency, or with such monolith arrogance. The greed-is-not-just-good-it's-required business attitude shown in this case has become almost fundamental to the Republican business playbook for so-called "free market" entrepreneurship. I'll bet most of the players here are NRA-loving 2nd Amendment nuts, oppose abortion (except for their cases), deny climate change, and think they are devout Christians.

Just like they love their Vols, also not a scientific correlation, but you can bank on it at least for the local HQ.

Local Citizen's picture

Price Gouging

Who was in charge of Pilot during the price gouging that they got fined for a few years ago? It appears integrity runs in the family.

Elwood Aspermonte's picture

That explains Burchette's $900, Knox County's Pilot rebate

It should have been $1,200 but they jacked the rebate or they turned the rebate calculation over to "manuel".

Seriously, I'm sure the City of Knoxville, Knox County, and the State of Tennessee have purchasing agreements in place with Pilot (I've seen all of their vehicles gassing up), might not have the most "sophisticated" auditors to look over their purchases, I'd like to see a comprehensive review such that as a tax payer for these entities, I'm not getting jacked by this crowd of chisels, muckety mucks, and high binders.

R. Neal's picture

Commenters over at the KNS

Commenters over at the KNS are defending Pilot, saying us rubes just don't understand normal business talk and jargon when we hear it.

I have been in countless high-level business meetings over the 30 something years of my career, and I have never ever once heard anyone say anything about "butt fucking" a customer.

In fact, not to defend Republican businessmen (which is most of them), but I worked for a ruthless, hard core, Bush (the first) Team 100 Republican who drove his sales people like rented mules and would do anything legal to make more money. If someone had ever said anything about "butt fucking" a customer they would have been fired on the spot.

metulj's picture

Same here.

Same here.

Average Guy's picture

I’m sure somewhere along the

I’m sure somewhere along the way, I would have considered a person I’ve dealt with in a business setting as a “mother fucker”.

However, I never thought my opinion entitled me to be able to steal from them.

Even at that, these victims weren’t “mother fuckers” because they were jerks, they viewed that way simply because they weren’t as “smart” as the perpetrators.

bizgrrl's picture

they viewed that way simply

they viewed that way simply because they weren’t as “smart” as the perpetrators

Heh. Who's smart now?

Factchecker's picture

In fact, not to defend

In fact, not to defend Republican businessmen (which is most of them), but I worked for a ruthless, hard core, Bush (the first) Team 100 Republican who drove his sales people like rented mules and would do anything legal to make more money. If someone had ever said anything about "butt fucking" a customer they would have been fired on the spot.

Me too. And I would agree there are degrees of difference between the ways we're accustomed to, the Pilot sales meeting way, and criminal wrongdoing.

Andy Axel's picture

Commenters over at the KNS

Commenters over at the KNS are defending Pilot, saying us rubes just don't understand normal business talk and jargon when we hear it.

I have been in countless high-level business meetings over the 30 something years of my career, and I have never ever once heard anyone say anything about "butt fucking" a customer.

I've heard customers insinuate it about the level of service that they're getting, but never the other way around.

AnonymousOne's picture

This will roil Knoxville's

This will roil Knoxville's social and political communities. How many times have you seen charity events with a banner showing the Pilot symbol? The zoo, the library, etc, etc. Politically it isn't as clear cut as partisan fans want to claim. Who do the Haslams support locally? And when will, or if, do the beneficiaries no longer believe the support is beneficial but rather a detriment to their further aspirations?

Andy Axel's picture

How many times have you seen

How many times have you seen charity events with a banner showing the Pilot symbol? The zoo, the library, etc, etc.

"Pilot Flying J Butt-Fuck Charitable Trust" just doesn't have a great ring to it.

AnonymousOne's picture

No it doesn't. But if you're

No it doesn't. But if you're organization depends on that money, and there's nothing to replace it...you'll take it and turn your head.

Average Guy's picture

In one sentence, you’ve not

In one sentence, you’ve not only described the Pilot situation; but also the Penn State football program, Wall Street crime, Boy Scouts, Catholic Church and partisan politics.

I love my country’s ideals and laws. Maybe one day they’ll outweigh money and status.

jbr's picture

I see tennessee and West

I see tennessee and West Virginia are the only two states that do not elect a Lt Governor.

Would Ramsey serve out the term as Gov if Haslam is out for some reason?

Ironic that someone the voting public strongly did not want as governor is in the position he is in.

AnonymousOne's picture

Ramsey or Haslam? Haslam did

Ramsey or Haslam?

Haslam did not get the majority of GOP votes. Ramsey and Wamp did.. And Ramsey probably went in there to split Wamp's votes up

Rachel's picture

I went back to the small town

I went back to the small town in middle Tennessee where I grew up this weekend for a get-together with the "girls" I went to high school with. The headline on the local (I think twice weekly) paper this morning was something like "Haslam reputation in jeopardy. " I figured they were talking about the governor, but it turned out that it was mostly about Jimmy.

Interesting.

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