Pilot Flying J To Pay $92 Million Penalty
KNOXVILLE, TN—Truckstop chain Pilot Flying J has reached an agreement with the FBI to pay a $92-million penalty over the next two years instead of facing criminal prosecution.
The deal does not stop customers from filing civil suits against the company, but rather keep prosecutors from filing criminal charges against the company and maybe even its top employees.
Pilot Flying J admits that individuals in the company are guilty of a fuel rebate fraud, but as a whole, the company claims that neither it or its CEO were involved.
As part of the settlement, Pilot agreed to fully cooperate with the FBI and help track down the employees responsible for the criminal offenses.
The U.S. Attorney’s Office claims the fraud was “prevalent within (Pilot’s) direct sales group and carried out with the knowledge and participation of employees responsible for the operation and oversight of direct sales. Pilot has accepted legal responsibility for the criminal conduct of its employees, which caused more than $56 million in loss to its customers, and agreed to pay full restitution to every victim of the fraud.”
The joint FBI and IRS investigation into the fraud resulted in last April’s raid of Pilot’s Knoxville headquarters and other offices. Since the raids, 10 Pilot Flying J employees—including supervisors—agreed to cooperate with the investigation and pleaded guilty to mail and wire fraud charges for their parts in the diesel fuel rebate scandal. So far, none have been sentenced.
Pilot Flying J CEO Jimmy Haslam commented: “We, as a company, look forward to putting this whole unfortunate episode behind us, continuing our efforts to rectify the damage done, regaining our customers’ trust, and getting on with our business.”
Pilot Flying J also confirmed that some supervisors pressured employees to participate in the fraud.
While the company did reach a judge-approved, $85 million class-action settlement last October, half a dozen cases remain open against the company by carriers and customers that opted out of that settlement.
In the wake of the scandal, several Pilot employees have either left on their own or been fired. Among the deposed employees are John Freeman, vice president of national sales, and Mark Hazelwood, company president. Several others have been put on administrative leave as the company sorts through the scandal fallout.