Pilot trial update: Haslam thrown under the bus

Pilot Flying J CEO Jimmy Haslam III has repeatedly denied knowledge of the widespread fraud scheme his company perpetrated on thousands of its customers, and he is not among the four defendants charged in the current federal case in Chattanooga. But his name keeps coming up in the trial.

Brian Mosher, one of former President Mark Hazelwood’s chief lieutenants who has already pleaded guilty to wire and mail fraud, testified under oath last week that he presented the financial details of his fraud scheme to both Hazelwood and Haslam. Mosher was eager to show his bosses how much money his dishonesty was making for Pilot, and he kept Haslam and Hazelwood updated on the progress of the scheme. “Early on, I would explain the way the spreadsheet was laid out,” Mosher testified. “But later on, we would just look at the bottom line.”

John “Stick” Freeman, a former Pilot VP who also pleaded guilty, got caught up in the rebate fraud scheme early on—when Western Express, one of his victims, grew wise to the scam, they forced Pilot Flying J to buy one of their dilapidated, nearly worthless airplanes for $1M. That was way back in 2009. Federal prosecutors later surreptitiously recorded a conversation in which Freeman claimed that Haslam knew all about the fraud scheme, the Western Express fiasco, and the airplane purchased to smooth it over. “He knew, absolutely,” Freeman said of Haslam, “He loved it.”

One of the defense attorneys representing defendant Karen Mann, a Regional Account Representative, introduced email evidence that he said pointed to Haslam’s knowledge of the fraud conspiracy. Mann’s lawyer, Jonathan Cooper of Knoxville’s Whitt, Cooper, Trant & Hedrick, was trying to show that Mann was simply following orders from the top when she cut the rebates given to Pilot’s customers. The emails were sent from Arnie Ralenkotter, a regional sales director who has pleaded guilty, to Jimmy Haslam. Ralenkotter was passing along sales representative Tim Prins’ assessment of a problematic customer, Smith Transport, whose owner had stated that he had no intention of being loyal to one truckstop chain and wanted to collect discounts from Pilot and its competitors. 

“Jimmy, Tim does a nice job of explaining the situation at Smith,” Ralenkotter wrote. “This is fairly typical of our interaction with this fuel buyer. Good news is he is close to retirement.” Haslam responded, “Thanks for the update on Smith – disappointing.” The next email that Ralenkotter sent was to that same sales representative, Tim Prins, directing him to cut the rebate Prins had just negotiated with Smith Transport by four cents a gallon. Smith Transport only learned that their rebates had been changed three months later. 

Pilot, which is controlled by the Haslam family, issued another statement reiterating that “Jimmy Haslam was not aware of any wrongdoing.”

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