We have been following this case since news of the investigation broke earlier this year. Count on us for ongoing coverage of case as it unfolds.
Sudden guilty pleas by a pair of mid-level executives show the investigation into the truck stop chain controlled by the family of Tennessee’s governor and the Cleveland Browns’ owner is picking up steam, with prosecutors likely setting their sights on higher-ups at the company, experts say.
The guilty pleas entered Wednesday were the first stemming from a two-year investigation of a rebate program at Pilot Flying J, the company controlled by the family of Gov. Bill Haslam and Browns owner Jimmy Haslam. The charges were filed weeks after a raid of the company’s Knoxville headquarters and other locations. The fruits of that raid, along with secret recordings and at least three key cooperating witnesses, point to more charges to come.
“The government is not going to offer what appears to be attractive plea bargains to people unless they fully intend to prosecute perhaps the company or perhaps higher-ups in the company,” said Nashville attorney David Raybin, who is not involved in the case. “These two people are not their ultimate targets. The targets are the company and the higher-ups at the company.”
Court documents don’t make clear exactly which executives — or how high-ranking they were — may have known about the alleged fraud. But the two who pleaded guilty appear to be key players in terms of knowledge and information and could prove valuable witnesses, Raybin said.
Court documents say sales employees were trained on how to defraud trucking companies of discounts and rebates owed to them by being loyal customers of Pilot Flying J.
Court papers outlining the plea deals say regional sales director Arnold Ralenkotter and regional accounts representative Ashley Smith Judd — the employees who pleaded guilty — were part of the conspiracy to boost profits and pad commissions.
Pilot Flying J, the country’s largest diesel retailer with annual revenues of $31 billion, was founded by the Haslams’ father. Forbes listed the truck stop chain as the 6th largest privately owned company in America.
Jimmy Haslam has denied any wrongdoing and has suspended several members of the sales team. An affidavit unsealed last month shows that a Pilot employee was secretly recorded saying Jimmy Haslam knew what sales people were doing.
The company has launched its own internal investigation, and Jimmy Haslam has said that the review suggested about 5 percent of the company's customers received less rebate money because of manual adjustments by Pilot employees.
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