Customers say fraud at Haslam-owned chain went deeper
May 14, 2015, 6:24 AM
NASHVILLE, Tenn. (AP) — After a 2013 FBI raid on the truck-stop chain owned by Cleveland Browns owner Jimmy Haslam and Tennessee Gov. Bill Haslam, Pilot Flying J moved quickly to settle fraud claims. But a handful of companies that refused to settle say they have uncovered a deception that other firms overlooked.
The trucking companies agreed to buy fuel exclusively from Pilot Flying J in exchange for special rates, according to court documents. Those rates varied from company to company but often were based on the fuel cost plus a few cents per gallon. Pilot has admitted that in many cases it failed to provide the promised rate — for example, tacking on an additional 3 cents per gallon rather than a promised 2 cents.
But trucking firms suing in federal court say they also were deceived about the initial cost those rebates were based on.
In documents filed Monday, the firms say they believed Pilot’s “cost-plus” offers were based on Pilot’s actual fuel costs. In reality, they were based on an industry average plus various fees and taxes.
“Pilot, as the largest retail supplier of diesel fuel, does not pay an average price,” the lawsuit claims.
Pilot attorney Aubrey Harwell said the Oil Price Information Services contract average used by Pilot is simply the industry standard.
“For many years, Pilot has been totally transparent about the basis for cost. They have not taken advantage of any customers, notwithstanding the allegations by a select few to the contrary,” Harwell said.
After the rebate fraud was exposed, the company quickly settled claims with about 5,500 trucking firms, agreeing in a class-action lawsuit to pay $85 million in money owed and interest in November 2013.
Several companies opted out of the class action and filed their own lawsuits in federal court. At least one outstanding lawsuit raises similar claims against Pilot in state court in Illinois.
Since the raid, 10 former Pilot employees have pleaded guilty to fraud. CEO Jimmy Haslam has not been charged and has said he was unaware of the scheme. Gov. Bill Haslam has said he is not involved in Pilot’s day-to-day operations.
Last July, Pilot agreed to pay a $92 million penalty, and federal attorneys agreed not prosecute the company. Pilot had $31.4 billion in revenue last year.
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