PILOT Flying J Fuel Centers Defrauded Customers

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Author Topic:   PILOT Flying J Fuel Centers Defrauded Customers

jimh posted 07-29-2013 08:29 PM ET (US)
As I have done a lot of towing of my trailer boat on many highways, I have, on occasion, bought gasoline from the FLYING J fuel centers found on many of our interstate highways. Having been a customer of FLYING J, I was interested to hear that FLYING J had been systematically and illegally defrauding its customers, that the federal government of the USA has been investigating FLYING J, and that a number of FLYING J current or former employees have pled guilty to federal criminal charges in negotiated plea-bargins. The investigation of FLYING J appears to be continuing. The federal prosecutors were tipped off to the fraud by low-level management employees. The investigation appears to be slowing working its way up the chain of management at FLYING J.
FLYING J is the brand name of fuel centers operated by the PILOT company of Knoxville, Tennessee. (Incidentally, Knoxville is a major corporate center for Brunswick; it is the home of the Brunswick Boat Division, principally Sea-Ray boats.) The PILOT company was founded by Jim Haslam. [His son, Jim Haslam, Jr.,] is the present CEO of PILOT. Statemets of some of the employees of PILOT that have already made plea-bargain with federal prosecutors and pled guilty to fraud allege that Jim Haslam was aware of the fraudulent billing practices.
To make matters more interesting, [another] son of [founder] Jim Haslam, Bill Haslam, is the current Governor of Tennessee, as well as the former Mayor of Knoxville, and also the former President of PILOT.
A local newspaper in Knoxville is a good source of information on the progress of the federal investigation. See
http://www.knoxnews.com/news/2013/jun/18/ pilot-guilty-plea-former-regional-sales-manager/
The above article contains links to many documents in the case. I found reading an affidavit in support of a search warrant to be quite interesting:
http://www.documentcloud.org/documents/687037-affadavit.html
The above affidavit sets out several instances of billing fraud as it presents probable cause of a crime so that a search warrant could be obtained to gather further evidence. The scale of the fraud is described as involving amounts of a million dollars or more per year. The fraudulent billing increased profits for PILOT and also for the sales managers performing the fraud, as their commissions increased proportionally.
In the past it has been often mentioned that one ought to consider the ethics or morality of doing business with certain companies. I mention this situation with FLYING J in case any one might have an ethical or moral problem doing business with them in light of the revelation of the criminal fraud in their business practices.
Also, I have admiration for the woman who appears to be one of the initial whistle-blowers of this large criminal fraud. She is mentioned in the documents I cited above, along with two other cooperating employees whose identity is still confidential.

Binkster posted 07-29-2013 09:43 PM ET (US)
What? Just some "Good 'ol boys" livin large!!
rich
Jefecinco posted 07-31-2013 10:09 AM ET (US)
Greedy pond scum.
wezie posted 07-31-2013 10:23 AM ET (US)
Be interesting how far this goes up.
When large amounts of money begin to flow around, this situation is often the case, much like our national government.
jimh posted 07-31-2013 04:23 PM ET (US)
A more comprehensive article on PILOT and the federal investigation of their fraudulent billing is provided by the Wall Street Journal, and is available on-line at
http://online.wsj.com/article/ SB10001424127887323300004578555561961503452.html
Marsh posted 08-02-2013 10:21 PM ET (US)
Just a bit of clarification for those who have not read the article:
Pilot/flying J was started by Jim Haslam, Sr., who has turned over things to Jim Jr., who also happens to own the Cleveland Browns of the NFL, and as stated earlier, is the older brother of the current governor of our fair state, Bill Haslam. All three appear to be major shareholders of Pilot/Flying J.
It will indeed be interesting to see how this all plays out, considering the close ties to Tennessee government, the NFL, the University of Tennessee athletics (Jim, Sr. Is a major supporter).
With as many as nine individuals now pleading guilty and/or turning state's evidence, it is hard to envision a picture in which the entire Haslam clan was unaware of this scam. But perhaps all three were indeed totally in the dark.
As a former CPA, it surprises me that these shenanigans were never caught during annual audits.
jimh posted 08-03-2013 08:11 AM ET (US)
Thanks for the clarification on Jim Haslam Sr. and Jr. I emended the initial article to make that clearer.
jimh posted 08-06-2013 10:53 PM ET (US)
It is also important to note that the fuel centers operating under the name FLYING J were originally started, owned, and operated by another company, FJ MANAGEMENT INC., also known as FLYING J INC. This company was a private corporation run from headquarters in Ogden, Utah and founded by O. Jay Call.
That operation ran into financial problems in 2009 and their fuel centers were sold to PILOT, the company that is under federal investigation for fraud. The sale included an agreement to continue operation of the fuel centers under the FLYING J name, but with the new name of PILOT FLYING J.
There is no indication, at least that I can tell, that the federal investigation of fraud in the billing practices of PILOT FLYING J fuel centers is concerned with the operation of them prior to the acquisition of the fuel centers by PILOT. That is, when FLYING J fuel centers were being operated by FJ MANAGEMENT INC., their business practices are not part of the current investigation into PILOT FLYING J.

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Author	Topic: PILOT Flying J Fuel Centers Defrauded Customers
jimh	posted 07-29-2013 08:29 PM ET (US) As I have done a lot of towing of my trailer boat on many highways, I have, on occasion, bought gasoline from the FLYING J fuel centers found on many of our interstate highways. Having been a customer of FLYING J, I was interested to hear that FLYING J had been systematically and illegally defrauding its customers, that the federal government of the USA has been investigating FLYING J, and that a number of FLYING J current or former employees have pled guilty to federal criminal charges in negotiated plea-bargins. The investigation of FLYING J appears to be continuing. The federal prosecutors were tipped off to the fraud by low-level management employees. The investigation appears to be slowing working its way up the chain of management at FLYING J. FLYING J is the brand name of fuel centers operated by the PILOT company of Knoxville, Tennessee. (Incidentally, Knoxville is a major corporate center for Brunswick; it is the home of the Brunswick Boat Division, principally Sea-Ray boats.) The PILOT company was founded by Jim Haslam. [His son, Jim Haslam, Jr.,] is the present CEO of PILOT. Statemets of some of the employees of PILOT that have already made plea-bargain with federal prosecutors and pled guilty to fraud allege that Jim Haslam was aware of the fraudulent billing practices. To make matters more interesting, [another] son of [founder] Jim Haslam, Bill Haslam, is the current Governor of Tennessee, as well as the former Mayor of Knoxville, and also the former President of PILOT. A local newspaper in Knoxville is a good source of information on the progress of the federal investigation. See http://www.knoxnews.com/news/2013/jun/18/ pilot-guilty-plea-former-regional-sales-manager/ The above article contains links to many documents in the case. I found reading an affidavit in support of a search warrant to be quite interesting: http://www.documentcloud.org/documents/687037-affadavit.html The above affidavit sets out several instances of billing fraud as it presents probable cause of a crime so that a search warrant could be obtained to gather further evidence. The scale of the fraud is described as involving amounts of a million dollars or more per year. The fraudulent billing increased profits for PILOT and also for the sales managers performing the fraud, as their commissions increased proportionally. In the past it has been often mentioned that one ought to consider the ethics or morality of doing business with certain companies. I mention this situation with FLYING J in case any one might have an ethical or moral problem doing business with them in light of the revelation of the criminal fraud in their business practices. Also, I have admiration for the woman who appears to be one of the initial whistle-blowers of this large criminal fraud. She is mentioned in the documents I cited above, along with two other cooperating employees whose identity is still confidential.
Binkster	posted 07-29-2013 09:43 PM ET (US) What? Just some "Good 'ol boys" livin large!! rich
Jefecinco	posted 07-31-2013 10:09 AM ET (US) Greedy pond scum.
wezie	posted 07-31-2013 10:23 AM ET (US) Be interesting how far this goes up. When large amounts of money begin to flow around, this situation is often the case, much like our national government.
jimh	posted 07-31-2013 04:23 PM ET (US) A more comprehensive article on PILOT and the federal investigation of their fraudulent billing is provided by the Wall Street Journal, and is available on-line at http://online.wsj.com/article/ SB10001424127887323300004578555561961503452.html
Marsh	posted 08-02-2013 10:21 PM ET (US) Just a bit of clarification for those who have not read the article: Pilot/flying J was started by Jim Haslam, Sr., who has turned over things to Jim Jr., who also happens to own the Cleveland Browns of the NFL, and as stated earlier, is the older brother of the current governor of our fair state, Bill Haslam. All three appear to be major shareholders of Pilot/Flying J. It will indeed be interesting to see how this all plays out, considering the close ties to Tennessee government, the NFL, the University of Tennessee athletics (Jim, Sr. Is a major supporter). With as many as nine individuals now pleading guilty and/or turning state's evidence, it is hard to envision a picture in which the entire Haslam clan was unaware of this scam. But perhaps all three were indeed totally in the dark. As a former CPA, it surprises me that these shenanigans were never caught during annual audits.
jimh	posted 08-03-2013 08:11 AM ET (US) Thanks for the clarification on Jim Haslam Sr. and Jr. I emended the initial article to make that clearer.
jimh	posted 08-06-2013 10:53 PM ET (US) It is also important to note that the fuel centers operating under the name FLYING J were originally started, owned, and operated by another company, FJ MANAGEMENT INC., also known as FLYING J INC. This company was a private corporation run from headquarters in Ogden, Utah and founded by O. Jay Call. That operation ran into financial problems in 2009 and their fuel centers were sold to PILOT, the company that is under federal investigation for fraud. The sale included an agreement to continue operation of the fuel centers under the FLYING J name, but with the new name of PILOT FLYING J. There is no indication, at least that I can tell, that the federal investigation of fraud in the billing practices of PILOT FLYING J fuel centers is concerned with the operation of them prior to the acquisition of the fuel centers by PILOT. That is, when FLYING J fuel centers were being operated by FJ MANAGEMENT INC., their business practices are not part of the current investigation into PILOT FLYING J.