June 18th , 2013 15:12 pm Leave a comment

Third employee pleads guilty in probe of Pilot Flying J

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NASHVILLE — A third employee of the truck stop chain owned in part by Tennessee’s governor and the owner of the Cleveland Browns pleaded guilty Tuesday in what authorities call a scheme to cheat trucking firms out of rebates.

Regional sales manager Kevin Clark pleaded guilty to mail fraud in federal court in Knoxville. Court records state he “knowingly and voluntarily joined and participated in the conspiracy” with others at Pilot Flying J, the country’s largest diesel retailer, to short-change trucking companies between 2009 and this spring.

As part of the plea agreement, Clark acknowledged participating in a scheme to defraud customers of the cash rebates they had negotiated in order to increase Pilot profits and boost sales commissions.

Federal agents raided the privately held company’s Knoxville headquarters in April. Pilot is run by Browns owner Jimmy Haslam, the brother of Gov. Bill Haslam. Jimmy Haslam has denied any personal wrongdoing.

The governor maintains he is not involved with operating Pilot Flying J, though he continues to hold an undisclosed ownership stake in the company posting annual revenues of $31 billion.

Clark has agreed to cooperate with the investigation and testify on behalf of the prosecution.

As part of the plea agreement, prosecutors said they will only hold Clark responsible for rebate reductions he personally approved, rather than all of the alleged fraud committed as part of the conspiracy.

Clark’s attorney did not immediately return messages seeking comment. A Pilot spokeswoman had no immediate comment.

Secret recordings made as part of the investigation show that members of the Pilot sales team derided some clients as unsophisticated, lazy and undeserving of rebates they had negotiated when signing a deal to buy fuel from Pilot. An FBI affidavit indicates millions of dollars were unfairly withheld.

According to the transcript of a Nov. 28 conversation, Clark recounted how managers of Omaha, Neb.-based Morehouse Trucking had failed to keep track of how much money was due in rebates.

“The dumb (expletive) never checked, I guess,” Clark said. “I felt like sayin’, ‘Well you’re the moron that didn’t check it!’”

Jimmy Haslam in one of his first public appearances following the April raid told reporters that he had called Clark to obtain a phone number for Morehouse and made arrangements to reimburse any rebates the company had failed to pay.

Manager Curt Morehouse said in a phone interview Tuesday that he had always had a good impression of Clark before the details of the rebate allegations began to surface.

“Everything about him was positive, until I read the affidavits,” Morehouse said. “At that point my opinion of him changed.”

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