KNOXVILLE - The Pilot Flying J employees who entered guilty pleas Wednesday aren't at the top of the company's corporate ladder.
Pilot's upper-level executives shouldn't necessarily rest easy, though.
Criminal defense experts said Wednesday that the pleas from Northeast regional sales director Arnold "Arnie" Ralenkotter and account representative Ashley Judd indicate that the government is eyeing bigger targets.
"I would suspect (prosecutors are) targeting the company and the highest executives of the firm," said David Raybin, a white-collar defense attorney based in Nashville. "That's what I infer from this."
The guilty pleas entered on Wednesday are the first clues about the government's investigation since an affidavit was released on April 18, outlining allegations of rebate fraud committed by Pilot employees against unsuspecting trucking companies.
Prosecutors had been gathering evidence for months, using secretly recorded conversations and government informants, and seized additional evidence in a raid on April 15.
Raybin indicated the timing of Wednesday's guilty pleas was noteworthy. "This is a significant event, to have that kind of ... plea agreement worked out this quickly," said the lawyer, who is not involved in the Pilot case. "This tells me that the government has significant evidence."
That evidence may extend up the chain of command.
Richard Myers, an associate professor of law at the University of North Carolina, said he isn't familiar with the specifics of the case but that in general, prosecutors "always try to start lower on the totem pole and work your way up to the folks who are more responsible."
Myers — a former assistant U.S. attorney in California — said defense attorneys representing upper-level employees never like to see plea agreements "start rolling in" because they suggest the government has a credible case.
Depending on the type of plea agreement signed by lower-level employees, he said, employees up the chain will want to have a conversation with the government.
"A late cooperator is worth less than an early cooperator, to the government," he said. "The next thing that'll happen is, as more people come in, you have to decide ultimately can I fight this thing (and) if I can't fight this thing, how do I get the best deal for my client?"
The affidavit released by the government in April cited an unnamed employee who alleged that the fraud had occurred with the knowledge of Pilot CEO Jimmy Haslam and president Mark Hazelwood.
Haslam has denied knowledge of the alleged scheme.
The government's investigation is apparently still active. Curt Morehouse, of Omaha, Neb.-based W. N. Morehouse Truck Line, said Wednesday that investigators from the FBI and IRS were in his office two weeks ago for a two-hour interview.
Among other things, he said, they "asked if I had been promised anything or asked to not talk to anyone" in connection with the case.
"And the answer was absolutely not," he added. "I got all my money and I'm happy with Mr. Haslam."
According to the affidavit, W.N. Morehouse discovered last year that it had been shorted rebates totaling $146,565 over seven years.
Haslam has previously said that several of the company's employees have been put on leave. Pilot has not identified those employees.
Multiple Pilot employees were highlighted in the affidavit, including John Freeman, the company's vice president of sales and — according to the affidavit — Ralenkotter's supervisor.
Freeman was quoted in transcripts of secretly recorded conversations, including one in which he allegedly described a situation with Nashville-based trucking firm Western Express in which Western discovered that it was not getting all the money it was due.
In the transcript, Freeman said Pilot ultimately bought an airplane from Western in order to address the situation. According to the transcript, Freeman went on to say that the plane wasn't airworthy, so the company sold it in Nashville.
On Wednesday, a News Sentinel reporter used Pilot's automated switchboard to call John Freeman's line. An automated message said that "This is currently not a working mailbox."