KNOXVILLE, Tenn. - The FBI's inside source into alleged fraud at Pilot Flying J Travel Centers claims "fraud would be clearly evident", according to a sworn affidavit used to establish probable cause for search warrants.
Pilot CEO Jimmy Haslam has consistently denied having any knowledge of alleged fraud involving fuel rebates to truckers. In fact, in the days following the raid in April, Haslam was emphatic.
"Somebody asked me today if I was going to step down as president and I thought to myself—‘Why would I do that?’--candidly I hadn't done anything wrong."
But the FBI was being fed a different story. One day last October, their inside source was secretly recording Pilot's vice-president.
On tape, the FBI learned of an alleged $1 million payoff to a Nashville trucking company called Western Express. The cash, for a plane so broke it didn't even fly, was in return for allegedly cheating on fuel rebates.
But it’s what happened at Pilot Headquarters one month later that caught the FBI's attention. It was Nov. 20, 2012 at a top-level meeting with sales directors, managers and Pilot's top executives.
On tape, a male voice interrupts company President Mark Hazelwood and references the alleged "deceptive conduct" with Western Express. According to FBI documents, Haslam was at the same meeting.
By January, the FBI's inside source was now describing an email that he claimed both Haslam and the company's vice-president were "looking carefully at every customers profit and loss reports.” The source tells the FBI that "rebate fraud... would have been evident.”
A few weeks later, in February, the $1 million airplane deal came up again during recorded conversations. On tape, Pilot Vice-President John Freeman was asked directly by the FBI's inside source whether Haslam or Hazelwood knew about it.
According to FBI documents, Freeman responds with an expletive, saying “I mean I called Jimmy and told him I got busted at Western Express. Oh, he knew it, Absolutely, I mean he knew all along."
In the days following the raid, Haslam downplayed the extent of the alleged fraud.
"I think the key thing to focus on is that the investigation zeroes in on what we believe to be a very narrow part of our business," Haslam said.
By March 7, the FBI investigation headed to a dramatic close.
Account executive Ashley Judd, who has since pleaded guilty to her role in the scheme, revealed on tape that she would "burn" files if caught.
Then, on April 1, the FBI's inside source alerted the agents. He told them that both Pilot's chief financial officer and the company's top lawyer were asking questions about fuel rebates.
Finally, on April 9, Pilot's top lawyer ordered all rebate-related documents turned over to her office "by close of business, Friday, April 12, 2013,” according to FBI records.
Three days later, on April 15, the FBI moved in.
Haslam has since hired an independent investigator who will submit his findings of alleged fraud directly to Pilot's board of directors.
Meanwhile, the FBI continues to go over hours and hours of secret recordings, plus computer hard drives and emails of 35 Pilot employees, including Haslam.
A review of recent plea agreements shows that two Pilot employees did not waste a minute. Both confessed their roles the very day the FBI walked into the building on April 15.