KNOXVILLE, Tenn. - The legal drama surrounding Pilot Flying J involves a wide cast of characters — including one with wings.
An affidavit that led to a federal raid of the Knoxville-based truck-stop chain indicates that Pilot was forced to buy a private airplane after one of its customers discovered it was being shorted on fuel rebates.
That alleged transaction, which was described in secretly recorded conversations, could come under scrutiny as prosecutors seek to make a case against Pilot executives.
The federal investigation became public in April, when FBI and IRS agents raided Pilot's Knoxville facilities.
Two employees have subsequently pleaded guilty to conspiring to commit fraud and have agreed to assist the government in making a case against other executives.
The airplane deal allegedly involved Western Express, a Nashville trucking company that bought fuel from Pilot and discovered it had not been getting the full rebate it was due.
According to a transcript included in the government's affidavit, John Freeman, Pilot's vice president of sales, described how he offered to cut the company a check, but a Western official instead suggested that Pilot buy an airplane from him.
"It was so broke, the (expletive) wasn't air-worthy, so we had to sell it in Nashville," Freeman added.
Public records provide details about a transaction that appears to match that chain of events.
According to FlightAware.com, Pilot Travel Centers in 2009 acquired a 10-seat Falcon 20 from a company called Air 1 Inc.
Air 1 had the same address as Western Express, according to state records.
Paul Wieck, the president of Western Express, said the company's former majority owner was the one involved in the deal, but he has since died.
The records from FlightAware indicate that Pilot sold the aircraft to a Michigan company called Royal Air Freight Inc., in 2010.
A Royal Air spokeswoman said the company "wouldn't have a comment."
Eric Eckardt, of Florida-based Flight Source International, said his firm brokered the deal.
"That aircraft was sold to one of our clients up in (the) Detroit area," he said.
Asked why the company bought or sold the aircraft, a Pilot spokeswoman declined to comment.
The plane transaction could be significant as prosecutors try to make the case that top Pilot executives were aware that customers were being defrauded.
The affidavit, for example, highlights a Nov. 20, 2012, diesel sales meeting at which Pilot CEO Jimmy Haslam and president Mark Hazelwood allegedly were in attendance.
According to the affidavit, Hazelwood was making a presentation to the group when someone interrupted with a reference to Freeman's "old deal with Western."
Hazelwood responded by saying, "We're going to introduce him to a guy by the name of Manuel."
The government's affidavit alleges that "Manuel" was a shorthand reference for reducing the rebate amount due to a customer without the customer's knowledge, a process which the affidavit said was also known as a "manual rebate."
Mark Pickrell, a Nashville attorney whose firm does fraud and internal investigation work, said a key fact would be whether the plane was sold at its market value.
Pickrell said the plane deal "could have been an entirely appropriate transaction", but added later that "Any time people do things in a hard way when there's an easy way, like cutting a check, you have to wonder if something strange is going on."
In a transcript from the affidavit, Freeman allegedly told an FBI source that it "cost us a million bucks" to resolve the Western Express issue, although he also said that "we made $6 million on the guy."
Pickrell said prosecutors could potentially use the plane deal to try to link top executives of the company to knowledge of fraud, adding that "when you talk about private planes, you're talking about, normally, very senior decision-makers that are involved in those decisions."
On the other hand, he indicated there's always a danger in linking fraudulent activity to top decision-makers.
"Within a large organization, as you go up the hierarchy, the amount of knowledge actually underlying a decision becomes less and less and less," he said.
Haslam has denied knowledge of fraud at the company. Attorneys for Hazelwood and Freeman could not be reached for comment.
According to Federal Aviation Administration records, there are four planes currently registered to Pilot Corp. — a pair of Falcon 50s made by Dassault Falcon, and two Learjets.
In addition to the government's criminal investigation, Pilot has been hit with a wave of civil suits based on the federal allegations.