KNOXVILLE, Tenn. - Pilot Flying J said Monday it has “reached an understanding with the U. S. Attorney’s office” and the U. S. Department of Justice, that the company will not be prosecuted.
According to a news release, the agreement assumes the company follows the terms of an agreement, including paying a monetary penalty over the next two years and fully cooperating with the federal government’s investigation of fraudulent conduct within the company’s diesel fuel sales discount programs.
The company said the agreement calls for Pilot to pay a monetary penalty of $92 million. The company has also admitted wrongdoing and agreed to pay its customers back $56 million in losses.
“We, as a company, look forward to putting this whole unfortunate episode behind us, continuing our efforts to rectify the damage done, regaining our customers’ trust, and getting on with our business,” CEO Jimmy Haslam said in the release. “We’ve been committed from the beginning of this to doing the right thing, and that remains our commitment.”
According to a news release from the U.S. Attorney for Eastern Tennessee, the agreement “expressly states that it provides no protection from prosecution to any individual, and moreover, imposes a continuing obligation on Pilot to provide complete cooperation with the ongoing federal investigation of current and former Pilot employees relating to fraudulent conduct involving the sale of diesel fuel.”
The government’s investigation of alleged diesel fuel rebate fraud at Pilot became public last year. Since then, the company has reached an $85 million settlement in federal court with trucking customers who claimed in civil lawsuits that they had been shorted on diesel fuel rebates. Under that settlement, Pilot agreed to repay any amounts owed, plus 6 percent interest and attorneys’ fees.
A criminal investigation is ongoing, and 10 former employees have pleaded guilty to charges in connection with the case.
In a news release, U.S. Attorney Bill Killian said that “The terms of this agreement, including the significant monetary penalty and the very serious consequences if Pilot fails to comply, demonstrate quite clearly that no corporation, no matter how big, influential, or wealthy, is above the law. In addition, the company’s agreement to fully cooperate with the United States, including its obligation to identify its employees’ criminal conduct, will assist the ongoing federal investigation. The agreement ensures that Pilot’s extensive remediation efforts will continue until all trucking company victims have received full restitution and until Pilot has demonstrated to the United States that it has implemented sufficient internal controls to prevent this kind of fraudulent conduct from ever occurring again.”
So far, 10 former sales employees have pleaded guilty to crimes associated with cheating truckers of promised fuel rebates and two additional former employees have been granted immunity.
An FBI affidavit filed last April claimed some top company executives were aware of the alleged fraud.
Yet a review of the 143-page document also reveals some tape recordings that support Pilot Flying J CEO Jimmy Haslam's claim that he was unaware of any alleged fraud.
Haslam has has never been charged with a crime in connection with the ongoing probe, and within days of the FBI raid, he called for a complete audit of the Pilot Flying J books and a review of sales procedures.
In addition, Pilot's Board of Directors hired an outside, independent investigator to look into allegations and report those findings directly to the Board when completed.
More details as they develop.