U.S. District Judge James M. Moody approved a $84.9 million settlement in the Pilot Flying J fuel rebate scandal in a Little Rock, Arkansas courtroom Monday.
KNOXVILLE, Tenn. - The federal raid on Pilot Flying J's headquarters was a stunningly public spectacle.
But the FBI's investigation of the Knoxville-based truck-stop colossus — which became public this month — began quietly, and was made possible by a pair of shadowy figures who essentially acted as spies.
One was an informant identified as Confidential Human Source 1, who first alerted the FBI to the alleged fraud scheme and over a period of months recorded conversations with a Pilot employee known as CHS-2.
On Oct. 4, the FBI confronted CHS-2, who apparently agreed to record conversations with co-workers.
The FBI has not named CHS-2, but the affidavit — which refers to the person as a "he," but said that is not necessarily indicative of the person's gender — provides a significant amount of detail about the mole.
He is identified by the affidavit as "a current Pilot regional director of sales" who worked out of a"remote office location in Bedford, Texas."
He also is identified as having supervised Cathy Giesick, a former Pilot regional sales manager named in the affidavit as providing information to the FBI.
Those details appear to match the description of Vincent Greco, identified in the affidavit as "Director of Sales for the West Region" who "works remotely and lives in Bedford, Texas."
The affidavit at one point said that Giesick "transferred to CHS-2's region and supervision" and at another point said that "Greco became her new regional supervisor."
Greco is supervised by Vice President of Sales John Freeman and is described in the affidavit as supervising regional sales managers Kevin Clark, Scott Fenwick and John Scott.
CHS-2 was brought into the investigation in June 2011, when CHS-1 began secretly recording conversations with him. Earlier, CHS-2 had confided in CHS-1 about Pilot's handling of rebates, and CHS-1 had gone to the FBI with the information. CHS-1 continued to record CHS-2 without his knowledge into 2012.
On Oct. 4, 2012, the FBI and Internal Revenue Service confronted CHS-2, who, according to the affidavit, confirmed the fraud and provided agents with a spreadsheet and an email thread that he had printed out and placed on his bulletin board "in the event he was ever contacted by law enforcement."
CHS-2 also admitted his own involvement in a rebate scheme, and signed a non-prosecution agreement with the U.S. Attorney for the Eastern District of Tennessee. The following day the federal agents began recording conversations involving CHS-2 and other Pilot employees.
The surveillance was conducted in locations including Lakeville, Minn.; a Pilot executive's Rockwood-area lake house; Blackberry Farm in Walland; and Pilot headquarters on Lonas Drive.
Greco has not returned phone calls to the News Sentinel. But another federal investigation using a corporate executive in a similar role provides some indication of how surveillance is conducted in such cases.
Mark Whitacre, a former top executive at Archer Daniels Midland, was a government informant in the 1990s for a price-fixing investigation, depicted in the 2009 movie "The Informant!"
For three years, he carried a trio of recording devices — one on his body, one in his notebook and one in his briefcase.
The first few weeks, he said, "it was really tremendously high pressure. I knew I was going up against some very, very powerful people."
Besides the fear of being caught, Whitacre — who served more than eight years in prison in connection with a separate scheme — cited the amount of time involved.
He would meet his FBI handlers at 6 in the morning, and they would shave his chest to attach a microphone. A couple of nights a week they would meet for several hours to go over the tapes and identify the speakers.
"It almost became a second full-time job," he said.
The technology has changed since then, according to Allan Bachman, education manager for the Association of Certified Fraud Examiners.
"The technology has advanced, as all technologies have, and so wiring up an individual is not as onerous as it used to be," he said. "I mean, you can record quite a lengthy conversation using just a cellphone. Just turn on the voice recorder and put it in your pocket."
The advances in technology can't necessarily eliminate the stress of acting as an informant, though.
"Picture yourself being put in a position where you know you're recording somebody else's conversation," said Bachman. "You're basically working undercover. You're putting yourself at risk. Possibly others. There's a tremendous amount of pressure with that, regardless of what technology is used. You're still doing the same deed of putting yourself in that position."
The government will not confirm the identity of CHS-2, and it is unknown why information was included in the affidavit pointing to Greco as the source.
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