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 - Welcome to the gray side.
That's how Pilot Flying J's top sales officials explained rebate deals to each other and how they justified promising a customer one price and charging another, according to transcripts of secretly recorded conversations unsealed by federal officials Thursday.
CEO Jimmy Haslam insists the company's motto hasn't changed — "to do the right thing all the time." The transcripts tell a different story.
Everyone from the bottom-rung salesman to the vice president of sales and Jimmy Haslam himself knew the code words, according to the records — and saw shorting customers on promised discounts and rebates as nothing more than the cost of doing business. They called it "jacking the discount," "cost-plussing," "screwing" and a few less polite terms.
To the salesmen, it was all a game.
"We're playin' (expletive)' poker with funny money, and it's liar's poker with funny money because of all this cost-plus stuff," John Freeman, Pilot's vice president of sales, told his regional sales directors at a meeting Oct. 25. "So, you know, I'm not, I don't want to get into a moral or ethical conversation, because I believe that if a guy's gonna (expletive) you then we got to go to (expletive)' him harder. ... (expletive) ‘em early and (expletive) ‘em often."
Arnie Ralenkotter, Pilot's director of northeastern sales, bragged in a conversation the same day about cutting a deal with a stubborn client in Illinois (a "Russian mafia guy') who insisted on what he thought was a steep wholesale discount — and got nothing instead.
"Well, we agreed to the across-the-board deal," Ralenkotter boasted, according to the transcript. "And we didn't change a thing. ... Let him believe whatever the hell he wants. ... Dumb ass."
Brian Mosher, Pilot's director of sales for national accounts, told salesmen they had no reason to feel remorse if they overcharged a small trucking business.
"I'm sending cost-plus pricing to a guy that has absolutely no idea what cost-plus pricing is," Mosher said at a Nov. 19 sales meeting. "And he's not gonna take the time to know what it means, ‘cause, frankly, he's lazy, and he doesn't care. ... That guy does not deserve premium pricing from us, in my opinion, because he's not willing to go back and do all the work on it."
Spanish-speaking customers made for especially easy pickings.
"They're not stupid," Kevin Hascomb, Pilot's regional sales director, explained at a Feb. 15 meeting. "There is just ... uh ... there is a language barrier. So you can get away with a little bit more because they know that they are not going to understand everything that you say."
Holly Radford, a regional account representative at the Knoxville headquarters, laughed when she heard a colleague recall the black-and-white pricing at his last job. "And what did I tell you?" she said. "Welcome to the gray side."
Documents in the Pilot Flying J investigation
On the afternoon of Monday, April 15, 2013, the FBI and IRS searched the Knoxville headquarters of Pilot Flying J. These documents lay out federal authorities' case for the search, based on claims of rebate fraud.
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