Wednesday, April 24, 2013

Pilot Flying J affidavit reveals possible racism

Reading through the Federal Bureau of Investigation’s affidavit seeking the warrant to search Pilot Flying J’s headquarters is like peeling back an onion. One stinking layer of alleged deception after another.

Once you get past the foul language and quoted laughter, it reaches a new level of disturbing. Racism.

The affidavit clearly shows that smaller trucking companies were allegedly targeted by the scam to defraud them out of rebates owed to them. But as you dig deeper and further into the document, it gets worse.

Early on in the document, the FBI details a list of terms used by the sales staff to describe the alleged scheme. Included in that list are the terms “manuel,” “manwell,” and “manny.” All terms to describe the manual calculating of the rebates.

Flipping on through, on Page 83 it certainly raises eyebrows when it’s detailed how language barriers were exploited in the alleged fraud as well.

Kevin Hanscomb, the current director of sales for the east region is quoted as saying:

“They’re not stupid 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 you say. So you can say cost minus, or cost plus 3, and it’s cost plus 5 and they’re not going to go oh well, he’s screwing us … maybe I misunderstood. So there is some forgiveness there that probably isn’t at other parts of the world.”

The comment was made to a confidential informant who worked with the FBI and facilitated tapings of some of the conversations detailed in the affidavit.

The comment above came from a conversation in which Hanscomb was talking to the informant about the ability to reduce discounts in the south Florida area without much consequence because of the language barrier in that region.

It should be noted that Pilot Flying J President and CEO Jimmy Haslam reviewed the same affidavit I’m quoting from over the weekend. He studied it, he said.

He addressed the media on Monday and has continued to issue statements throughout the week.

He talked about a “reputational hit” the company has taken in the course of this investigation. He maintains that the foundation of the company is built on “its integrity.”

A statement released to the media on Wednesday revealed that several members of the sales team were placed on administrative leave on an interim basis.

We are not judging the guilt or innocence of the team members placed on administrative leave. We are addressing actions and words that fail to show proper respect to our customers and that violate the character, values and principles that have been core to this company since it was founded 54 years ago,” the release states.

Stay tuned. Who knows what, if any, layer will be peeled off next.

Tuesday, April 23, 2013

‘Low hanging fruit’

If you did not hear about the FBI raid on the Pilot Flying J corporate offices on April 15, and are not tuned in to all the ensuing events, you are trucking on another planet.

At first, the reason for the raid was pure speculation, but the guessing game didn’t last long.

When the long and detailed affidavit for search warrants was unsealed in federal court in Knoxville on April 18, the gasp could not have been louder. Maybe gasp isn’t the right word. It was kind of a choking sound, like when a superstar CEO of a mega-corporation has to face the industry and apologize all over the place for his company’s cheating many beloved customers.

Jimmy Haslam addresses the media. (Image via press
conference webcast at
Yesterday I listened to Jimmy Haslam’s latest statement to the press regarding the FBI investigation. When he said he read the affidavit word for word Friday night – sat down and studied it like a “student” – I thought to myself, he was doing what all good reporters were doing, as well as many Internet-savvy trucking company customers.

He said he was embarrassed and he should have been. The affidavit was a shocker.

Recordings caught slick sales team personnel red-handed with explanations of how they cheated many trucking customers who had agreements to buy Pilot Flying J fuel and, in return, get a rebate. The rebates for many, however, have allegedly been manipulated.

According to the affidavit, the investigation alleges a rebate scheme designed for the dual purposes “of increasing the profitability of Pilot and increasing the diesel sales commissions of the Pilot employees participating in the fraud.”

It was submitted to the court by an FBI agent, whose reports detail the FBI investigation and recount information provided by informants, both named and confidential, and actual dialog recorded. It intended to show probable cause in order to get a search warrant.

But you won’t be reading verbatim details of recorded conversations of Pilot Flying J sales people in newspapers. The profanity often gets in the way of many true quotes.

It documents some high-level sales personnel at a meeting openly discussing the “screwing” or other terms used to describe the business practice of cheating companies who were “low hanging fruit” or not sharp enough to spot the fraud.

A school of thought with some of the fuel sales team seems to be that it’s OK to “monkey” or “jack” with the discounts promised the customer if they are too dumb to reconcile their records with Pilot Flying J’s records and prove it. If Pilot got busted by a smart trucking company who called them on the difference, sales people learned to call it a “computer glitch.”

Example of some of the recorded dialog:

“If the customers aren’t smart enough to know what they’re getting then they don’t deserve the rebate.”

“F--- them early and f--- them often.”

“I called Jimmy and told him I got busted at Western Express.”

“What did he say?”

“Oh, he knew it. … Absolutely. I mean he knew all along that I was cost-plussin’ this guy, he knew it all along. Loved it. We were makin’ $450,000 a month on him … why wouldn’t he love it?”

“Our advantage is their ignorance.”

“Yeah, aka we’re f---in’ them.” (Laughter)