Four more ex-Pilot Flying J execs plead guilty

To John “Stick” Freeman, the promises to customers just made for one more game.

“We’re playin’ [expletive] poker with funny money, and it’s liar’s poker,” he told Pilot Flying J’s senior sales staff at one point. “Sell it to ’em the way they wanna buy. And then understand that the (expletive)’s got the ability to know what the hell you’re doing to ’em . ... [Expletive] ‘em early and [expletive] ’em often.”

He lost the game. Freeman, Pilot’s former vice president of sales, and three more former Pilot employees pleaded guilty Thursday to federal charges of mail fraud and wire fraud for bilking trucking customers across the country out of millions of dollars in promised diesel rebates.

‘SAY ONE THING, DO ANOTHER’

Freeman devised the fraud scheme, which relied on promising trucking customers one rebate but quietly tweaking figures to deliverthem another, court records show. He nicknamed the plan “Manuel” based on the manual calculation of real and bogus rebates, according to court records.

The others — John Spiewak, a Pilot regional sales manager based in Centerville, Ohio, who oversaw and approved rebate contracts; Vicki Borden, Pilot’s director of inside sales, who kept two sets of books to monitor profits on the rebate fraud; and Katy Bibee, a regional sales representative who negotiated bogus rebates — helped carry out the fraud for years, federal prosecutors said.

It was simple, Freeman explained at a sales meeting: “Say one thing, do another.” But be careful, he warned: “Don’t get too cute.”

He and the others said little Thursday as they stood before U.S. District Judge Curtis Collier — just a four-part chorus of “Yes,” “No,” and “Guilty, Your Honor.”

All four already had admitted guilt in signed plea agreements filed in July. They’ll return to court Jan. 24 for sentencing, if not before.

WHAT’S NEXT

The plea agreements hold out the possibility of each testifying at the October trial of Mark Hazelwood, Pilot’s former president, and three others: Scott Wombold, former vice president of national sales, and former regional sales reps Heather Jones and Karen Mann. That trial, to be held in Chattanooga, could last as long as six weeks.

Federal prosecutors said Hazelwood gave the green light to Freeman’s rebate fraud scheme. He, Freeman and the others talked openly and brazenly about the fraud

in emails and at sales meetings, according to court records, unaware their words were being recorded by undercover informants.

Hazelwood even encouraged expanding the fraud by breaking down customers into two tiers, according to court records — those who tracked the rebate amounts, which fluctuated daily based on market prices, and those who didn’t — to filter out the easy victims.

“We have to go after every angle out here,” he told Freeman and the sales division, according to court records. “Manuel does a hell of a job.”

HOW IT BEGAN

The rebate fraud came to light after FBI and Internal Revenue Service agents serving a search warrant raided Pilot’s corporate headquarters on Lonas Road in West Knoxville in April 2013.

“We have to go after every angle out here. Manuel does a hell of a job.”

— MARK HAZELWOOD, PILOT’S FORMER PRESIDENT

That warrant indicates the fraud stretched back to 2008 — maybe earlier.

Along Freeman’s path to profits, he’d made an enemy — Vincent Greco, a Pilot sales executive based in Bedford, Texas, who’d competed with him for the top sales job. Greco acted as an informant, wearing a wire to sales meetings.

Pilot, the largest operator of truck stops nationwide, ultimately paid a $92 million settlement to 5,500 trucking customers. CEO Jimmy Haslam, brother of Gov. Bill Haslam, and owner of the Cleveland Browns, hasn’t been charged and has denied knowing about the fraud.