Fed­eral judge OKs deal in Pi­lot Fly­ing J fraud case

Truck­ing com­pa­nies cheated out of re­bates

The Washington Times Daily - - Business - BY CHUCK BAR­TELS

LIT­TLE ROCK, ARK. | A fed­eral judge in Arkansas ap­proved a set­tle­ment Mon­day that pays $84.9 mil­lion to 5,500 truck­ing com­pa­nies that were cheated out of promised re­bates by Pi­lot Fly­ing J, the na­tion’s largest diesel re­tailer.

The set­tle­ment doesn’t put to rest a fed­eral in­ves­ti­ga­tion in which seven com­pany em­ploy­ees have al­ready en­tered guilty pleas.

At­tor­ney Aubrey Har­well Jr. of Nashville said Jimmy Haslam, owner of the Cleve­land Browns and CEO of the truck stop chain, had no knowl­edge that em­ploy­ees were cheat­ing cus­tomers. The com­pany is co-owned by Mr. Haslam’s brother, Ten­nessee Repub­li­can Gov. Bill Haslam, who has said he isn’t in­volved with Pi­lot Fly­ing J’s op­er­a­tions.

U.S. Dis­trict Judge James Moody said Mon­day that he was sat­is­fied that the set­tle­ment was fair, rea­son­able and eq­ui­table.

“I don’t have any reser­va­tion about giv­ing fi­nal ap­proval here,” Judge Moody said at the end of an hour-long hear­ing in Lit­tle Rock.

The judge also ap­proved $14 mil­lion in fees that will go to the truck­ers’ lawyers.

The set­tle­ment re­im­burses truck­ing firms for their losses, plus 6 per­cent in­ter­est, which is cal­cu­lated from the time each re­bate should have been paid. The cheat­ing dates back to 2005.

Lawyers on both sides stressed that no one among the 5,500 com­pa­nies agree­ing to the set­tle­ment filed an ob­jec­tion and that only about 1 per­cent of af­fected com­pa­nies opted out of the agree­ment so they could file their own law­suits.

Don Bar­rett, an at­tor­ney for the truck­ers, said the set­tle­ment makes his clients whole.

“What Pi­lot was re­quired to do was done well and ... hon­or­ably,” Mr. Bar­rett said.

He said many clients re­ceived their money be­fore the set­tle­ment was ap­proved.

“They’re al­ready pay­ing it out. They’ve paid out most of it al­ready” Mr. Bar­rett said.

The at­tor­ney praised Jimmy Haslam for open­ing the ac­counts in ques­tion to au­di­tors and striv­ing to make truck­ing com­pa­nies whole.

“We couldn’t have had this re­sult in this short amount of time had not Mr. Haslam stepped up to the plate, said he was go­ing to do the right thing and in an hon­or­able way and he did it. ... That’s the com­ment of the 5,800 truck­ers that I rep­re­sent,” Mr. Bar­rett said.

Mr. Har­well said it was in the in­ter­est of the com­pany to reach a set­tle­ment quickly.

“The ad­van­tage to Pi­lot Fly­ing J is demon­strat­ing clearly and un­equiv­o­cally that they were com­mit­ted to do­ing the right thing. Where there were things that hap­pened im­prop­erly, they were com­mit­ted to make them right,” Mr. Har­well said.

Pi­lot Fly­ing J con­ducted in­ter­nal au­dits af­ter the chi­canery came to light in April and, ac­cord­ing to Mr. Har­well. An in­de­pen­dent au­di­tor ver­i­fied the com­pany’s find­ings.

The truck­ers’ law­suit al­leged a va­ri­ety of vi­o­la­tions, in­clud­ing fraud, un­just en­rich­ment, fraud­u­lent con­ceal­ment, breach of con­tract and other claims, all of which were dropped with the set­tle­ment. Pi­lot Fly­ing J has an­nual rev­enues of about $30 bil­lion.

Pros­e­cu­tors charged in court doc­u­ments that the scheme to cheat cus­tomers out of re­bate and dis­count money was well known among sales staff. Plea agree­ments con­tend that sales staff took part in a train­ing ses­sion that taught em­ploy­ees how to de­fraud truck­ing com­pa­nies with­out get­ting caught.

Mr. Har­well stressed that the Haslams had no in­volve­ment in any wrong­do­ing.

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