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FBI raid of Haslam-owned Pilot voted top Tenn. story of 2013

December 22nd, 2013 12:00 am by Associated Press

FBI raid of Haslam-owned Pilot voted top Tenn. story of 2013

In this April 19, 2013, file photo, Jimmy Haslam, CEO of Pilot Flying J and Cleveland Browns owner, speaks during a news conference at the company headquarters in Knoxville. AP photo.

NASHVILLE — When federal agents stormed the Knoxville headquarters of Pilot Flying J in April, it sent shockwaves through business, sports and political worlds.

The investigation into a scheme to defraud customers at Pilot, a truck stop chain owned by the family of Cleveland Browns owner Jimmy Haslam and Tennessee Gov. Bill Haslam, has been voted the state’s No. 1 news story of 2013 by reporters and editors of The Associated Press, AP member newspapers and broadcast subscribers.

John Guillon, managing editor of the Citizen Tribune in Morristown, noted on his ballot that the Pilot investigation involves “one of the state’s highest profile businesses, run by the governor’s family, high ranking donors to the University of Tennessee.”

Jimmy Haslam, who bought the Browns last summer, was at first dismissive of the raid, telling reporters that the probe involved a “very insignificant number of customers.” 

But the company’s approach shifted shortly after a judge unsealed a 120-page affidavit that included transcripts of secretly recorded discussions among senior members of the sales team that candidly — and often crassly — outlined the scheme to defraud trucking company customers deemed too unsophisticated to notice that they were being cheated out of rebates and discounts they were entitled to.

In one example, the court documents detailed how Vice President of Sales John “Stick” Freeman regaled colleagues with tales of withholding rebates from clients.

“Hey, this is a game,” Freeman said, according to recordings made by an FBI informant. “We’re playin’ (expletive) poker with funny money, and it’s liar’s poker with funny money.” 

Pilot moved quickly to settle a class-action lawsuit that paid 5,500 trucking companies $85 million in reimbursements and interest for the money they were cheated out of. A federal judge approved the settlement last month, though several Pilot customers opted out and continue to pursue their own claims against Pilot.

Two former members of the Pilot sales team agreed to cooperate with investigators and seven others have pleaded guilty to fraud charges. A Pilot lawyer recently said more guilty pleas are likely. Jimmy Haslam has denied any prior knowledge about the scheme, and no charges have been filed against him or the company.

Pilot was founded with a single gas station in 1958 by family patriarch Jim Haslam, a former University of Tennessee tackle who played on the 1951 national championship football team under Gen. Robert R. Neyland, who built the Volunteers into a football powerhouse.

Jim Haslam credits his sons with expanding the chain from mostly gas stations and convenience stores to a “travel center” concept featuring branded fast-food service that launched a period of rapid growth for Pilot. Company revenues have grown at a rapid pace, from $2 billion in 1998 to more than $30 billion last year.

Bill Haslam eventually left his position as Pilot president to run for mayor of Knoxville in 2003 and was elected Tennessee governor in 2010. 

Top Tennessee Stories of 2013 

Here are the top Tennessee stories of 2013, as selected in voting by subscribers and staff of The Associated Press: 

• Federal agents raid the Knoxville headquarters of Pilot Flying J, the huge truck stop chain owned by the family of Gov. Bill Haslam and Cleveland Browns owner Jimmy Haslam, over allegations that Pilot systematically cheated trucking companies.

• Gov. Haslam declines federal funds for Medicaid expansion in Tennessee while he tries to negotiate a special deal for the state during the rollout of the federal health care overhaul.

• Four Vanderbilt football players are charged with raping an unconscious student in a campus dormitory.

• Country superstar George Jones dies in a Nashville hospital at 81 after years of illness.

• The state children’s services commissioner resigns amid scrutiny of her agency’s handling of death cases, the subject of a public records fight between the state and several media outlets.

• (tie) Following federal court rulings, Memphis City Schools and Shelby County Schools merge to create a Unified School District with 150,000 students, before six municipalities vote to break away from the district and start their own public school systems.

• (tie) A Newport judge orders a baby’s name changed from Messiah to Martin, saying “Messiah” is a title reserved only for Jesus Christ; a higher court declares her ruling unconstitutional, and a judicial panel charges the judge with violating its code of conduct.

• Lawmakers pass a bill to allow people with handgun carry permits to store firearms in their vehicles, regardless of their employers’ wishes.

• U.S. Rep. Scott DesJarlais, a licensed physician, is reprimanded and fined by the Tennessee Board of Medical Examiners for having sex with patients before he was elected to Congress.

• Eight people are killed in fiery east Tennessee interstate crash between a church bus, an SUV, and a tractor-trailer.

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