Witness Says Jimmy Haslam Said "Awesome. How Can We Do More?" After Being Shown Spreadsheet That Included Rebate Fraud

Tuesday, November 28, 2017

A witness told a Chattanooga jury on Tuesday that Pilot Travel Center's CEO Jimmy Haslam, after being shown a spreadsheet that included a listing of "savings" from defrauding trucking companies, said, "That's awesome. How do we do more?"

Witness Brian Mosher said it happened when he was showing the annual profit and loss sheet for his sales territory to Haslam and Mark Hazelwood.

He said the sheet included the amount of rebate that had been promised to a number of trucking companies and the much-lower figure that was actually paid out.

Mosher, who was at the forefront of the fraud, also told of being on a Pilot corporate jet with Haslam and Hazelwood when Hazelwood asked if he had done anything with manual rebates (the method by which the fraud was carried out).

He said Haslam asked, "Is that like Stick's deal with Western Express?"

It was testified that John "Stick" Freeman, who originated the fraud as early as 2007 and then taught it to others, was cheating Western Express out of as much as $300,000 a month in promised rebates.  

Western Express found out what was going on and, as a result, Pilot wound up having to buy a problem-plagued airplane from the trucking company for $1 million. Pilot later unloaded the plane at a Nashville sale.

Also Tuesday, in a secretly recorded tape played for the jury, Jimmy Haslam comments, "That sounds like Stick's old deal with Western." The comment was made at one of several sales meetings secretly taped by one of the salesmen, who contacted the government and began wearing a mic.

Jimmy Haslam has not been charged and he denies any knowledge of wrongdoing at Pilot, where 14 employees have pleaded guilty to wire and mail fraud and another four are standing trial at the Federal Courthouse on Georgia Avenue.

Mosher, a former Pilot sales director, said Western Express was on a manual rebate, which allowed Pilot to cheat "less-sophisticated" customers who received a monthly rebate check. He said Freeman began "pulling a number out of the air" for the rebate payment rather than going by the agreement.

He said Freeman first started the practice, and he (Mosher) began doing it in a big way after getting the go-ahead from Hazelwood, who later advanced to Pilot president.

Mosher said he asked Hazelwood, "Is that something we can do?"

He said he was "taken aback" when Hazelwood said, "Not only can we do it, we should do it. They don't have contracts, so we can change the price however we want."

Mosher said it was later when he was on the plane trip when Hazelwood asked if he had done anything on the manual rebates. He said when he told him he had not that Hazelwood said, "Dammit, I said you need to do something. Put together a list and let's get going."

Mosher said after the plane trip, "I began finding customers to put on manual rebates." By the next year (2009) he had 46 trucking companies on manual rebates, and he was cheating 41 of them.

He said he dealt mainly with smaller trucking firms.

Attorney Rusty Hardin asked him, "So you were preying on the little guy?" Mosher answered, "Yeah."

The jury heard a tape in which Mosher taught a break-out session of Pilot sales personnel at the Knoxville headquarters on how to cheat trucking companies by the manual rebate system.

Mosher said he believes that Jimmy Haslam was at the session. It was testified that the training session was at the urging of Haslam, who is the owner of the NFL Cleveland Browns.

Mosher said at the meeting "the savings is humongous." He said by "savings" he meant extra profit to Pilot from cheating trucking companies.

Mosher said at the session that a lot of trucking company owners "are lazy and they don't care. A lot of them don't know what cost plus is. Some of 'em don't even know what a spreadsheet is. That guy doesn't deserve premium pricing from me."

He advised the sales people to be careful in working the scam. He said, "It's an art. It's a feel. It's do what you can. But don't ever expose yourself. Know your customer."

Mosher said at the session, "John (Freeman) and I began doing this about the same time. I've clearly made peace with it."

Heather Jones, who is one of those on trial, said during the meeting, "Very few (trucking company executives) ask for backup. I would say less than 10 percent."

A new employee, Jason Holland, spoke up at the session, saying he had come from the Comdata firm where "everything is black and white." He said, "I'll be honest I'm struggling with the gray."

Scott Wombold, who is also on trial along with Hazelwood and Karen Mann, commented, "Jason, you've got to get your mind comfortable with it."

He added, "Brian and I have worked as closely as anybody. Don't ever be foolish when you're doing this. Be extremely cautious."

At another recorded session - the one in which Haslam made his comment - Mark Hazelwood told the group some "highly confidential" news. 

He said Dave Owens, the president of NASTC (National Association of Small Trucking Companies) had agreed to come to Pilot "and bring four of his top guys with him."

Hazelwood said the association controlled 300 million gallons of diesel per year.

He said, with total diesel usage shrinking due to certain trucking company efficiencies, "We have to work all the harder to not only keep our share but increase our share."

On the sophistication of trucking firm owners, Hazelwood said, "Customer A looks in every orifice. Customer B doesn't even know you have an orifice."






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