Pilot Sales Accountant Said Cheating Trucking Firms Was "Fun"

Thursday, November 9, 2017

A Pilot sales accountant said in an email shown the jury in a Chattanooga trial that it was "fun" to cheat trucking firms out of promised discounts.

Top outside salesman Arnie Ralenkotter, after Karen Mann had set up another trucking account to pay less than had been agreed, wrote, "That's what I like to see. It's more fun for you anyway."

She replied, "Yes, it is. I've been doing it a lot now and love it! Thanks Arnie!"

He replied, "Grab that bull by the horns."

Ms. Mann is standing trial along with fellow sales accountant Heather Jones, former Pilot Flying J president Mark Hazelwood and former national sales director Scott Wombold.

It was testified that, to the contrary, some Pilot employees resisted taking part in the scam that cost trucking firms millions of dollars.

The government displayed emails between Ralenkotter, of Hebron, Ky., and one of his sales guys, Tim Prins, who wrote, "I do not agree with the adjustments. The result could be the loss of a good valuable customer."

Prins said it also could lead to "another embarrassing situation like Smith Transport" in which Pilot was caught and had to repay $67,372 to the firm that it had shorted.

Prins pointed out that Smith at the time was being acquired by Chattanooga-based US Xpress, and he said the situation could have possibly caused Pilot to lose that big account if it were found out.

Prins also worried about one trucking firm that was being defrauded "having ties with the Gambino family."

It was arranged that Prins be moved out of sales into a position in fuels.

Rolenkotter, who was just the second witness in the first week of the trial, told of John Freeman getting promoted to vice president of sales. He said Freeman was especially close with Pilot CEO Jimmy Haslam, who is also the Cleveland Browns owner.

He said the move did not sit well with some in the sales division, including Vincent Greco, who began wearing a mic and working undercover with the government.

In one email, Ralenkotter instructed an accountant to "put in a lower discount" than had been promised a trucking firm. He said he had told the company a higher amount because "I wanted them to think that our deal was better (than Travel Centers of America) so we did not lose business to a competitor."

He informed the company of the promised deal in one email, then less than two minutes later told the office to pay two cents less per gallon.

In another deal, he told Ms. Mann to "put it in at four-cent less and see if the carrier notices."

He testified, "If we thought they would notice, we didn't try it. Once we got caught, we stopped" and blamed it on a computer or entry error.

Prosecutor Trey Hamilton pointed out that president Hazelwood was copied on an email from Ralenkotter where he spoke of the firm "mistakenly" shorting a trucking firm.

The witness said the word "mistakenly" was used as a "wink wink" and "to cover up that we were cheating them."

Asked if he was ever told not to cheat trucking firms or chided for the practice, he said, "Not that I recall."

In another email to Karen Mann, he reminded her to "avoid sending any detail" to the trucking firms about terms of the promised discounts.

Another trucking firm, B&B Transport, got wise to the scheme and got a reimbursement.

An email message said of an official at Keystone trucking, "He's smart and he will discover we are playing with the numbers. Playing games with Keystone is making me nervous."

At one time Ralenkotter suggested that the sales team no longer have to fill out tedious manual price adjustment forms. But Vicki Borden, office sales manager who has pleaded guilty, worried that "I don't think we can trust Jerry's group" to go along with the scheme. She was referring to Jerry Beets, a financial office manager with Pilot at the time.

It was also pointed out that "then Mitch will know too." It was a reference to Mitch Steenrod, chief financial officer.

When a new employee - Kevin Hite - was hired in sales, it was decided to "get to know him before we fill him in on cheating the trucking companies."

Ralenkotter later told Karen Mann to be sure and do the "adjustments." He testified, "It was better to say 'adjustments' than 'cheating.' "

Ms. Mann replied, "Yes, I will continue to make adjustments."

Ralenkotter said the fraud started in 2008 when there was a big fluctuation in the petroleum market - going from a high to a low. He said, "The spread was extraordinarily high, and it was an opportunity for us to keep some of that spread."

He figured he cheated about 20 percent of the customers assigned to him.

Ralenkotter said he was making about $125,000 in 2008, but was up to around $400,000 by the time of a surprise FBI raid on the company's Knoxville office on Tax Day 2013.

Attorney Rusty Hardin asked if he "was one of the first to run in and plead guilty." He said that was right. His plea was entered May 31, 2013 - just a month and a half after the raid.

Ralenkotter said he was "trying to stay out of jail."

The trial resumes Monday at 9 a.m. at Federal Court on Georgia Avenue. Judge Curtis Collier is presiding.





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