Pilot President Says Profits, Margins Soared During Period Of Defrauding Truckers, Acquisition Of Flying J; Salesman Says He Had "No Doubt" Haslam Knew Of Fraud

  • Wednesday, January 10, 2018

Current Pilot Travel Centers president Ken Parent testified Wednesday that profits at the Knoxville-based firm soared during the time that trucking companies were being defrauded and when Pilot took over the bankrupt Flying J brand.

He said Pilot in 2008 had 300 truck stops. That grew to 440 after the Flying J acquisition in 2010. There were 475 by the end of 2012.

The president said the Haslam family-owned firm had $3.5 billion in diesel sales to trucking firms in 2008. That was up to $5.3 billion by the end of 2012.

He said the average profit margin for Pilot in 2008 was 12 cents. It was 15.6 cents in 2012.

The 21-year Pilot employee said the firm had $420 million in diesel profits in 2008. It rose to $540 million in 2010 and to $730 million in 2011. It was up to $830 million in 2012.

He said fuel sales make up 55-60 percent of Pilot's income. Other funds flow from such areas as sales of food and merchandise.

Defense attorneys in the current Pilot trial in Chattanooga say the fraud against trucking companies  - from 2008 to 2012 - was a relatively small portion of the profit.

Pilot earlier agreed to repay trucking firms over $56 million and pay a $92 million fine to the federal government.

Former Pilot employees Mark Hazelwood, Scott Wombold, Heather Jones and Karen Mann are on trial for fraud in a Chattanooga courtroom. The trial resumed Wednesday after a month's delay.

A former Pilot sales director from Kansas agreed Wednesday that he told the FBI earlier he had "no doubt" that CEO Jimmy Haslam and president Hazelwood knew about the fraud.

Jimmy Haslam, who is the brother of Gov. Bill Haslam, has denied any knowledge of the fraud. He has not been charged, but a host of Pilot employees have - with all but four pleading guilty, including Clark. 

Kevin Clark said he did not speak directly to either man about the wide-spread scheme to pay trucking companies less than they had been promised in rebates.

However, he said it was discussed in periodic profit and loss sessions at the Knoxville headquarters. He said he would note that a company might be listed at a certain rate "but they were not really getting that deal.

He said Hazelwood sat in on the sessions and Jimmy Haslam "would be in and out."

Jimmy Haslam has denied any knowledge of the fraud scheme at Pilot. 

Clark said he was uncomfortable cheating trucking companies, but he did it to keep his job. He said he gained a host of manual rebate clients from Brian Mosher. He said, "I continued defrauding them, but not to the extent he was."

Clark said of the scheme, "I knew a lot of people were doing it and I felt pressured to do it too."  

He said "upper management encouraged" the cheating - especially after John Freeman was elevated over sales. "Then there was pressure to do more defrauding," he said.

Another witness, who is the keeper of the records involving Pilot plane flights, told of an email exchange in which Hazelwood wrote, "Let's get cost plus going."

John Freeman replied, "The opportunity is there."

Hazelwood answered, "Awesome."

It was testified earlier that cost plus referred to a payment system that made it relatively easy for Pilot to short change trucking firms on promised rebates.

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