Jimmy Haslam Had His Computer Seized as Part of FBI Investigation into Fuel Rebate Fraud, and Informant Alleges He Had Knowledge of Fraud

Jimmy Haslam Had His Computer Seized as Part of FBI Investigation into Fuel Rebate Fraud, and Informant Alleges He Had Knowledge of Fraud


Jimmy Haslam Had His Computer Seized as Part of FBI Investigation into Fuel Rebate Fraud, and Informant Alleges He Had Knowledge of Fraud

Jerry Jones is only the second shadiest person in this photo

Jimmy Haslam, new owner of the Cleveland Browns, could be in some trouble, and the rest of the NFL owners cannot be happy about the attention for his company, Pilot Flying J (“Pilot”), this week. His company’s headquarters were raided twice this week by the FBI and IRS. The affidavit used to obtain the search warrant for the initial massive search of the building (and some other locations) has been publicly released.

The FBI’s investigation centers around fraud related to client rebates for diesel fuel purchases. Without going too far down the world of Travel Center fuel, Pilot would have agreements with various trucking companies on fuel rates, based on the individual company and how much fuel they used. In exchange for basically agreeing to get fuel at Pilot (rather than a competitor like Love’s), the customer would get a fuel rebate that would be sent monthly. Pilot, on a large scale involving several regions across the country, would basically skim money and manually alter the rebates before cutting the check. Large amounts of money across several customers (It looks like it might be well over 100). A cent or two per gallon everywhere adds up.

The FBI had a previous employee, and two current employee informants who provided information for the affidavit. One of those, a Regional Sales Manager, recorded conversations on numerous occasions since last fall, some of the transcripts of which are provided in the affidavit.

That informant alleges “that the Rebate Fraud has occurred with the knowledge of Pilot’s current President Mark Hazelwood and Pilot’s Chief Executive Officer James A. “Jimmy” Haslem, III, due to the fact that the Rebate Fraud-related activities have been discussed during sales meetings in Knoxville, Tennessee, in which Hazelwood and Haslam have been present.”

Haslam, as CEO, is not implicated as often directly within those conversations. Several of the management level personnel do appear in significant trouble. With Haslam, there is at least wiggle room about his knowledge–so far and just based on the contents of the affidavit.

The most troublesome part for Haslam is a conversation between the informant and Vice President of Sales John Freeman. Throughout the discussions, there is reference and frequent jokes to an incident where Freeman got caught by a customer, and ended up having to buy a $1 million airplane off the client to settle it. In one part, Freeman explains ”

Fuckin’ A, I mean, I called Jimmy and told him I got busted at Western Express. . . Oh, he knew it. Absolutely, I mean, he knew all along I was cost-plussin’ this guy. He knew it all along. Loved it. We were makin’ $450,000 a month on him — why wouldn’t he love it? . . . Did it for five years, cost us a million bucks. I mean, we made $6 million on the guy, cost us a million bucks.

As a result of those allegations in the affidavit, the FBI obtained a warrant to search the headquarters. Among those items they were after? Jimmy Haslam’s computer, to search for more evidence that he directly knew of the fraud rebate issue. The search was to obtain more evidence to corroborate the extensive conversations that the FBI has about the fraud. For now, Haslam has less direct evidence against him than some of the others named, but that could change depending on what the searches reveal.

This is far from a case, though, of a CEO not having any knowledge of a small violation by a localized department, which hides it from the superiors. If the allegations are true, this was a wide scale way of doing business, and Jimmy Haslam may be in some serious trouble. The transcripts reveal that Pilot was defrauding trucking customers that were deemed too unsophisticated to discover that the agreed-upon deal was being changed. There is even reference at one point about being able to take advantage of some in Florida because of language barrier issues. Do you think the NFL wants to be associated with an owner, when that emerges?

In a league where the commissioner has suspended players even when the legal process hasn’t played out, because of the “stain on the shield”, you have to wonder if the rest of the owners will look inward, and explore recourse that may result in another change in Cleveland.

[photo via USA Today Sports Images]

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