Wednesday, May 27, 2015

New Charges Fuel Remaining Pilot Rebate Cases

By Walter F. Roche Jr.

With a key mediation session approaching new charges and counter-charges are being exchanged in the remaining handful of civil court cases stemming from allegations of massive fuel rebate fraud by the nation's largest truck stop firm.
The new allegations before a federal judge in Kentucky include a claim that Pilot Flying J not only manipulated promised rebates but also defrauded truckers by manipulating the underlying price being paid for diesel fuel.
Pilot's lawyers have countered charging that four of the trucking firms are making new unfounded last minute charges after learning they were only owed $60,000 under the rebate claims.
The court filings come as all the parties have been called to a Friday mandatory mediation session by U.S. Judge Amul Thapar.
In a filing this week, attorneys for FST Express, Wright Transportation, HB Logistics and Dick Lavy Trucking charged that "there was far more to Pilot's fraud than meets the eye."
They charged that the fraud over the underlying cost of the fuel "dwarfs the rebate/discount fraud."
The cases are the only ones remaining after Pilot settled a class action suit in U.S. District Court in Arkansas last year. Pilot paid some $84 million to dozens of transportation firms in response to charges that the Knoxville firm secretly reduced promised rebates to trucker not sophisticated enough to notice.
In the brief filed by four firms that opted out of the settlement, they charged that the settlement enabled Pilot "to buy its way out of a multi-billion dollar fraud for pennies on the dollar."
The suits settled in Arkansas last November followed an FBI raid on Pilot's Knoxville headquarters and the filing of a 120-page affidavit by an FBI agent detailing the rebate shaving scheme.
Pilot also paid $92 million to the federal government in a civil settlement of the allegations.
In a ruling this week, Thapur denied a motion by Wright Transportation to amend its original complaint to include the cost fraud charges. The charges, however, remain for other plaintiffs.
Thapur also ruled that Pilot had not properly responded to some of the charges and gave the fuel firm only till Friday to respond.
Thapur wrote that Pilot's response "is not an acceptable response to the factual allegations."
Pilot, meanwhile, has denied allegations that it failed to respond to requests for documents and records and asked Thapur to deny a motion to extend the deadline for discovery.
"Any claim that Pilot's document production has been delayed and inadequate is simply not supported by the facts," the company brief states.

Monday, May 4, 2015

Pilot Faces Yet Another Suit on Rebates

By Walter F. Roche Jr.

A motion to quash a subpoena on a key former official of Pilot Flying J has been denied even as the travel center firm is facing yet another law suit two years after a highly publicized federal raid on its headquarters.
U.S. Magistrate Judge Bruce Guyton has rejected a motion to quash a subpoena for the deposition of Lori McFarland, who once played a key role in the diesel fuel rebate program that is the subject of an ongoing federal investigation.
McFarland had asked the court to quash the subpoena contending that her testimony would jeopardize her constitutional rights against self incrimination.
In a two-page order Guyton said McFarland could not make "a blanket assertion of her fifth amendment privilege before questioning in order to avoid questioning altogether."
McFarland was mentioned prominently in a 120-page affidavit filed by an FBI agent in federal court in Knoxville. According to transcripts of secretly recorded Pilot sales meetings, McFarland oversaw the rebate program and could manipulate the rebates to boost both company profits and sales commissions.
She was subpoenaed in two of about a half dozen remaining civil suits against Pilot stemming from allegations that top company officials systematically reduced promised rebates to trucking firms who they thought would never notice.
Meanwhile in federal court in Ohio, a suit has been filed by the Dick Lavy Trucking Company of Bradford charging that it had been cheated on promised rebates for a decade by Pilot.
The 24-page complaint accuses Pilot of engaging in "massive fraudulent conduct." Two of the Pilot employees named in the suit, Janet Welch and  Arnold Ralenkotter, already have entered guilty pleas to mail and wire fraud charges.
The suit charges the truck-stop firm with breach of contract, civil theft and violations of consumer protection statutes in Tennessee and Ohio.
According to the complaint when a trucking company official at one point challenged the accuracy of rebates, Pilot officials blamed it on "problems with the billing system." The statement was false and Pilot knew it was false, the suit charges.
The suit repeatedly cites the 120-page FBI affidavit filed to justify the search warrants and the April 15, 2013 raid on Pilot's offices.
 Pilot attorney Aubrey Harwell said Monday he had just learned of the suit and had not had a chance to read the complaint.
Pilot settled dozens of lawsuits in a class action case in Arkansas, but a handful of firms opted out of that $84 million deal.
The remaining suits have now been consolidated before a federal judge in Kentucky. The Lavy suit may also be merged into those cases.
Pilot also reached a $92 million settlement with the federal government over fuel rebate charges.