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.

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