Tuesday, February 9, 2016

Indictment Shows Emails Detailed Pilot Rebate Fraud

By Walter F. Roche Jr.

First it was the transcripts of secretly taped sales meetings, but now federal prosecutors have provided new evidence of massive rebate fraud in a series of emails sent by sales executives of Pilot Travel, the nation's largest truck stop firm.
In a 58-page 14-count indictment made public Tuesday, prosecutors detailed how those executives, including then President Mark Hazelwood and Vice President John Freeman systematically lulled unsuspecting truck operators and reduced their promised rebates by millions of dollars.
The indictment charges the Pilot sales staff with "lulling and attempting to lull targeted trucking companies into believing that Pilot was honestly and accurately applying" promised discounts.
And, the indictment charges, the goals were simple: increase market share and profits along with commissions to those in on the scheme.
"Maybe we just need a rebate Queen," one Pilot sales executive conjectured during an exchange about who else in the company should be let in on the scam.
In another exchange Arnold Ralenkotter heaped praise on a sales staffer for her recent rebate shaving efforts.
"Good initiative. That's what I like to see," Ralenkotter wrote.
"I've been doing it a lot more and loving it," the staffer, Karen Mann, responded. "Thanks Arnie."
"Grab that bull by the horns," Ralenkotter responded.
Ralenkotter is one of 10 former Pilot staffers who has already entered a guilty plea.
The indictment Tuesday named eight more,  including Hazelwood, who now face charges of conspiracy to commit mail and wire fraud.
Hazelwood also faces witness tampering charges. The indictment charges that Hazelwood tried to influence his former administrative assistant who was being questioned about his knowledge of the fraud.
 Freeman, the former Pilot vice president of sales, sent an email in which he boasted about how badly one trucker was fooled.
"He's crazy and thinks he's getting  deal and he's not," Freeman wrote. "He's not getting what he thinks."
The indictment also repeats excerpts from the secretly recorded sales meetings held in November 2012 at Freeman's lakeside home.
"We're playing f**kin poker with funny money," Freeman said according to the indictment.
Indicted along with Freeman and Hazelwood were Scott Wombold, Vicki Borden, John Spiewak, Katy Bibbee, Heather Jones and Karen Mann.
Wombold is also charged with lying to a federal agent when he stated that the rebate scheme was not discussed at sales meetings.
Specific victims cited in the indictment include Queen Transportation of North Carolina, BP Express in Tennessee, Koleasco in Michigan and P & I in Ohio.
When officials at Tennessee's Smith Transportation and other companies figured out they weren't getting promised rebates Pilot staffers cited computer glitches and "inadvertent changes," according to the indictment.
The emails cited in the indictment contained detailed information showing what customers should have received compared with the "savings" generated by cutting the promised rebates.
The new wave of indictments is but the latest blow to Pilot since the rebate fraud first became public in April of 2013. The company has paid $176 million to settle claims by truckers and the federal government.
Pilot issued a statement stating that they were disappointed and saddened by the developments and would continue to cooperate in the investigation.
Not named or even referenced in the indictment was Pilot's top executive and owner James A. Haslam, who has consistently denied any knowledge of the rebate fraud.

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