With the owner of a trucking company thumbing his nose at anything Pilot Flying J offered to garner his loyalty, Arnie Ralenkotter went straight to the top of the truck stop giant, emails showed.
In a July 2008 email sent directly to Pilot Flying J CEO Jimmy Haslam – without including then-president Mark Hazelwood – Ralenkotter outlined salesman Tim Prins’ assessment of the situation the nation’s largest diesel fuel retailer was having with Smith Transport.
Prins had explained that the owner of Smith Transport “has no interest in ever being loyal to one chain” and planned on collecting discounts from Pilot Flying J and competitor TravelCenters of America.
“Jimmy, Tim does a nice job of explaining the situation at Smith,” Ralenkotter wrote. “This is fairly typical of our interaction with this fuel buyer. Good news is he is close to retirement.”
Haslam responded, “Thanks for the update on Smith – disappointing.”
‘We are in a situation’
Ralenkotter next emailed Prins with a directive to cut the discount Prins had just negotiated with Smith Transport by four cents for every gallon the Pennsylvania trucking company bought at Pilot Flying J. Three months later, testimony Nov. 13 in U.S. District Court in Chattanooga, Tenn., showed, Smith Transport got wise.
“We are in a situation at Smith,” Prins wrote in an email.
Ralenkotter later wrote to regional account representative Karen Mann, “Karen, do what is necessary to rebate the difference between what they thought they got and what we ‘mistakenly’ were charging for a three-month period.”
A copy of that email went to Hazelwood, not Haslam.
Hazelwood, Mann, former vice president of sales Scott Wombold and regional account representative Heather Jones are standing trial in U.S. District Judge Curtis Collier’s Chattanooga courtroom on charges including conspiracy to commit wire and mail fraud.
Fourteen other Pilot Flying J executives and support staff have already pleaded guilty to ripping off trucking companies by promising higher rebates than they were paid from at least 2008 until April 2013, when the truck stop giant’s Knoxville headquarters was raided. At least two more former employees have been granted immunity.
Pilot Flying J’s board of directors has confessed criminal responsibility, but Haslam, who also owns the Cleveland Browns, has denied any knowledge of it. He is not charged.
‘He’s at the top’
Ralenkotter, who was director of sales for Pilot Flying J’s northeast region during the fraud scheme, has been on the witness stand for three days, sent there by federal prosecutors Trey Hamilton and David Lewen.
But it was Mann’s attorney, Jonathan Cooper, who entered into evidence email exchanges between Ralenkotter and Haslam as he sought to show Mann was simply following orders when she shorted trucking companies promised rebates.
“He’s at the top of the company,” Cooper said of Haslam as he cross-examined Ralenkotter. “He’s always been at the top of the company.”
Ralenkotter responded, “As long as I’ve been involved with it.”
“You didn’t send this to Mark Hazelwood, did you?” Cooper asked of the email about Smith Transport’s lack of loyalty.
“No,” Ralenkotter answered.
Cooper also showed jurors a September 2008 email in which Ralenkotter reminded his staff of the message Haslam was pushing that year.
“I don’t guess I need to reiterate what Jimmy said in his update, but I’m going to anyway,” Ralenkotter wrote. “We need to make certain we are doing everything we can to deliver the gallons on our focus accounts. Work hard, work smart, find creative ways to get gallons.”
The trial, which began last week, is expected to stretch into late December. But it almost came to a halt Nov. 13 when Collier revealed that he – without notice to either side in the case – allowed a female juror to leave for a trip she’d already booked but didn’t mention during jury selection.
Hamilton cried foul, saying he and Lewen might have booted her from the pool and chosen someone else had they known she’d be unavailable after the trial was already underway. He didn’t contest Collier’s authority to replace her with an alternate juror but urged the judge to delay the trial until she returned.
“We ask the court to fully exercise its discretion,” he said.
Collier refused a delay, saying to do so would then jeopardize any plans the rest of the jurors might have made based on the current trial schedule.
“The longer the trial goes on means there will be additional reasons for delay,” he said. “(The female juror at issue) is not able to perform her duties.”
She will be replaced by another woman selected as an alternate.
The trial continues Nov. 14.