CHATTANOOGA, Tenn. - This young mother felt queasy about lying to trucking companies and ripping them off, but she testified on Nov. 20 that she still struggles with labeling it a crime.
“This was Pilot,” Katy Bibee testified Monday in the trial of four former Pilot Flying J employees accused in a $92 million fraud conspiracy. “I trusted the people that worked there 20-plus years … for a company I was so proud to work for … We were free to do any charitable events during work hours … I feel like I was somewhat brainwashed thinking these things were ok.”
Bibee, 36, was among the last to join the list of 14 former Pilot Flying J staffers and executives who have pleaded guilty to charges of conspiracy to commit wire and mail fraud – the same accusations for which former Pilot Flying J president Mark Hazelwood, former vice president of sales Scott Wombold, and ex-regional account representatives Heather Jones and Karen Mann are now standing trial.
Pilot Flying J’s board has admitted criminal responsibility. Pilot Flying J Chief Executive Officer Jimmy Haslam has denied knowledge of the scheme and was not charged.
‘I loved the company’
Called as a witness for the government Monday in U.S. District Court, Bibee remained reluctant to label herself a criminal or her actions in promising trucking firms bigger discounts than they were paid.
“There were things I felt uncomfortable doing at Pilot at times,” she testified.
“At any time, did you think you had done anything to defraud anyone?” asked attorney Rusty Hardin, who represents Hazelwood.
Bibee answered, “No. I didn’t think about things in terms of defrauding or intent to defraud … It may be uncomfortable and not the truth. I wish I would have said, ‘I don’t want to do that.’ I did not think this was a criminal act.”
Bibee, like Mann and Jones, worked under the direction of Pilot Flying J salesmen and sales executives. It was the salesmen and executives whose jobs were to convince trucking companies to buy diesel at Pilot Flying J instead of the firm’s competitors. Her job – like that of Mann and Jones – was to handle the paperwork required to cheat the trucking companies of the discounts her superiors promised to give and, emails showed, to lie when necessary to fool them.
Bibee was fresh out of college and newly married when she snared a job at Pilot Flying J in 2005 – three years before federal prosecutors Trey Hamilton and David Lewen say the fraud scheme began.
“I loved the people I was working with,” she testified. “I loved the company … I thought I was deeply blessed to have this job.”
‘I was scared to death’
Twelve years later – on Tax Day 2013 – agents with the FBI and IRS Criminal Investigation Division showed up on her doorstep with news Pilot Flying J’s Knoxville headquarters was being raided.
“I felt like I should talk to them,” she said. “I was scared to death.”
She initially refused but later agreed to meet them at Pilot Flying J headquarters later that evening.
“I was told everyone else was cooperating,” she said.
Three months after that interview, Bibee was diagnosed with breast cancer.
“I had a lot going on in my life,” she said. “I chose to put (the investigation) aside for a while and focus on getting better and taking care of my children.”
Eventually, though, she received what is known as a target letter – formal notice from federal authorities that she was a suspect in the fraud. Still, she said, she resisted confessing guilt. She trusted her boss – former Pilot Flying J executive John “Stick” Freeman and the man captured on secret recordings boasting about the fraud scheme.
“I never questioned him,” she said. “I thought there had to be a reason for (the lying and fraud). I didn’t think anyone would ask me to do anything wrong.”
“Trusting Mr. Freeman is why you’re here today, isn’t it?” asked attorney John Kelly, who represents Wombold.
Bibee answered, “Yes.”
‘This is clearly a lie’
But Hamilton, who had sent her to the witness stand as part of her plea deal, quickly fired back.
“What did you agree to do with the customers?” he asked.
“To mislead them,” she answered.
Hamilton then asked, “Is this something you would be happy to tell your children you did?”
“No,” she responded.
“You did it anyway?” he pressed.
Bibee said, “Yes.”
“If the search warrant had not happened, would you have continued to do what Mr. Freeman asked you to do?” Hamilton asked.
Bibee answered, “I would continue to do what I was told.”
Hamilton then produced an email in which Bibee lied to trucking company owner Mike Queen about his promised discount.
“Was there a legitimate reason for it?” he asked.
Bibee said, “No, this is clearly a lie I told to the customer.”
But then she added that the company at issue in a particular email – Queen Transportation – was too small to rate the kind of discount the firm had been promised.
“They never expected they would get this kind of discount anyway,” she said. “I’m not saying they deserved (being defrauded). There’s no excuse.”
Hamilton ended questioning of Bibee with an email between Bibee and Freeman in which she mocked a trucking firm owner as “little man Don” and told her boss, “Let’s remember that when we look at his rebate check this month.”