2 Pilot Workers Plead Guilty in Fuel Rebate Controversy
This story appears in the June 3 print edition of Transport Topics.
Two employees of Pilot Flying J pleaded guilty to fraud charges in connection with the federal government’s investigation into allegations the truck-stop chain shorted some trucking customers who participated in its fuel rebate program.
Arnold Ralenkotter, a regional sales director in Pilot’s direct sales division, pleaded guilty to conspiracy to commit mail fraud and wire fraud, and Ashley Judd, a regional account representative, pleaded guilty to a conspiracy charge, according to documents filed May 29 in a U.S. district court in Knoxville, Tenn.
Through the guilty plea, Ralenkotter admitted he had conspired with other Pilot employees to “deceptively withhold” discounts from Pilot customers from about 2008 through April 2013, according to court documents.
By February 2013, the rebate scheme had evolved to the point that Ralenkotter was working with other Pilot employees to identify customers who purchased diesel in locations where Pilot had no direct competition, and who would not likely be able to notice a reduction in their discounts, the documents said.
Judd agreed that employees in Pilot’s direct sales division “have been routinely taking advantage of over-the-road trucking company customers” by reducing their monthly rebates without their knowledge since she began working for Pilot in 2009, according to the documents.
Judd had been instructed by other sales employees, “and agreed through her actions, albeit with reluctance,” to take advantage of some Pilot customers by sending them fraudulently determined rebate check amounts, rather than the actual amounts due to them under their discount deals, the documents said.
Ralenkotter could face up to 20 years in prison and up to a $250,000 fine; and Judd could face up to five years in prison and a fine up to $250,000, according to the documents.
Both agreed to cooperate fully with law enforcement and not to protect anyone who was involved in criminal offenses, the documents said.
“The statements released by the federal court today do not come as a surprise, given what we’ve been learning in our own internal investigations, but are nonetheless disappointing,” Pilot Flying J spokesman Tom Ingram said in a statement May 29. “We want to assure our customers that we are taking every step to correct any wrongdoing that has occurred and to make certain that it does not happen again.”
Pilot’s board of directors on May 1 appointed attorney Reid Weingarten of Steptoe & Johnson LLP to lead an internal investigation of the allegations.
The federal investigation came to light April 15, when FBI and Internal Revenue Service agents raided Pilot Flying J’s Knoxville headquarters to execute search warrants and serve subpoenas.
At an industry conference last month, Pilot Flying J CEO Jimmy Haslam said he was “absolutely not aware” of the alleged rebate scheme before the raid.
He also said the truck stop chain is working with trucking customers to pay back money owed to them.
Several trucking customers have filed suit against Pilot Flying J. Former FBI Director Louis Freeh’s law firm has been hired to represent the plaintiffs.
