The temperature inside the Chattanooga, Tenn., federal courtroom Nov. 13 matched the temperature of the relationship between a Pilot Flying J executive on board with a fraud scheme and a salesman who wasn’t — frosty.
Here are five tidbits from Nov. 13 testimony in U.S. District Court in Chattanooga in the ongoing trial of former Pilot Flying J President Mark Hazelwood and three subordinates on charges they – along with at least 16 other ex-employees of the truck stop giant – conspired to rip off trucking companies by cheating them of promised discounts on diesel fuel.
Jurors have heard a lot about former Pilot Flying J regional salesman Tim Prins’ reluctance to cheat his trucking company customers and the upset it caused his then-boss, Arnie Ralenkotter.
Ralenkotter has admitted he threatened to pull accounts from Prins if he didn’t participate in the fraud, and a series of emails presented Nov. 13 showed Ralenkotter routinely overrode Prins’ rebate offers and required a report of every deal Prins’ struck.
“You were in some ways cutting the legs out from under Tim, weren’t you?” asked attorney Jonathan Cooper, who represents accused regional account representative Karen Mann.
Ralenkotter answered, “Yes.”
“Who was going to be blamed for (the fraud)?” Cooper asked.
“Tim,” Ralenkotter answered.
In one incident highlighted Nov. 13, Ralenkotter cut a discount Prins had promised one of his customers. When the customer – Smith Transport – found out, Prins was upset.
“To maintain my credibility within my territory, I want to be involved in correcting the issue with Smith Transport,” Prins wrote.
Ralenkotter wouldn’t let him.
“Do not have any discussions on rebate checks or fuel discounts!” Ralenkotter wrote.
Prins left Pilot Flying J in 2012 – months before it was raided in April 2013. He is not charged and is now listed as president of a Pennsylvania company that provides trucking companies with risk and fuel management services.
Ralenkotter has pleaded guilty to conspiracy to commit wire fraud and mail fraud.
It was so cold inside U.S. District Judge Curtis Collier’s courtroom Nov. 13, jurors were bundled up in coats and jackets.
One female juror wore a coat, thick gloves and a scarf. She repeatedly cupped gloved hands over her mouth to capture her own warm breath.
If jurors have complained, Collier hasn’t made note of it. By mid-afternoon, it was colder inside the courtroom than it was outside the federal court building in downtown Chattanooga.
Ralenkotter made no bones about Pilot Flying J’s directive to sales staff in 2008 as the Knoxville-based firm sought to overtake the competition in the truck stop industry.
“Isn’t it true that it was part of Pilot’s culture to push … sales (staff) as hard as (they) could work?” Cooper asked.
“We had a weekly benchmark,” he said.
To emphasize that point, Cooper showed jurors an email in which Ralenkotter limited vacation time for any salesman or team of salesmen who weren’t meeting weekly “benchmarks” for diesel fuel sales.
Pennies on the dollar
Cooper is hoping to convince jurors Mann is innocent because, he says, she never intended to defraud truckers but was instead acting on orders from bosses. But Mann, like the rest of her alleged co-conspirators, earned a cut from the fraud and, therefore, profited from the scheme.
Cooper doesn’t deny she got a boost in commission from the fraud but sought Nov. 13 to show jurors just how little that was. He showed jurors a directive from Ralenkotter in which Mann was ordered to short a trucking firm $5,000. He followed that up with a chart showing she made $10 from that transaction.
“You know she didn’t like doing these manual rebates?” Cooper asked Ralenkotter.
“Yes,” he answered.
Cooper continued, “It was a pain, time consuming?”
“Yes,” Ralenkotter agreed.
Earning the big bucks
Cooper let jurors know just how much Mann’s bosses were profiting.
For instance, Ralenkotter said he pulled in some $400,000 a year when Pilot Flying J was raided, but a chart Cooper showed jurors Nov. 13 put his annual haul from commissions and bonuses at more than $750,000.
That same chart showed Hazelwood was earning more than $1 million, and most regional sales executives who have confessed guilt in the fraud scheme were garnering pay similar to that of Ralenkotter.