By Erik Schelzig, Associated Press
NASHVILLE, Tenn. — Brad Martin, the newly appointed interim president of the University of Memphis who once hired Gov. Bill Haslam as an executive at Saks Inc., was named Wednesday by Pilot Flying J to oversee an internal investigation into FBI allegations of fraudulent business practices involving rebates to trucking customers.
Martin is a board member of Knoxville-based Pilot, a private company owned mostly by Haslam family members. The country’s largest diesel fuel retailer is run by CEO Jimmy Haslam, the governor’s brother and owner of the NFL’s Cleveland Browns.
Federal agents on April 15 raided the Pilot headquarters, the building housing its computer servers and the homes of three sales executives. The FBI alleges members of Pilot’s sales team deliberately withheld rebates to boost Pilot profits and pad sales commissions. No criminal charges have been filed.
Bill Haslam was president of Pilot when he was hired by Martin in 1999 to start up online retail operations for Saks in New York. Martin said at the time that Haslam had “contributed substantially to the remarkable growth and success of Pilot,” which had grown from a single gas station into a $2 billion business. Pilot’s annual revenues today stand at $31 billion, according to Moody’s Investors Service.
By 2001 Haslam was considering other opportunities after the dot-com bubble burst, and was elected Knoxville mayor two years later.
Martin was selected earlier this month to run the University of Memphis until a successor to retiring President Shirley Raines is found. He starts that role on June 30.
A Haslam spokesman on Wednesday declined to comment about the governor’s his ties to Martin.
Pilot also announced it has hired defense attorney Reid Weingarten, who specializes in white collar and political cases, to manage the internal probe and issue a report to a special board committee led by Martin.
Pilot won’t disclose who serves on its board beyond Martin and Jimmy Haslam. But FedEx Corp. founder and CEO Fred Smith confirmed to the Knoxville News Sentinel last week that he’s a member of the board, and Luxembourg-based CVC Capital Partners has also confirmed it has representatives on the board.
Bill Haslam, who maintains an undisclosed stake in the company, told reporters after the FBI raid that he was not on the board and does not have an active role at Pilot.
Weingarten, a former federal prosecutor, has defended former U.S. Reps. Jesse Jackson Jr., D-Ill., and Rick Renzi, R-Ariz., as well as former top executives at WorldCom Corp., Enron Corp. and Duane Reade Inc..
A previous Tennessee connection includes a role in investigating allegations that Democratic U.S. Rep. Bill Boner used his office for financial gain in the 1980s. The Justice Department in 1987 dropped a grand jury investigation into Boner, who was elected Nashville mayor later that year.
Boner’s attorney in that case was Aubrey Harwell, who has been hired as Pilot’s attorney in the current FBI probe.
Harwell in a phone interview remembered Weingarten as a “very aggressive and forceful” adversary in the Boner case, but said the two lawyers developed a mutual respect for each other.
“He was a man of tremendous integrity, as he his now,” he said. “He was honest, and he was committed to doing the right thing.”
While Harwell is representing the company, Weingarten will report directly to Pilot’s board.
“His response might be different than mine, but we’re not as adversarial as we were years ago, when he was prosecuting and I was defending,” Harwell said.