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Haslam board shifts costs from gas stations to taxpayers

Under Gov. Bill Haslam’s aministration, the Underground Storage Tank and Solid Waste Disposal Control Board has been shifting the financial burden of cleaning up toxic spills at gas stations and truck stops from business owners to taxpayers, http://www.tennessean.com/story/news/environment/2016/08/20/haslam-environmental-changes-shift-cleanup-costs-taxpayers/88906192/.

The 14-member board, 12 of whom are appointed by the governor, sets rules for the $50 million environmental fund overseen by the Tennessee Department of Environment and Conservation, or TDEC. The fund has been paying to clean up spills since 1990. It is financed by a combination of a gas tax paid by consumers at the pump and an annual fee paid by owners of petroleum tanks.

Since the board has been reconfigured, members representing consumers have been eliminated.

The board, which retained its four petroleum industry members, has voted in favor of a resolution to increase the state dollars available to private companies for environmental spills caused by failures or accidents from $1 million to $2 million. That became law in 2015.

This year, a new law gives the board the power to give all gas stations and truck stops a big break — suspending their annual fees to the cleanup fund entirely. Some board members have signaled their support for eliminating those fees this year — despite hearing from the man in charge of the state’s underground storage tank program that a “historically high burden of this funding has shifted onto the public.”

Suspending the industry’s financial contributions would leave taxpayers, who haven’t gotten the same breaks as gas stations and truck stops, bearing full financial responsibility for toxic spills.

Tennessee drivers continue to shoulder most of the cost of petroleum spills at Pilot Flying J, Chevron, Exxon and other companies, large and small, through a one-fourth of a cent per gallon gas tax that added up to about $18 million last year. Companies contribute about $2 million in fees each year.

The fund has paid out millions to private petroleum companies since it began operating in 1990, including $10 million to Pilot Flying J, the Haslam family truck stop chain worth an estimated $33 billion. The governor continues to hold an undisclosed financial stake in the company.

A spokeswoman for Haslam noted that the governor took steps to consult with counsel before restructuring the board to ensure there was no conflict of interest. The new structure was proposed by TDEC, said Jennifer Donnals, the spokeswoman.

Even before the reconstitution of the board, members who had been appointed before Haslam took office voted to cut industry fees, Donnals noted.

Ohio judge won’t dismiss claims against Haslam company proceed

COLUMBUS, Ohio (AP) — An Ohio judge won’t dismiss breach-of-contract and other claims against the truck-stop chain owned by Cleveland Browns owner Jimmy Haslam and his brother, Tennessee Gov. Bill Haslam.

Several companies have sued Pilot Flying J in connection with a scheme to cheat customers out of promised discounts and rebates.

A Franklin County judge this week refused the chain’s request to dismiss claims in an Ohio suit. He concluded the companies making the allegations provided sufficient information to pursue the claims.

Jimmy Haslam isn’t charged and has denied knowing about the scheme, which came to light after federal agents raided the company’s Knoxville, Tennessee, headquarters in 2013. It led to millions of dollars in settlements and charges against some employees.

Bill Haslam has said he isn’t involved with operating the company.

Jimmy Haslam would agree to deposition — under some conditions

Jimmy Haslam, CEO of Pilot Flying J and owner of the Cleveland Browns, has agreed to be deposed over ongoing civil lawsuits connected to a rebate fraud scheme carried out by the Haslam family’s $33 billion truck stop chain, reports The Tennessean.

The documents say Jimmy Haslam, brother of Gov. Bill Haslam, would agree to sit for a deposition under specific circumstances. That includes waiting to see how the 11th Circuit Court of Appeals rules on a case, and as long as the deposition takes place over the course of one seven-hour day. Brody also requested a coordinated effort across all of the pending civil cases so Haslam is only deposed once.

Jimmy Haslam is being sued by Wright Transportation, an Alabama-based trucking company, and several other companies around the country in connection to the scheme. The Knoxville-based company agreed to rebate deals with many customers, only to not actually provide those rebates. The case has led to 10 guilty pleas to federal indictments, another eight pending federal indictments and more than $100 million in fees and restitution.

Jimmy Haslam has denied knowing about the scheme or having any part in the scheme, and he’s not been charged. Attorneys for Wright Transportation and others believe information gathered by the FBI indicates Jimmy Haslam at least knew of the scheme.

Judge backs requiring deposition of Jimmy Haslam

MOBILE, Ala. (AP) — Cleveland Browns owner Jimmy Haslam is a step closer to having to answer questions about fraud at the truck stop chain where he is president and CEO.

Haslam has denied any knowledge of the scheme that has cost Pilot Flying J $177 million in settlements with customers and the government since it came to light after federal agents raided the company’s Knoxville, Tennessee, headquarters in April 2013.

Pilot’s former president and seven others, including two former top executives, have been indicted and face trial next year on charges they conspired to cheat customers out of promised discounts and rebates. Another 10 former employees have pleaded guilty in the fraud. But Haslam has not been charged criminally and for three years has fought legal efforts by trucking companies to depose him.

While about 5,500 firms were part of a class-action lawsuit against Pilot that settled quickly, Mobile-based Wright Transportation is one of several that opted pursue their own lawsuits in state court. Haslam has been ordered to sit for a deposition in that case.

On Friday, Mobile Circuit Court Judge Sarah Stewart declined Haslam’s request to reconsider her order, according to al.com. But that does not end his attorneys’ efforts to stop the deposition. They have also filed a motion for a protective order, claiming the case should not move forward until jurisdictional issues are resolved. On May 13, the court will hear arguments on that motion.

Pilot is owned by Haslam and his brother, Tennessee Gov. Bill Haslam, who has said he is not involved with operating the company. It is the nation’s largest diesel retailer with $31.4 billion in revenue in 2014.

Jimmy Haslam seeks to avoid deposition on Pilot Flying J rebates

Pilot Flying J CEO Jimmy Haslam has asked an Alabama judge to reconsider, amend or vacate a deposition order that could force him to testify in court for the first time regarding the rebate scheme plaguing the $31 billion family truck stop chain.

Further from The Tennessean:

Attorney Joseph McCorkle Jr., representing Haslam, filed the motion to reconsider late Friday in the civil case of Wright Transportation v. Pilot Flying J after the judge’s order came earlier in the day.

Among several claims, the defendant’s motion argues that Circuit Court Judge Sarah Hicks Stewart granted the petition to depose Haslam less than 42 hours after it was filed without scheduling a hearing or allowing Haslam a reasonable opportunity to respond.

The brief says Haslam’s legal counsel is “puzzled” by the decision and that the plaintiff’s petition is “riddled with factual and procedural errors.” The defense also contends the proposed deposition of Haslam is a “thinly-disguised effort to obtain discovery from him to be used in the litigation against him, wherever it ends up.”

Alabama-based Wright Transportation is one of several companies suing Pilot in connection with a scheme where top-ranking Pilot officials orchestrated fake rebates for customers. Haslam, brother of Gov. Bill Haslam and owner of the NFL’s Cleveland Browns, has denied knowing anything about the scheme.

“Of hundreds of cases resolved, this is one of only several unresolved,” said a spokesman for Pilot Flying J. “There is nothing Mr. (Jimmy) Haslam can add to what has become a prolonged litigation by this company.”

A federal investigation into the problem has already led to 10 guilty pleas to federal crimes and another eight federal indictments of former leading executives at the company. Jimmy Haslam is not among them.

Multiple Pilot stations seeking WIGS licenses

In Knoxville, 22 of the 52 local businesses applying to sell wine under a state law taking effect July 1 are Pilot Flying J stations, according to the News-Sentinel.

“The general way people call it is ‘wine in grocery stores,’ but it’s actually somewhat of a misnomer,” said Rob Frost, attorney for Knoxville City Council, which approves all of certificates of compliance. “If you sell above a certain percent of food, you don’t truly have to truly be a grocery store.”

In fact, only 20 percent of a business’s sales must come from retail food, according to the law passed in 2014. The law goes into effect on July 1.

Of the 52 compliance certificates issued so far, Food City has received 10, Kroger nine and Walmart four.

Alyson Dyer, an attorney with the city law office, said she expects more applications to be submitted.

The permits to sell wine are issued by the Tennessee Alcoholic Beverage Commission, but the agency requires a compliance certificate from the local government along with a business’s application.

To receive a compliance certificate, a business must fill out an application with the city, have a background check completed by the Tennessee Bureau of Investigations and receive confirmation from the Metropolitan Planning Commission that the store is correctly zoned for selling alcohol.

Note: A bill recently approved by the legislature prohibits anyone from owning more than two liquor store, but that applies only to sellers of distilled liquors, not those selling only wine.

Indictment of Pilot Flying J ex-president, 7 others, unsealed

From the News Sentinel:
After approving an expansion of scheme to defraud small trucking companies of promised diesel fuel rebates, former Pilot Flying J President Mark Hazelwood made a prediction, according to an indictment unsealed Tuesday.

“We’re all going to be winners for 2013,” the indictment quotes Hazelwood telling sales managers at a November 2012 meeting in which he was secretly recorded.

Hazelwood was arraigned Tuesday on charges including conspiracy to commit wire fraud and mail fraud as well as witness tampering in a nearly three-year investigation.

Seven other Pilot employees were named in the 14-count indictment. All eight are accused in the conspiracy count and nine specific charges of wire fraud.

Hazelwood faces an additional charge of witness tampering.

Former Pilot vice president of direct sales Scott Wombold is also charged with three counts of lying to agents with the FBI and IRS Criminal Investigation Division.

Ten former Pilot employees have already pleaded guilty and are awaiting sentencing.

In addition to Hazelwood and Wombold, the following former Pilot employees are named in the indictment: John Freeman, who was vice president of sales and who has been identified in an FBI affidavit as the architect of the fuel rebate scheme; Vicki Borden, who supervised various sales support staff; sales representatives Katy Bibee, Heather Jones and Karen Mann; and John Spiewak, who is listed as a former regional sales manager.

Trucking companies claim Jimmy Haslam orchestrated rebate scheme

KNOXVILLE, Tenn. (AP) — Two trucking companies are accusing Cleveland Browns owner Jimmy Haslam of directly orchestrating a scheme to cheat customers out of promised rebates and discounts, according to recent court filings.

Haslam is the CEO of Pilot Flying J, the nation’s largest diesel retailer, with annual revenues of around $30 billion. Tennessee Gov. Bill Haslam also holds an undisclosed ownership share in the company but has said he is not involved in Pilot’s day-to-day operations.

Since federal agents raided Pilot’s Knoxville headquarters in April 2013, 10 former employees have pleaded guilty to the scheme to defraud customers. Jimmy Haslam has not been charged with any crime.

The accusations against him came in a bill of particulars filed Friday in federal court by National Retail Transportation Inc. and Keystone Freight Corp. They were first reported by investigative reporter Walter F. Roche Jr. on his blog.

Tom Ingram, a spokesman for the Pilot CEO, said Saturday that he was not familiar with the claims made in this lawsuit, but “Jimmy Haslam has said from the beginning that he was unaware of any issues and that he would get to the bottom of it and deal with any issues. And that continues to be his position.”
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Judge orders mediation in Pilot Flying J lawsuit

KNOXVILLE, Tenn. (AP) — A federal judge has ordered mediation in a lawsuit targeting the truck-stop chain owned by Cleveland Browns owner Jimmy Haslam and Tennessee Gov. Bill Haslam.

The suit claims Knoxville-based Pilot Flying J fraudulently withheld fuel rebates and discounts from customers. Pilot earlier settled similar claims in a class-action lawsuit for $85 million. A few companies opted out of that settlement.

The Knoxville News Sentinel reports (http://bit.ly/1uKOqe1) that some plaintiffs’ attorneys this week objected to the ordered mediation. They said they need to take discovery first to determine what was stolen from their clients.

A Pilot attorney disagreed, saying an audit provided by the company gives an “absolutely full picture” of the damages.

Pilot also recently agreed to pay a $92 million penalty to avoid criminal charges against the company.

Pilot to pay $92M, avoid corporate criminal charges under deal with prosecuters

Pilot Flying J has reached a deal with federal prosecutors to avoid criminal charges against the company, reports the News Sentinel.

Under the deal made public on Monday, Pilot must pay a $92 million penalty over two years and cooperate with an ongoing criminal investigation into diesel fuel rebate fraud.

Federal prosecutors said in a news release that the criminal enforcement agreement “expressly states that it provides no protection from prosecution to any individual” in connection with the case.

“We, as a company, look forward to putting this whole unfortunate episode behind us, continuing our efforts to rectify the damage done, regaining our customers’ trust, and getting on with our business,” CEO Jimmy Haslam said in a company release.

“We’ve been committed from the beginning of this to doing the right thing, and that remains our commitment.”

The government’s investigation of alleged diesel fuel rebate fraud at Pilot became public last year. Since then, the company has reached an $85 million settlement in federal court with trucking customers who claimed in civil lawsuits that they had been shorted on diesel fuel rebates.

Under that settlement, Pilot agreed to repay any amounts owed, plus 6 percent interest and attorneys’ fees.

A criminal investigation is ongoing, and 10 former employees have pleaded guilty to charges in connection with the case.

In the government’s news release, U.S. Attorney Bill Killian said the “terms of this agreement, including the significant monetary penalty and the very serious consequences if Pilot fails to comply, demonstrate quite clearly that no corporation, no matter how big, influential, or wealthy, is above the law.”

The agreement, which was signed on Friday by Pilot attorneys, states that the company will use its best efforts to make any present or former directors, officers or employees available for interviews or testimony, as requested by prosecutors. That includes identifying witnesses who may have material information.

The agreement also does not prevent the Internal Revenue Service from pursuing any civil collection actions.

The looming unanswered question is which Pilot employees or former employees — if any — still might be targeted for indictments. The most high-profile executive is Haslam, the owner of the NFL’s Cleveland Browns, the son of the company’s founder and the brother of Tennessee’s governor.

Haslam has said he had no knowledge of fraud, and Tom Withers, a Savannah, Ga., defense attorney and former assistant U.S. attorney, said Monday that “it would strike me as unusual if the company were to resolve things and they didn’t have some kind of an indication from the government that the government was not going to go after (Jimmy) Haslam. That would be unusual in my judgment.”

On May 19, nine employees left Pilot, were terminated or were placed on administrative leave, including former President Mark Hazelwood and former Vice President of Sales John Freeman, who alleged in a conversation secretly recorded by the FBI that Haslam was aware of the company’s fraudulent activity in at least one instance.