U.S. truck stop firm to pay $92 mln in U.S. criminal settlement

July 14 Mon Jul 14, 2014 3:10pm EDT

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July 14 (Reuters) - Pilot Flying J, the large U.S. operator of truck stops, agreed to pay a $92 million fine to resolve its criminal liability for a scheme in which employees fraudulently withheld diesel fuel price rebates from customers, the U.S. Department of Justice said on Monday.

The Knoxville, Tennessee-based company accepted legal responsibility for criminal conduct of its employees and has made more than $56 million of restitution and $12 million of additional payments to customers, the Justice Department said.

Pilot Flying J, one of the largest privately held U.S. companies, also agreed to improve its accounting and compliance procedures and cooperate with the federal probe of current and former employees, who remain subject to prosecution.

While the company will not be prosecuted, it would face a criminal conspiracy charge if it materially breached its obligations. If that occurred, it would not contest the underlying allegations, the Justice Department 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," U.S. Attorney Bill Killian in Knoxville said in a statement.

Pilot Flying J's chief executive is Jimmy Haslam, who is also majority owner of the Cleveland Browns football team.

"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," Haslam said in a statement. "We've been committed from the beginning of this to doing the right thing, and that remains our commitment."

Pilot Flying J has roughly 650 retail locations, and according to the government sells about 6 billion gallons of diesel fuel annually to trucking companies.

The company generally offers rebates based on volume and other factors to encourage customers to buy its fuel rather than buy from competitors.

But the Justice Department said employees, sometimes with the encouragement of supervisors, withheld rebates to boost Pilot Flying J's profit and their own sales commissions.

It said this was typically done by reducing monthly rebate amounts, or lowering "off-invoice" discounts.

Since April 2013, when search warrants were executed at Pilot Flying J's headquarters and other locations, 10 employees have pleaded guilty to mail and wire fraud charges and agreed to cooperate with investigators, the Justice Department said. (Reporting by Jonathan Stempel in New York; Editing by Dan Grebler)

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