Pilot Flying J Exec Says Senior Management Knew of Rebate Fraud

KNOXVILLE, Tenn. -- Pilot Flying J senior management was aware of the alleged fuel rebate scheme recently uncovered by federal officials, according to a newly unsealed plea agreement.

Jay Stinnett, who served as a senior sales director for the Knoxville, Tenn.-based operator of more than 650 travel centers and travel plazas, admitted his role in the alleged fraud on April 15, according to the documents. As part of his plea agreement, Stinnett agreed to cooperate with the FBI and IRS in their investigations into Pilot Flying J.

He has since pointed the finger at senior members of the company's management team, stating that they were aware of the fraud, The Tennessean reported.

Stinnett did not name the offending parties. However, a warrant affidavit filed in the days after the raid shows Vice President of Sales John Freeman talking openly about how to carry out the rebate fraud with President Mark Hazelwood, the newspaper noted.

"[Stinnett] knew his actions were dishonest. His actions were done out of loyalty to Pilot for the purpose of increasing the company's profitability, and members of Pilot senior management were aware of the rebate reduction scheme," the plea agreement states.

In addition to Stinnett, guilty pleas have been filed by Pilot Flying J employees Kevin Clark, Holly Radford, Arnold Ralenkotter and Ashley Smith Judd. All pled guilty to mail fraud and conspiracy in federal court.

According to WKYC-TV, federal authorities are perhaps working their way up the ladder of Pilot Flying J corporate management. CEO Jimmy Haslam has repeatedly denied any involvement in the rebate fraud.

In a statement released earlier this week, Haslam said, "We are disappointed in the actions of these employees toward our customers. We assure our customers that our five-step plan to correct any wrongdoing and to make certain these actions do not happen again is ongoing, and that our customers' confidence in the vast majority of our 23,000 team members nationwide remains well-placed."

Stinnett faces up to 20 years in prison and a possible fine of up to $150,000 plus restitution.