Jimmy Haslam Told Pilot Sales Team To "Use Creative Ways To Get Gallons" Witness Says; Juror For Pilot Trial Does Not Show Up For Court; Flies Off On Pre-Paid Trip

Monday, November 13, 2017

Pilot Flying J CEO Jimmy Haslam told the huge travel center chain's sales staff on Sept. 2, 2008, to "find creative ways to get gallons," it was testified Monday in the Chattanooga trial of four former Pilot Flying J employees facing fraud charges.

Arnie Ralenkotter, a regional sales director, said he responded by sending an email to members of his team. He said he told them the Haslam dictum probably did not need to be re-iterated, but he said he "was going to anyway."

It was testified earlier that 2008 was the year that Pilot sales staff started paying certain "less sophisticated" trucking firms less than the rebates they had been promised. That policy defrauded the trucking companies of millions of dollars and padded Pilot's profits for years.

Haslam, who is also the owner of the Cleveland Browns, is not facing any criminal charges, but the former Pilot president (Mark Hazelwood) national sales director (Scott Wombold) and two sales associates (Karen Mann and Heather Jones) are on trial at the Federal Courthouse on Georgia Avenue.

Ralenkotter, who is among 14 Pilot employees to plead guilty for cheating trucking companies, said he informed his sales people on Jan. 1, 2009, that they could not ask for more than a week of vacation at a time if they were not meeting their weekly sales quota.

The witness, who would answer some emails at 12:30 in the morning, said there was constant pressure to deliver gallons of purchases from the truckers.

Ralenkotter, in testimony on Thursday, said he was making around $400,000 in 2012 - his last full year at the Knoxville-based firm. However, a defense attorney pointed to a record showing he actually got $767,605.41.

He said that included a base salary of over $80,000, commissions of $363,000, a bonus of $167,000, a December dividend of $19,000 and an "August recap" of $135,000.

Ralenkotter said, "I thought it was $440,000." The attorney said, "It was three quarters of a million." 

In contrast, Ms. Mann only earned $10 for cutting the rebate for Patrick Transport at the direction of Ralenkotter. He had told her, "Drop Patrick by $5,000 and see if he calls."

It was testified that several of the companies did notice the shortages and called the company's hand on it. Pilot then had to make good on the promised amounts.

Ralenkotter said not all trucking companies were so easy to deal with. He said a Smith Transport official was adept at playing the travels centers against one another. Ralenkotter reported on that situation to Jimmy Haslam, adding that "the good news is that he is close to retirement."

Haslam replied, "Thanks for the update. Disappointing."

It was testified that Smith Transport at the time was being acquired by Chattanooga-based U.S. Xpress.

Earlier in the day, a juror did not show up for court as the trial was to resume. A court administrator said she was advised that she had a pre-paid trip and had flown off until a planned Nov. 27 return.

During jury selection, the woman notified attorneys that she had paid for some trips and would lose the money if she did not go. However, Judge Curtis Collier said this week was not one that she listed as a planned trip. He said he would not have scheduled court if he had known she would not be there.

Judge Collier said that generally, when both sides decide to keep a juror, he does not later excuse the juror without the approval of the lawyers on both sides. All defense attorneys said the juror should not be excused, but that the case proceed on a delayed schedule. Judge Collier said that might put the close of the trial on into March.

Prosecutor Trey Hamilton urged the judge to use one of the alternates and keep the case going. He said, "Otherwise, why do we have four alternates?"

After a two-hour morning delay for the government to brief the court on legal opinions, Judge Collier ruled that the woman should go off the case.

He said if her schedule had been followed, and considering that he has a commitment for part of the first week of December, that court would only be able to be held for another day and a half in November and a day and a half in December.

The case may last six weeks or more, attorneys said earlier. 

Ralenkotter, of Hebron, Ky., is only the government's second witness (other than two brief witnesses taken out of turn), and he will be back on the stand on Tuesday morning.



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