More details have emerged in the fraud case against Pilot Flying J, the family business of Gov. Bill Haslam which is run by his brother. The company headquarters was raided by the FBI on Tuesday. And man, is this turning out to be a big ol’ shitpile.
The allegation is that the company intentionally reduced monthly rebates due trucking company customers to increase the company’s profitability on monthly P&L statements — and thereby increase sales commissions, which were based on those figures. According to the FBI affidavit, the practice was shockingly commonplace and widespread, involving a wide array of employees — account executives, regional supervisors, executive management; it was even openly discussed in a meeting attended by Pilot’s President Mark Hazelwood and CEO Jimmy Haslam III. This was no whispered back-room deal done under the cloak of secrecy — unless you’re a Pilot Flying J customer, of course. Nope, as layed out in the FBI affidavit, it was business as usual, even something discussed in sales meetings. Everyone, save customers, seemed to know about it. [UPDATE: The Tennessean, which operates the worst website in the history of journanimalism, now has a dead link to the FBI affidavit, because I guess they figure no one ever digs through the memory hole on the web. However, I think this one goes to the same information.]
Even more shocking is the incredible hubris on display in recorded conversations. “Fuck ’em early and fuck ’em often,” says John Freeman, Pilot’s VP of sales on page 50 of the affidavit. What a swell guy.
On Page 52 we hear Arnold Ralenkotter, Pilot regional sales director, joking with Brian Mosher, Director of National Sales, about ripping off what Ralenkotter called “a fuckin’ Russian mafia guy” in Illinois named “Pav”:
MOSHER: How’d it end up?
RALENKOTTER: Well, we agreed to the across-the-board deal. And we didn’t change a thing.
MOSHER: He doesn’t fuckin’ have a clue. He doesn’t have a clue.
RALENKOTTER: But he slid that, he slid the, you know, the Love’s offer letter, where they kinda lay it all out? Walked out of there, I said don’t change a thing. Let him believe whatever the hell he wants.
MOSHER: He didn’t have any fuckin’ clue.
Mosher and the rest treated customers like the enemy. If you were a smart negotiator, they’re all like, “How dare you! You gonna mess with me? I’m gonna mess with you.” But if a customer didn’t understand Pilot’s complicated pricing program, they’re like “Stupid rubes! You deserve to get ripped off!” Indeed, these guys seemed to take special pleasure in preying upon — no, relishing — customers’ ignorance about pricing and rebates:
SCHIMMEL: Let me ask a question. Even though, do we have an idea of what percentage of people out there truly know, have an understanding of discounts? I mean …
MOSHER: I would tell you it’s, I’m gonna say way less than 50%. I’m thinking it’s 25% or less, that really, really know on a day-in-day-out basis. Now, again, that depends, right? Because if you’re sending that customer a daily price fetch, he doesn’t have to know, all he has to do is save his e-mails, okay? Because he can go back and recalculate this stuff. (Laughter.) But the guy that doesn’t– huh?
WELCH: Some of’em. (Laughter.)
MOSHER: Some of ’em, some of ’em don’t know what a spreadsheet is. I’m not kiddin’. So, again, my point is this: Know your customer. Know what you’re sending him, know what his preferences are, know how sophisticated he is, okay? If the guy’s sophisticated and he truly has gone out and gotten deals from the other competitors and he’s gettin’ daily prices from us, don’t jack with his discounts, ’cause he’s gonna know, okay? But the guy that’s just sayin’ “Cost-plus, cost-plus, cost-plus, I need cost-plus.” “Why do you need cost-plus and what do you know about cost-plus? How’s cost-plus compare to retail-minus over the last three months?” “I don’t know, but Love’s is sayin’ it, so I need it.” Solution: Tell him we can do it. Tell him we can do it on a rebate.
What despicable people. I wonder if Gov. Haslam regrets his decision to keep his Pilot Oil holdings out of his “near-sighted” trust, under the reasoning that,
… Tennesseans are “very familiar” with his relationship with Pilot, a privately held company with annual revenues of $20 billion.
Yes, we are very familiar, indeed. Grab the dang popcorn, peeps.