UPDATED: Haslam family company under criminal probe

Tuesday, April 16, 2013 at 3:39pm
Updated 4:45 p.m.

Cleveland Browns owner Jimmy Haslam said Tuesday the federal government has launched a criminal investigation into rebates offered by the truck stop chain owned by his family, including his brother, Tennessee Gov. Bill Haslam.

Agents from the FBI and Internal Revenue Service raided the Pilot Flying J headquarters in Knoxville on Monday.

Jimmy Haslam, who is the CEO of Pilot Flying J, held a news conference in Knoxville to confirm the investigation is criminal, rather than civil, in nature.

"We don't know a lot. It appears to be centered on a very insignificant number of customers and the application of rebates, that rebates that were owed to the customers were not paid. We, of course, disagree with that," the CEO said.

Haslam said subpoenas had been issued to several members of his 23-person sales force, though he said he was unable to identify any specifically. Haslam said he had not been subpoenaed and no one has been arrested.

Bill Killian, the U.S. attorney in Knoxville, told The Associated Press that four search warrants have been served on Pilot, but the reasons have been sealed by a federal court.

FBI and Internal Revenue Service agents locked down the Pilot Flying J headquarters Monday afternoon and ordered most employees out of the building as they conducted their search well past midnight.

Haslam said essential personnel were allowed to remain in the building to ensure the company's nearly 500 truck stops had sufficient fuel supplies. It was unclear why the IRS was involved in the raid, he said.

"It does not involve, as best we can tell - and I'm pretty sure we're right - any type of tax issue," he said. "So there's no evasion of tax or federal taxes, which candidly is what your suppliers, particularly fuel suppliers, worry about."

Investigators are looking at rebates offered to trucking company customers, the company said. Some trucking companies receive discounts or rebates on fuel purchases from truck stop chains.

Haslam said that the company is launching an internal investigation, and that his responsibilities as owner of the Browns wouldn't be affected. He said he planned to travel to Cleveland this week and next as the team prepares for the NFL draft.

"First of all I apologize, because the last thing we ever want to do is put any kind of blemish on the city of Cleveland - which we've grown to love - or the Browns," he said. "So I personally feel bad about that, even though I don't think we've done anything wrong."

Law enforcement experts say a likely reason for the suddenness of the search is that federal investigators want to preserve as much evidence as possible under a warrant approved by a federal judge.

Former federal prosecutor Jeffrey Neiman said search warrants are sought when investigators fear that documents could be lost or destroyed before being requested under subpoena.

"Search warrants of big companies are rare and they are going to be done when the investigators have a sense of urgency," Neiman said.

Earlier Tuesday, the Republican governor made an impromptu visit to the press suite in the legislative office complex in Nashville to discuss the raid. He said that he had not been contacted by federal authorities and that he was going to concentrate on "being governor and doing things I can control."

Bill Haslam said he has not had an active day-to-day management role in the company in 15 years. He defended keeping his unspecified holdings in the privately owned company outside of a blind trust he established for his other investments after he was elected governor in 2010.

"The point of a blind trust is to say 'I don't know that I own that,'" Haslam said. "As I said at the time, it felt a little disingenuous to say 'I don't know if I own Pilot or not.'"

Haslam has refused to divulge how much money he earns from his stake in Pilot, which had $29 billion in revenues in 2012. He has argued that releasing his Pilot earnings would reveal personal information about the income of family members not running for office and proprietary information.

The Haslam brothers are supporters of the University of Tennessee, where their father, Jim Haslam, played tackle on the 1951 national championship football team under Gen. Robert R. Neyland, who built the Volunteers into a football powerhouse.

The elder Haslam founded the Pilot Corp. in 1958 with a single gas station in Gate City, Va. He credits his sons with expanding the chain from mostly gas stations and convenience stores to a "travel center" concept featuring branded fast-food service.

Bill Haslam acknowledged that the federal raids were worrisome.

"That's a business that obviously my family is involved in, people I care a lot about," Haslam said. "And to say, 'Oh, it doesn't feel like a big deal,' is wrong."


10 Comments on this post:

By: pswindle on 4/16/13 at 2:50

Are you saying that a FBI raid is over rebates? Do you think that all of TN is dumb and blind and would believe that tale of woe?

By: bfra on 4/16/13 at 6:23

And It is a pity this po "oh so rich family" has to be bothered with these "Federal worrisome" raids. Cry me a river & clean up the place! Just don't know why the IRS is involved!

By: Loner on 4/16/13 at 7:00

The plot sickens....it's criminal, not civil....there's trouble in paradise. There has to be more to this....the feds don't normally shut down the corporate headquarters of companies that do 29 billion per year in business....this story will go national....and Governor Billy Haslam's family will have no control over that.

By: Ralphieboy on 4/16/13 at 9:13

Of course when you have a US Attorney appointed by a democratic President who sees a chance to embarrass an important republican family, politics would never come into play.

By: Wild Bill on 4/17/13 at 7:15

Just ask Gibson Guitars how unreasonable a federal raid and investigation can be.

Yes they settled for a relatively small fine. But anyone really familiar with the case knows that he Feds had a very weak case and were glad to get what they got. Gibson could have contested in court but that would have cost them million in legal fees.

Also Gibson can continue to buy rosewood from India, which was the crux of the raid to begin with.

By: Moonglow1 on 4/17/13 at 7:58

Moonglow1: The 1 percenter's make their money through taxpayer incentives (as Nashville taxpayers are doing for HCA in exchange for jobs?), crooked accounting\cooking the books, grabbing taxpayer money to subsidize their businesses, off shoring \ hiding their money, engaging lobbyists to influence policy, and other questionable tactics.

Two examples are the Frists when Rick Scott ran HCA (Medicare fraud \ billing) -even through only one person went to jail, they paid a fine, and went on to make more millions, and the owners of Sommet Center (crooks). I will be very curious on the Haslam outcome.

The Fed's don't raid unless there is strong evidence of wrongdoing. It appears someone was keeping the "rebates" to inflate their "bottom line. "

Ah yes! You gotta love these 1 percenters: millions - not enough; billions - not enough. They are the reason the country is "going to h#ll." Profits are off the charts and so are jobs - off the charts as there are no jobs.

I say round up these CEOs and lock em up. The govt got rid of the Italian Mafia and replaced it with American CEOs who fleece the public.

By: gm0168 on 4/17/13 at 12:07

UT Athletic Department is sweating bullets about now......love it!!

By: Rasputin72 on 4/17/13 at 2:20

One can never be too clever in the pursuit of heaven on earth.

By: jonw on 4/18/13 at 11:17

I would put no "dirty tricks" beyond the reach of Eric H. Holder, Jr., & Oblamer.
Maybe they were trying to find the semen stained blue dress.

By: Moonglow1 on 4/18/13 at 1:04

Moonglow1: jonw-looks like President Obama found "the blue dress" hiding and slinking in Haslam's closet!!