A man who was involved with the FBI’s investigation into Pilot Flying J’s infamous fuel rebate scam is now claiming that the fuel giant’s list of fraud victims also included the United States Government.
When federal agents first raided the headquarters of Pilot Flying J back in April of 2013, John Verble was a broker at Morgan Stanley Smith Barney’s Knoxville office. According to Verble, he helped the FBI conduct the investigation into Pilot, acting as an informant and even wearing a wire during conversations with Pilot employees.
The FBI investigation led to a raid at Pilot headquarters and a series of arrests, including eventually Pilot Flying J President Mark Hazelwood, over a fuel rebate scam which the company has admitted legal responsibility for. Some trucking companies are still involved in litigation against Pilot and its executives, but most of the carriers involved received a part of an $87 million class-action settlement.
But it turns out that – according to Verble – not every victim of Pilot’s scam has been revealed. In a petition to the U.S. Supreme Court, Verble’s lawyer writes that “one of Pilot Flying J’s largest customers is the U.S. government, which buys hundreds of thousands of gallons of diesel fuel periodically for use by the Postal Service, and that the U.S. government was defrauded of its rebates in the same fashion as private trucking companies.”
While it has not before been stated publicly that the US government might have been a victim, that claim does not seem to have surprised Pilot attorneys.
“That is not a new allegation to me,” attorney Aubrey Harwell said. “There are certainly things Mr. Verble has said that we disagree with, and we don’t find Mr. Verble’s allegations for the most part to be based in fact. We audited all the accounts and sent money to everybody to whom it was owed.”
Verble is suing for whistleblower protection because shortly after the Pilot raid, he was fired from Morgan Stanley. Verble claims his firing was a result of his involvement with the FBI investigation, though Morgan Stanley claims he was fired over allegations of fraud and insider trading.
His two initial appeals for whistleblower protection were denied for different reasons. His attorney, Richard Neely, who served 22 years as a judge for the West Virginia Supreme Court of Appeals, claims that his protection was denied for “a strong political reason.”
While he didn’t specifically name the “political reason,” Pilot Flying J’s CEO is Jimmy Haslam, owner of the Cleveland Browns, and brother to Tennessee Governor Bill Haslam, also a part-owner in Pilot Flying J.
Jimmy Haslam has maintained since the beginning that he was unaware that Pilot employees were cheating companies out of millions, though during the FBI investigation, his employees were caught on tape saying that not only did Haslam know about the practice, but he approved of it as well.
Here is an excerpt from the original FBI affidavit released after the raid on Pilot headquarters:
VP: [expletive] A. I mean, I called Jimmy and told him I got busted at Western Express.
Confidential Informant: What’d he say?
VP: Oh he knew it.
Confidential Informant: Oh did he?
VP: Absolutely. I mean, he knew all along that I was cost-plussin’ this guy. He knew it all along. Loved it. We were makin’ $450,000 a month on him–
Confidential Informant: Holy [expletive]!
VP: — why wouldn’t he love it?
Confidential Informant: Yeah.
VP: Did it for five years, cost us a million bucks. I mean, we made $6 million on the guy, cost us a million bucks.
Haslam sat for an 8-hour deposition in December of 2016 as part of a court case that two of trucking companies have brought against Pilot and Haslam for allegedly defrauding them through the fuel rebate scam. According to attorneys representing the trucking companies, the deposition was kept “sealed and therefore shielded from public view” at Haslam’s request.
Haslam has not been charged with a crime.