Chas Sisk

The (Nashville) Tennessean

NASHVILLE — The national travel center chain Pilot Flying J has struck a deal with federal prosecutors that will spare the company from criminal charges stemming from a scheme to defraud commercial customers of rebates.

The Knoxville-based truck-stop chain founded by the father of Gov. Bill Haslam and run by his brother announced Monday that it had agreed to pay a $92 million penalty. The company also said it would continue to assist criminal investigators.

The deal with the U.S. Department of Justice

stems from a raid on Pilot headquarters more than 15 months ago.

It does not end civil litigation filed by customers, nor does it keep prosecutors from bringing charges against employees of the company.

But it does appear to head off the possibility of an indictment of Pilot and it suggests prosecutors do not expect to bring charges against the company's most senior officers, including chief executive Jimmy Haslam, who also owns the Cleveland Browns.

"We, as a company, look forward to putting this whole unfortunate episode behind us, continuing our efforts to rectify the damage done, regaining our customers' trust, and getting on with our business," Haslam said in a statement. "We've been committed from the beginning of this to doing the right thing, and that remains our commitment."

According to federal prosecutors, Pilot acknowledged it had defrauded customers of more than $56 million and that its employees had fabricated documentation.

Since last year, 10 Pilot employees have pleaded guilty to mail and wire fraud charges arising from the long-running scheme. Brian Mosher, former director of sales for national accounts, has pleaded guilty to conspiracy to commit wire and mail fraud. He is the highest ranked executive to plead.

The penalty, which will be paid over a period of two years, is based on federal sentencing guidelines. The company, which employs 23,000 people and has 650 retail locations nationwide, also agreed to pay restitution and file periodic reports showing it has taken steps to prevent future fraud.

The deal leaves open the possibility of prosecution if the company does not comply.

"The terms of this agreement, including the significant monetary penalty and the very serious consequences if Pilot fails to comply, demonstrate quite clearly that no corporation, no matter how big, influential or wealthy, is above the law," Bill Killian, U.S. attorney for the Eastern District of Tennessee, said in a news release.

"The company has cooperated fully with the government and will continue to do so," said Aubrey Harwell, its attorney.

The deal does not end the Federal Bureau of Investigation and Internal Revenue Service's investigation into the scheme. But it does not place direct oversight over Haslam or other executives.

That fact suggests prosecutors do not expect to bring charges against the company's top officers, said David Raybin, a Nashville defense attorney who has followed the case.

Haslam's awareness or potential involvement in the scheme has been unclear. Papers filed in connection with a April 2013 raid on Pilot's Knoxville headquarters quoted company executives as saying Haslam knew about the scheme and attended meetings in which it was discussed, allegations Haslam has denied.

Raybin said those conversations alone would not be enough to show he knew about or participated in the scheme.

"The government does not press cases like that unless they have really solid evidence," Raybin said. "A passing mention in a meeting is not the kind of thing a federal prosecutor is going to bring."

Meanwhile, trucking firms can continue to press civil lawsuits. One such case is pending in federal court in Kentucky, where eight companies have asked for repayment and damages. Arguments in that case were canceled last week and have not been rescheduled.

(Contributing: WBIR-TV, Knoxville)