Arnold 'Arnie' Ralenkotter, Ashley Judd: Pilot employees enter pleas in federal rebate fraud probe
No comment from Pilot
Josh Flory, Jamie Satterfield, knoxnews.com
3:59 PM, May 29, 2013
KNOXVILLE — A Pilot Flying J spokeswoman is declining to comment today following plea agreements submitted in federal court by two employees, one admitting to conspiracy to commit mail and wire fraud and the other to a mail fraud charge.
Arnold "Arnie" Ralenkotter, Northeast regional sales director for Pilot Flying J, entered a guilty plea to one count of mail fraud in U.S. District Court in Knoxville, according to his attorney, Ed Yarbrough, a former U.S. attorney in Nashville.
Also, employee Ashley Judd entered a plea today to conspiracy to commit mail fraud, according to federal court documents.
A waiver of indictment filed on Wednesday, and signed by Ralenkotter, said he conspired with other people, including Pilot employees, to commit mail fraud and wire fraud.
"The primary purpose of the conspiracy was to send fraudulently reduced rebate check amounts to some of Pilot's trucking company customers so that Pilot could fraudulently retain rebates that were owed to those customers and so that Pilot could create and maintain the false pretense that those customers were in fact receiving their agreed upon diesel price discount with Pilot," the indictment states.
The goal of the conspiracy was to drive up commissions and profits and hurt competing firms, according to federal court records.
Their pleas signal that Judd and Ralenkotter are cooperating in the federal probe.
Both are free on bond.
According to documents, Ralenkotter would "deceptively" withhold discounts from the company's customers. He engaged in the scheme with other employees from about 2008 to April 2013, documents allege.
The waiver said a regional account representative assigned to work with Ralenkotter would send a monthly spreadsheet via email to Ralenkotter, who worked in Hebron, Ky.
The waiver said that spreadsheet identified the actual rebate amounts Ralenkotter's customers should receive pursuant to their discount agreement and recommended amounts by which to deceptively reduce the targeted customers' rebate amounts without telling them.
Ralenkotter was supervised by Vice President of Sales John Freeman, according to federal documents unsealed last month as part of the FBI's months-long investigation.
"On one occasion between 2008 and 2013 defendant Ralenkotter told a subordinate that if he was not willing to deceptively reduce a customer's rebate, then defendant Ralenkotter would take the customer's account from him," the plea agreement states.
According to an information, Judd was instructed by and conspired with other Pilot employees to change customers' monthly rebates without the customers' knowledge.
Judd was an account representative whose job was to send out rebate checks and talk to rebate customers about any issues or concerns they had, court records show.
She is accused of lying to companies who questioned the accuracy of their rebates.
The information also said Judd, at the request of other Pilot employees, agreed to try to conduct discussions about rebate reductions over the phone, rather than by email, "to minimize the potential that evidence of the Pilot employee conspiracy to reduce customer rebates could be easily retrieved in email."
A Pilot spokeswoman declined comment today.
Last month, federal agents raided Pilot facilities, including its headquarters on Lonas Drive.
In an affidavit unsealed days later, the government used recorded conversations and information from unnamed informants in alleging that certain Pilot employees for years had conspired to engage in rebate fraud against unsophisticated trucking companies.
Pilot Flying J CEO Jimmy Haslam has said several members of the company's diesel fuel sales team were placed on indefinite leave.
News Sentinel reporter Tom Humphrey contributed to this report.