Few details available in IRS investigation of Pilot Flying J

Few details available in IRS investigation of Pilot Flying J

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Knoxville police assisted as the FBI raided the Pilot Flying J headquarters Monday. Knoxville police assisted as the FBI raided the Pilot Flying J headquarters Monday.
"It centers on an insignificant number of customers and the application of rebates, that rebates that were owed to the customer were not paid. We, of course, disagree with that," Pilot Flying J CEO Jimmy Haslam said. "It centers on an insignificant number of customers and the application of rebates, that rebates that were owed to the customer were not paid. We, of course, disagree with that," Pilot Flying J CEO Jimmy Haslam said.
Haslam appeared calm and at ease during a news conference, even flashing a grin at reporters. Haslam appeared calm and at ease during a news conference, even flashing a grin at reporters.

By ALEXIS ZOTOS and SAMANTHA MANNING
6 News Reporter

KNOXVILLE (WATE/AP) – A day after federal investigators raided the Pilot Flying J's West Knoxville headquarters, the company's CEO Jimmy Haslam said the investigation is apparently not tax related.

Haslam said investigation centers around claims of failure to pay rebates to trucking customers.

"It does not involve -- the best we can tell, let me say that, and I'm pretty sure we're right -- any kind of tax issues. There's no evasion of state or federal taxes," Haslam said.

Haslam was unable to provide many details about the FBI investigation.

Investigators have also not released any specifics about why the company was raided Monday.

A spokesperson for the Internal Revenue Service's Criminal Division confirmed the IRS was involved in the raid.

"It centers on an insignificant number of customers and the application of rebates, that rebates that were owed to the customer were not paid. We, of course, disagree with that," Haslam said.

The CEO said he believed the amount of rebates involved to be a "low number."

He said he was not sure why the IRS was involved in the investigation.

"Best we can tell, it does not involve any tax issues," Haslam said.

Knoxville tax and criminal defense attorney Norman McKellar says though he is not familiar with the details of the Pilot investigation, criminal investigations by the IRS are rare.

"Last year there were only 2,500 nationwide," McKellar explained. "These kinds of investigations or prosecutions are relatively rare here in East Tennessee."

The timing of the investigation makes sense, however, McKellar said.

"As we move towards tax day or just passed tax day, you typically will see some of these higher profile investigations or sometimes arrests made," he said. "I don't think it's a coincidence that it happened on April 15. That search warrant could have been executed any of the other 364 days of the year, but April 15 is always a good reminder to people to pay their taxes.

He says normally investigations by the IRS are civil.

"Criminal tax issues come down to intent or what the IRS calls willfulness, filing an incorrect tax return is not a crime but intentionally or willfully filling an incorrect tax return is a crime," McKellar explained.

McKellar says there are several reasons why the IRS would be investigating. The FBI's presence could be a matter of assistance or as part of a separate investigation.

"The IRS doesn't just handle taxes. In a criminal sense they can handle a wide range of violations of law including bank fraud or wire fraud. So simply because an IRS agent is investigating a case for criminal violations doesn't mean it's only a tax violation," McKellar said.

McKellar says Pilot has done a good job handling the difficult situation.

"I think they've done a good job being proactive. They're in damage control right now because as you're well aware, the simple investigation can make people think you've done something wrong," he said.

McKellar adds the search warrants indicate the government believes there is some wrongdoing.

"The government thinks there's something afoot," he said. "Certainly enough something to look in to and investigate. Now in the end does that mean there's going to be a criminal indictment or prosecution? Not necessarily."

He explained the investigation alone does not mean there is wrong doing. He said it's very possible they will determine criminal prosecution is not warranted. That decision comes down to the Department of Justice.

Haslam sent an email to employees Monday saying, "You know by now that our company is the subject of a federal investigation. We are cooperating appropriately with any and all external investigations and conducting our own.

We believe and trust there has been no wrongdoing. We will keep you informed and I encourage you to rely on that information rather than random news reports and gossip that is surely to follow."

That message was followed Tuesday by another email to employees by the company's counsel.

"I am in the process of putting together a hold document for the entire company which will be sent out shortly. Until you obtain a copy of my hold order, DO NOT DESTROY ANY DOCUMENTS IN YOUR POSSESSION," the message said.

Several Pilot Flying P sales employees were subpoenaed as part of the investigation, but Haslam said he had not received one himself.

U.S. Attorney William Killian confirmed Tuesday to 6 News that four search warrants were executed at the headquarters Monday.

Jimmy Haslam's brother, Gov. Bill Haslam, was equally mum Tuesday about the raid.

The Republican governor made an impromptu visit to the press suite in the legislative office complex in Nashville.

Gov. Haslam said he had spoken with his brother, but that he didn't have any further details on which records the agents were searching for.

The governor said he has not had a day-to-day role in managing the company in 15 years, and that he will concentrate on his role as governor while the investigation continues.

Jimmy Haslam said the company was cooperating with investigators and said other than that it was "business as usual."

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