2 Pilot employees plead guilty in federal court

2 Pilot employees plead guilty in federal court in connection with FBI investigation

Arnold Ralenkotter (right) leaves federal court. Arnold Ralenkotter (right) leaves federal court.
Ashley Smith Judd and her attorney. Ashley Smith Judd and her attorney.

6 News Reporter

KNOXVILLE (WATE) - Two Pilot Flying J employees pleaded guilty to charges in federal court Wednesday, making them the first Pilot workers to enter a guilty plea in connection with a recent FBI raid.

Pilot Flying J was raided by the FBI on April 15 after a whistleblower tipped federal agents off that the company had been cheating regular diesel fuel customers, by reducing the amount of rebates their received through a Pilot rewards program.

Full Coverage of the Pilot Flying J Investigation

Arnold Lee Ralenkotter, 51, is the Northeast regional sales manager for Pilot. He works from his home in Hebron, Kentucky.

Ralenkotter pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud. He faces up to 20 years in prison.

The sales manager is accused of causing and approving the sending of reduced rebate checks to customers.

The plea agreement says an inside manager at Pilot's Knoxville headquarters would send Ralenkotter lists of the actual rebates owed to customers along with suggestions for how much to reduce them by.

He allegedly approved the reduced amounts, or in some cases, reduced them further.

Ralenkotter has agreed to cooperate with the FBI investigation and could eventually be asked to testify against Pilot in court.

"Mr. Ralenkotter expressed to me very early on his desire to do the honorable thing which he felt in part involved the guilty plea and cooperation with investigators," defense attorney Edward Yarbrough said. "It would be expected or hoped at least that his sentence would be more lenient than other members of the conspiracy because of his willingness to come forward."

Ashley Smith Judd, 27, a regional account representative for Pilot in Knoxville, also pleaded guilty to one count of conspiracy to commit an offense against the United States.

The plea agreement says her offense was mainly mail fraud, saying she was instructed to fraudulently reduce the amount of rebate checks that she mailed to customers.

It also says Judd, at the request of other employees, discussed the rebates over the phone with other Pilot workers and left rebate information out of electronic spreadsheets whenever possible to reduce the amount of evidence created in the event of an investigation.

The charge alleges that in one case, when Judd was asked by a customer about a discrepancy in the rebate amount, she told them it was a "lapse in the numbers."

She's also accused of creating false data after a client noticed a discrepancy and requested the information.

Judd faces up to five years in prison.

Both indictments also mention a gathering of diesel sales representatives from November 2012.

At that event, Ralenkotter, Judd and other Pilot employees allegedly attended training sessions in which they were encouraged and instructed to reduce customer rebates.

Both Ralenkotter and Judd will have a status hearing Sept. 24. After that, a judge will set a date to decide their sentences.

Ralenkotter and Judd have been released on their own recognizance.

Read the court documents:

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