Pilot-Flying J Owner Faces Investigation

[gpsman]

April 16, 2013
Truck Stop Business of Browns Owner Faces Investigation
By JUDY BATTISTA | NYT

After Jimmy Haslam bought the Cleveland Browns in the summer, he stood
in the middle of a field at his very first practice, wearing a Browns
T-shirt and shorts, a promising sign that the franchise — one of the
N.F.L.’s most storied, but long lagging while in the hands-off control
of the former owner Randy Lerner — would finally have the attention
and enthusiasm of the person in charge.

On Monday, however, it became clear that Haslam, who paid more than $1
billion for the Browns and only a few days ago sold the minority stake
he had held in the Pittsburgh Steelers, has much bigger concerns than
which players the Browns will select in next week’s draft.

Agents from the Federal Bureau of Investigation and the Internal
Revenue Service raided and locked down the headquarters of Pilot
Flying J, the family business of truck stops and convenience stores
run by Haslam, on Monday afternoon in Knoxville, Tenn., as part of a
continuing investigation.

“It will take some time for us to finish what we’re doing,” Marshall
Stone, the spokesman for the F.B.I. office in Knoxville, said,
declining to provide further details.

The scene Monday, according to what a Pilot Flying J employee told The
Knoxville News Sentinel, involved a few dozen federal and local law
enforcement officials, some wearing bulletproof vests, swiftly moving
through the three office buildings on the corporate campus. They were
verifying employees’ identifies and job titles, instructing them to
turn off their computers and cellphones, and telling some to stay
while sending others home.

Haslam, 59, told reporters Tuesday that the investigation was related
to rebates that customers complained had not been properly paid. “It
does not involve any tax issues,” he said.

Documents were seized by the authorities during the search; Haslam
said he did not know specifically which ones. He added that although
he had not been subpoenaed, some members of the company’s sales staff
had been. He also said that he planned to be in Cleveland on Thursday
and Friday to prepare for the draft and apologized because “the last
thing we ever want to do is put any blemish on Cleveland or the
Browns.”

In a statement given to reporters Tuesday in the form of a Q. and A.,
the company acknowledged that multiple search warrants were served
Monday. The statement also said the investigation appeared to center
on the application of rebates to what the company said was a small
number of trucking company customers.

The company statement said that, to their knowledge, no company
executives were targets. And it seemed to raise the question of
whether the raid could be politically motivated; Haslam’s brother
Bill, the former president of the company, is the governor of
Tennessee.

“That’s not for us to say,” the statement said, in reply to its own
question.

The N.F.L. declined to comment.

Pilot Flying J owns more than 600 travel centers throughout the
country and employs more than 25,000 people. Forbes magazine called it
one of the country’s largest privately held companies, with $29
billion in sales annually. The Haslam family, according to Forbes,
owns 59 percent of Pilot, with Jimmy Haslam owning 35 percent of that
share. The magazine lists Jimmy Haslam’s net worth at $1.8 billion.

Haslam, whose father, Jim, played football at Tennessee, bought a
minority stake in the Steelers in 2008. In the summer, he became aware
that Lerner was looking to sell the team, and little more than a month
later, Haslam bought it.

The N.F.L. looks closely, and with independent advisers, into the
finances of potential owners. If the source of the owner’s wealth is a
family business, the league looks at the company finances and its
reputation. There is also an extensive background check into the
individual, similar to those conducted when hiring a top executive.

This is not the first time that the Haslams’ company has had legal
trouble. In 2005, the United States Department of Labor announced an
agreement in which the company would pay 110 assistant managers
$720,000 in back wages and damages to resolve violations of the
overtime provisions of the Fair Labor Standards Act, according to The
News-Sentinel. And the company settled price-gouging allegations in
three states by paying fines in the wake of Hurricane Ike in 2008.

Haslam, with a commanding speaking style, made a strong first
impression in Cleveland, promising that there was no chance he would
move the team and proclaiming that he would be involved and
transparent. That was a marked departure from the reclusive Lerner,
who inherited the team after the death of his father, Al, who
purchased the franchise from the N.F.L. in 1998.

Haslam moved quickly to reshape the franchise. Mike Holmgren was out
as the chief executive, and Joe Banner was in. After the season, Coach
Pat Shurmur and General Manager Tom Heckert were fired. Haslam pursued
Chip Kelly, but was rebuffed before Kelly left Oregon for the
Philadelphia Eagles. Haslam hired the rookie head coach Rob Chudzinski
and General Manager Mike Lombardi.

Haslam spoke to Cleveland-area civic organizations. He was named to
the board of directors of the Cleveland Clinic. He and his wife bought
a home in the area. But in February, he announced that he would return
to Pilot Flying J as the chief executive. John Compton, the former
president of PepsiCo who had been hired in September to give Haslam
time to focus on the Browns, became a “strategic adviser,” which
includes having input on the Browns’ marketing efforts.

“This is about me realizing my first love is running Pilot Flying J
and wanting to return to that job,” Haslam told The Knoxville News
Sentinel at the time.
http://www.nytimes.com/2013/04/17/sports/football/browns-owner-jimmy-haslams-business-is-under-investigation.html?_r=0
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- gpsman