Exclusive 5 On Your Side investigation details how FBI built case into Jimmy Haslam's Pilot Flying J

FBI, court records reveal new details

KNOXVILLE, Tenn. - An exclusive 5 On Your Side investigation reveals new details about the FBI probe into Pilot CEO Jimmy Haslam and his company.

An extensive review of FBI documents, search warrants and court records provides an inside look at how the federal probe into alleged fraud began.

In Knoxville, it was a picture perfect day on April 15, a typical Monday morning at the nation's largest truck stop operator. But just a mile and a half away, at FBI headquarters, agents were suiting up for a four-and-half-minute ride to Pilot Flying J's Headquarters.

Dennis Francis is a longtime Knoxville criminal defense attorney with both law enforcement and judicial connections. Francis said the FBI raid was so secretive that, "even the Chief of Police in Knoxville did not know where they were going."

"Turn off your radios, turn off your cells phones. Meet us at a rally point and we're going in," said Francis recalling how sources described the hours leading up to the raid.

Once inside Pilot Flying J Headquarters, agents headed straight to the top floor, including the front office of Pilot CEO Haslam.

"I suspect that these search warrants may not be the beginning of this investigation. These search warrants may be the end of the government's investigation," Francis said.

In fact, the FBI's investigation began two full years before with a single tip.

An extensive review of FBI documents reveals how the probe began on May 4, 2011. The tipster described to federal agents "alleged fraudulent activity by certain Pilot employees."

Just weeks later, in June 2011, the FBI's tipster began secretly recording someone inside the company who claimed to know even more.

Over the next few months, a Pilot regional sales director on a recording identified two key players inside Pilot Headquarters in Knoxville: the company's vice-president and its national sales director. He claimed that both were "fraudulently withholding" fuel rebates from truckers.

The day after the raid, April 16, Haslam held his first news conference to discuss to the raid.

"I have no idea, this is all very new to me," said Haslam when describing events surrounding the raid. "As you guys know, we run a tight ship here and we have immediately begun our internal review."

But the ship was already in danger. By the fall of 2012, the FBI had secured a third source: a former Pilot sales manager.

On Oct. 2, 2012 FBI agents made her an offer she couldn't refuse in the form what known as a "Kastagar letter."

Francis said it's an offer to testify with some protection.

"They come in, they take a statement from you, you swear the stuff in there is true," Francis said.

"Then, they say we're not going to use this against you unless or until you take the witness stand and you testify differently."

It worked.

According to FBI records, she described even more Pilot Flying J employees at headquarters who allegedly took part in the fraud.

Just two days later, on Oct. 4, 2012, the FBI moved into high gear.

For the first time, agents approached the Pilot Flying J regional sales director they had been secretly recording now for more than a full year. He agreed to work undercover.

For the next six months, dinners, training sessions and even meetings inside Pilot Headquarters were all recorded, detailing the alleged fraud.

The FBI had hit the jackpot and it a nerve with Haslam.

"To have this type of incident to happen here at Pilot Flying J is tough," Haslam said. "It really rocked us back. I won't tell you any differently."

Through his attorney, Haslam declined to be interviewed for this report, but he has consistently denied any knowledge of alleged fraud and any wrongdoing.

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