UPDATE 7/29: Two more yellow boxes. Fenwick and Welch pled guilty, it was reported today.
DOJ is up to five guilty pleas in the PFJ fraud investigation. Adding in CHS-1 and CHS-2 (Greco), that adds up to seven cooperating PFJ employees in the investigation. I thought it might be useful to see where these people are in the org chart and check into how it’s mapping out. In particular, are there are any straight lines to Jimmy Haslam?
The org chart is based on the info in search warrant linked here; it’s a best effort, but in some cases I’ve guessed who reports to whom. (Stinnett is a question; I’m assuming discounting coordinator is part of accounting and rolls up to the CFO.) If you’re not up to speed on the case, here’s the best review I’ve read on it.
Who has pled guilty?
- Arnie Ralenkotter, Eastern Regional Sales Director based in Hebron, KY (Cincy suburb). Uttered the immortal line, “He thinks you’re fuckin’ em. So you might as well be fuckin ’em.”
- Ashley Judd, Inside Sales (unclear whose account she handled). Judd told CHS-2 that if anyone ever came in the office that that file would be first one that Judd would burn.
- Kevin Clark, Sales Rep based in KC. Unlucky for him, his boss was a DOJ informant and was rolling tape when Clark said: “You’re gettin’ like cost-minus-1 but we were really givin’ him like cost-plus-3. And the fucker never checked in the optimizer! To me, I felt like sayin’ Well you’re the moron that didn’t check it!”
- Jay Stinnett, unclear his official role or who he reports to. He was an outside rep, was promoted, and was at Freeman’s lake house meeting with other sales directors. As near as I can tell, he seems like a Sales Productivity and/or Training jack-of-all-trades. He didn’t teach the manual discount break-out session, but he planned it. Among his damning tape: “Our advantage is their ignorance.” (Male voice) “Yeah, AKA, we’re fuckin’ ‘em. (Laughter.)”
- Holly Radford, Inside Sales for Hanscomb. In the fateful breakout session she coined the phrase, “Welcome to the gray side.” She also handled Stinnett when he was on the road and ‘kept his shaved accounts straight.’
Who must be sweating it out?
- Brian Mosher, National Accounts Manager. At the sales meeting, he taught the breakout sessions on manual rebates.
- Vicky Borden, Inside Sales Director. Her team seemed to be the mechanics enabling the manual rebate process. April 1, a couple of weeks prior to the warrant being served, she was huddled up in meetings with Seabrook (General Counsel) and Steenrod (CFO) and was asked to provide them info on Pilot’s direct sales manual rebate practices.
- John Freeman, VP Sales. The likely fall guy. Was the person who bought the airplane in 2008 to settle with Western Express after Western discovered a million dollar shorting. (Seems to be some shenanigans on Western’s side of that transaction, FWIW.) “Hey, this is a game. We’re playin’ fuckin’ poker with funny money, and its liar’s poker with funny money because of all this cost-plus stuff. So, you know, I’m not, I don’t want to get into a moral or ethical conversation, because I believe that if a guy’s gonna butt-fuck you then we got to go to butt-fuckin’ him harder than (UI).”
What about Jimmy?
It seems obvious that the CEO would know why he’s buying a customer’s $7,000,000 airplane that doesn’t fly for $1,000,000. But that (the Western incident) was in 2008 and it seems like the customer walked away happy. Apart from that incident, CHS-2’s inside sales person offers a pretty exculpatory statement for Haslam here:
CHS-2: [Freeman] was cooking the books pretty good?
CRUTCHMAN: Oh yeah.
CHS-2: And why wasn’t Jimmy smart enough to figure that out?
CRUTCHMAN: Does he care?
CRUTCHMAN: He just wants numbers.
CHS-2: But he knew … John [Freeman] was monkeying with the rebates.
CRUTCHMAN: He don’t know anything about our business.
CHS-2: Well, he knew about Western, cause I remember sitting in sales meetings.
CRUTCHMAN: Western, because it got called out because of Knight.* That’s the only reason. He didn’t know about the others.
Also note, Haslam was not at the Freeman’s lake house when the sales meeting was being planned; was not in the breakout sessions at the sales meeting when reps were being trained on manual rebates. Freeman does not report to Haslam, he reports to President Mark Hazelwood.
In short, and based only on the affidavit, there is not a slam dunk case apparent that links Haslam to the fraud.
We’ll try to stay on top of the developments and keep the org chart updated.
Random: We’re not sure but we think Vols’ basketball coach Bruce Pearl’s daughter is selling for PFJ out of Chicago. (He has a daughter Jacqui and how many Jacqui Pearls from Knoxville are there, seriously?)
* Knight Transportation was looking into purchasing privately-held Western Express around this time and auditing their books which how the ‘plane deal’came about. Either Western didn’t want Knight (traded on NYSE: KNX) to know about the plane or needed to get it off their books. In any event, it seems the deal fell through.