Up until this week, Cleveland Browns owner Jimmy Haslam had avoided being significantly entangled in a fraud lawsuit against his truck-stop company, Pilot Flying J. Haslam, who bought the Browns in 2012, has denied knowledge in the alleged scheme — which plaintiffs/prosecutors say involved defrauding customers out of promised rebates — and has not been charged with a crime. But his position might have worsened Tuesday, when a recording played before a jury indicated that he might have been aware of the alleged effort.
If Haslam is implicated, it could affect his status as Browns owner, which could reverberate throughout the embattled organization. Will the Browns’ One True Rebuild be disturbed by instability at the top? We delved into the world of diesel-fuel truck-stop fraud so you don’t have to.
Pilot Flying what now?
Pilot Flying J is a gas-and-truck-stop company owned by the Haslam family. There are 750 locations in 43 states and Canada. Forbes listed it as the 15th-largest private company in the United States in 2016, with almost $20 billion in revenue.
What do prosecutors say they did wrong?
Prosecutors argue that Pilot Flying J executives conspired in a fraudulent scheme to issue diesel fuel rebates to trucking companies, only to charge them a higher price. Pilot Flying J headquarters were raided by the FBI and IRS in 2013, and now 14 former employees have pleaded guilty in the case, while four former executives are on trial for conspiracy to commit wire and mail fraud. So, a lot.
The company has already paid $92 million in fines, as well as an $85 million civil settlement to customers.
Is Jimmy Haslam in trouble?
Let’s just say he’s had better weeks. On Monday, former Pilot Flying J executive Brian Mosher testified that he committed rebate fraud to earn promotions within the company, and that he went over spreadsheets with Haslam detailing how much money the scheme had saved the company.
On Tuesday, a secret recording of Haslam was played for a Tennessee jury hearing the fraud case, in which the Browns owner seemingly references the scheme in a training meeting.
“Sounds like Stick’s old deal with Western,” Haslam said.
“Stick” refers to John “Stick” Freeman, formerly Pilot Flying J’s vice president of sales, who on behalf of the company defrauded a trucking company called Western Express, according to Mosher’s testimony. The two companies were only able to settle the matter after Pilot Flying J agreed to purchase a dilapidated plane from Western Express for $1 million — far more than the plane was worth.
Earlier this month, jurors also heard a secret recording of Freeman, whom prosecutors consider the architect of the Flying J fraud, saying of Haslam’s involvement, “He knew — absolutely. I mean, [Haslam] knew all along that I was cost-plussin’ [code for the fraud scheme] this guy. He knew it all along. Loved it.”
Freeman is also expected to testify during the trial in the next two months.
How could this affect the Cleveland Browns?
It could have no impact whatsoever. It could also trigger the sale of the most rudderless franchise in sports for the second time this decade, potentially wiping the slate clean (to the extent that there’s anything on the slate to begin with) and poising the Browns for a third decade of futility. Here are the potential scenarios:
Scenario 1: Haslam keeps the Browns but faces punishment
If Haslam isn’t indicted, the NFL could still take action through the sweeping personal conduct policy, though that seems unlikely. Even if the league did take action, leveling the maximum $500,000 sanction, a six-digit fine is a drop in the bucket for a man with a 10-digit net worth. The Browns would likely be unaffected in this scenario.
Scenario 2: The Browns are run by a different Haslam
If Haslam does become ensnared in the case, the league could empower someone else within the organization with voting rights and decision-making power — basically making someone an interim owner — until Haslam’s situation is resolved, according to Sports Business Daily. Who that executive would be, however, isn’t clear.
In 2013, just months after the FBI raid, when fears of federal charges against Haslam were very real, the same Sports Business Daily report stated that the designated executive that could replace Haslam could be … his father, Jim Haslam II. The elder Haslam founded Pilot Flying J, but he handed control of the company to his son in 1997 and has not been implicated in the case. He owns a minority share of the team, but it’s unclear if this contingency plan would still be the primary option four years later.
In this scenario, the Browns would effectively be under a new, temporary ownership, but that doesn’t mean things would change. Haslam and the league would presumably pick a caretaker with Haslam’s vision in mind, someone who would continue to shepherd Cleveland’s Trust The Process™ rebrand to fruition. As long as Haslam keeps it in the family, the Browns are unlikely to be affected.
Scenario 3: Haslam sells
After buying the team in 2012, it seems unlikely that Haslam would sell unless he were forced. It also doesn’t seem like he needs the money. Warren Buffett’s Berkshire Hathaway agreed to buy a controlling stake of Pilot Flying J in early October, and by 2023 the Haslam family’s stake in the company will drop from 77 percent to 20 percent. Running a football team sounds like a fun retirement hobby.
What could force a sale is a scenario in which the league’s owners turn on Haslam. If they decide that Haslam and any baggage that comes with him (like, say, federal charges for conspiracy to commit wire and mail fraud) are liabilities, the league could urge him to sell. If he refuses, they could even trigger the so-called “nuclear option,” in which the NFL executive committee finds that Haslam undermined “the welfare of the League” and forces him to sell. This was recently rumored to be a path owners discussed taking against Cowboys owner Jerry Jones.
A forced sale seems unlikely, but if it were to happen, it could be devastating for the Browns. New ownership would likely mean a new front office and a new direction. (If you spend a billion dollars on something, you might want to choose the people in charge.) So if the Browns do get sold, they could also get reset. The franchise, reincarnated in 1998, has already endured two decades of futility. A sale could mean a third.
Scenario 4: Trump gets involved
It’s an extreme scenario, but in 2017 “extreme” doesn’t require a ton of imagination. Bill Haslam, Jimmy’s brother and the current Tennessee governor, could be contemplating a Senate run in 2018 to replace the outgoing Senator Bob Corker, whom you may know as “Liddle’ Bob Corker.” (Bill Haslam has said he won’t run, but his term as governor ends in January 2019.) Bill Haslam refused to vote for Donald Trump in the 2016 election, and has defended NFL players’ right to protest racial injustice during the national anthem. That being said, Pilot Flying J, of which Bill owns an unknown percentage, donated $300,000 to Trump’s inauguration. And Jimmy and his wife, television CEO Dee Haslam, donated $200,000 to the inauguration. Governor Haslam’s connections to Pilot Flying J would surely be brought up by his opponents in what would be a grueling Senate race.
If Trump — I’m dead serious, please stay with me — prefers a different Senate candidate in the Republican primary, he could start attacking Bill Haslam much like he has attacked other Republicans. There’s a real chance that you could see 3 a.m. Trump tweets in 2018 that read, “Bill Haslam CORRUPT! Flying J scandal stole MILLIONS from customers. Brother ran Cleveland Browns into the ground. Sad!”
In other words, Donald Trump might screw up the Browns.