Cleveland Browns owner and business under federal scope

Cleveland Browns owner Jimmy Haslam and chief executive Cleveland Browns owner Jimmy Haslam and chief executive of Pilot Flying J, which being investigated for fraud against its customers. Photo Credit: AP, 2012

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NASHVILLE, Tenn. - Tennessee's Haslam family members, who famously own the Cleveland Browns, are furiously trying to control the damage from news of a federal investigation into the family business, a chain of truck stop operations, that could threaten to unravel decades of growing wealth and influence that spans business, sports and politics in the state and beyond.

Jimmy Haslam, the chief executive of the truck-stop chain, Pilot Flying J, owns the NFL's Cleveland Browns and recently sold his small holding in the Pittsburgh Steelers. His brother Bill is governor of Tennessee, and their father, Jim, has been a prominent GOP fundraiser for presidents and senators. The family has given heavily to philanthropic causes.

"It would be hard to think in Knoxville of a family that has been more active and more consistently generous and supportive of their fellow citizens in all walks of life," said Victor Ashe, a former Knoxville mayor and former ambassador to Poland. "That's what makes this all the more unfortunate,"

Jimmy Haslam's wealth is estimated at $1.8 billion by Forbes magazine, which also ranks Pilot Flying J as the sixth-largest privately held company in the country. The company's estimated revenues of $31 billion come within $2 billion of Tennessee's annual budget plan.

REBATE FRAUD CHARGED

An affidavit released after an April 15 raid of the company's headquarters by FBI and Internal Revenue Service agents alleges that sales employees withheld rebates owed to customers so they could boost profits and pad their commissions. The affidavit indicates the practice was widespread and, according to Pilot employees, was known to the top executives.

At first, Jimmy Haslam tried to downplay the criminal investigation. However, in his most recent public statement this week, he struck a far more serious tone. "That was the most painful -- and still is -- 48 hours that I've ever experienced in business," he said.

The website of The Tennessean newspaper quoted a report Tuesday by WBIR-TV in Knoxville that transcripts of secretly recorded conversations with Pilot sales managers "indicate a perceived vulnerability among businesses owned by Hispanics in South Florida."

The news website continues: "The transcripts quote Pilot's director of sales for the east region, Kevin Hanscomb, as saying, "They're not stupid, there is a language barrier. So you can get away with a little bit more because they know that they are not going to understand everything that you say.

"The transcript continues with quotes from Hanscomb that say Hispanic owners in South Florida would allow some "forgiveness" and believe they may have misunderstood rather than conclude the salesperson was involved in fraud."

Jimmy Haslam has said he won't step aside from the Browns or the company, but he announced an audit of customer contracts, the suspension of several salespeople and personally appealed to customers who Pilot workers belittled in often-crude language.

"We make mistakes like any company does, but there is absolutely no excuse for that kind of behavior," Haslam said. "I don't think I've ever been as embarrassed as I have been since I read the affidavit." No charges have been filed in the case as the investigation continues.

NFL Commissioner Roger Goodell said he met with Jimmy Haslam on Tuesday to discuss the federal investigation into the truck stop chain.

"Jimmy's doing everything he's asked. He's cooperating. He wants to make sure that he's doing all the right things in that regard, and he's assured us he's going to," Goodell said at a predraft event in New York.

FOOTBALL LEGACY

The Haslam family's reputation stretches back to the football dynasty of Gen. Robert R. Neyland at the University of Tennessee, and their political connections are deep.

Company founder Jim Haslam played tackle for the 1951 national championship team under Neyland, who built the Volunteers into a football powerhouse. The family has been a major financial backer of the state's flagship public university and its athletics programs ever since.

The elder Haslam founded the Pilot Corp. in 1958 with a single gas station in Gate City, Va. He credits his sons with expanding the chain from mostly gas stations and convenience stores to a travel center concept featuring branded fast-food service, plentiful truck parking, clean showers and other services.

Under Jimmy Haslam's leadership, the company acquired its closest rival, Flying J, and has become the country's largest retailer of over-the-road diesel fuel.

WELL CONNECTED FAMILY

The Haslam family had long been active behind the scenes in Republican politics, mostly as campaign donors. Jim and Jimmy Haslam were among the top fundraisers for George W. Bush's presidential bids and for other GOP candidates.

Jimmy Haslam has been close friends with Sen. Bob Corker (R-Tenn.) since they were roommates at the University of Tennessee, and their families have vacationed together at Haslam's summer home on Nantucket, Mass.

The governor and Jimmy Haslam also lead the ownership group of the Tennessee Smokies, a Double-A affiliate of the Chicago Cubs. Gary Wade, chief justice of the Tennessee Supreme Court, is part of the group.

Bill Haslam was the first in the family to run for office, narrowly winning the 2003 Knoxville mayor's race. Seven years later he was elected governor. That race featured heavy criticism from both Democratic and Republican candidates about his refusal to divulge financial details about his stake in Pilot.

A spokesman said the FBI allegations haven't changed the governor's views on keeping his Pilot earnings secret or keeping his holdings in the company outside of a blind trust for his other investments.

POLITICAL FOES QUESTION

Democrat Mike McWherter, who lost the 2010 governor's race to Haslam, said the revelations emerging out of the Pilot investigation renew questions about the governor's stake in the company.

"It would have been better for Bill Haslam in retrospect, with all of this information coming out, to have gone ahead with a full disclosure," McWherter said. "Because people would know exactly what his relationship is to Pilot."

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