Billionaire Haslam investigated over Pilot payments, lawyer says

Federal prosecutors in Manhattan are investigating whether billionaire Jimmy Haslam offered payments to executives at Pilot Travel Centers that could affect a sale of his stake in the company to Warren Buffett's Berkshire Hathaway.

Prosecutors in the Southern District of New York are reviewing the alleged payments, which could have boosted the value of Haslam's Pilot shares, according to people familiar with the matter. The probe was disclosed at a court hearing in a civil lawsuit between Haslam and Berkshire.

Brad Wilson, a lawyer for Haslam's Pilot Corp., said the truck-stop chain's officials learned of the probe as part of pre-trial information exchanges in the civil case over the accounting methods used in the sale. Pilot Corp. is Haslam's company while Pilot Travel is the truck-stop chain Buffett controls. 

Jason Miller/Getty Images

News of the federal probe is the latest chapter in an intensifying legal saga between the billionaires. Haslam contends Pilot Travel executives installed by Buffett have changed quarterly-earning accounting methods in a way that will cut the value of his holdings by $1.2 billion if the Tennessee-based billionaire elects to sell Buffett his remaining stake. A trial on Haslam's accounting allegations is set for January in Delaware.

In court filings last month, Berkshire said Haslam offered the payments to influence Pilot Travel executives' short-term business decisions in hopes of juicing quarterly earnings and pumping up his 20% stake's value. One Pilot Travel top executive already has tried to manipulate the books, a Berkshire attorney said at the hearing.

'Touches on fraud'

That executive's move "touches on fraud and other acts of illegality" and is part of a wider problem with Haslam's promises of side bonuses to Pilot Travel employees, Craig Lavoie, a lawyer for the Berkshire-owned company Travel, told Delaware Chancery Judge Morgan Zurn.

Liz Cohen, a spokesman for Haslam, didn't immediately comment on the probe. Haslam is the owner of the National Football League's Cleveland Browns. A spokesman for the prosecutors' office declined to comment.

Buffett's lawyers allege Haslam, whose family owned Pilot Travel until selling it a controlling stake, launched an "illicit scheme" involving secret pledges of bonuses to be paid out of his own pocket to 15 senior executives and other managers. He promised the millions of dollars in "side payments" to the executives to boost short-term profit at the expense of Pilot Travel's long-term value, Berkshire's attorneys allege. 

At the hearing, Berkshire said David Clothier — Pilot Travel's controller — altered some of Pilot Travel's financial records to benefit Haslam after being offered a side bonus.

That's on top of promises Haslam made to senior executives at a country-club dinner in March along with vows of side payments to managers in the truck-stop chain's fuel division. Berkshire noted in earlier court filings decisions made by gas and diesel buyers could have a major effect on short-term earnings.

Phil Keene, a Pilot Travel spokesman, didn't immediately return an email for comment on behalf of Clothier. The executive has been with the company for 31 years and serves as a vice president of finance along with the company's treasurer and controller, according to his Linked-In Page. 

Clothier also couldn't be reached through a call to Pilot Travel's main switchboard.

Zurn said Wednesday she wouldn't let Berkshire's attorneys use its allegations about payments to Clothier and others to bolster its defenses in the accounting case, but didn't bar them from cross-examining Pilot Travel employees about them at trial.

The civil case is Pilot Corp. v. Abel, 2023-1068, Delaware Chancery Court (Wilmington).