Freedom Fuel Network Faces Lawsuit Over Unpaid Fuel Allegedly Used for Discounted Sales

The Freedom Fuel Network made national headlines back in July when President Donald Trump praised the gas station chain for selling fuel at steeply discounted prices. A lawsuit by a Georgia-based fuel supplier alleges that some of the gas sold through the network was never paid for.

In a federal suit filed on Aug. 19, Mansfield Oil of Gainesville said that businessman Syed Kazmi and his company, KRSM, obtained more than 1.1 million gallons of fuel from a Pennsylvania supply terminal between May and July. When Mansfield sent the invoice for the fuel in July, amounting to about $4 million, the bill went unpaid, the suit claims.

The suit further alleges that KRSM sold a portion of the fuel to stations in the Freedom Fuel Network. The suit does not name Freedom Fuel Network as a defendant or accuse the company of wrongdoing.

In early July, Freedom Fuel sold gas at $3.47 a gallon in honor of President Donald Trump's status as 47th president at 25 stations in Pennsylvania and New Jersey — a steep discount to prices at other stations in the area.

Trump touted the move as evidence that American consumers would soon be back to seeing "record low prices" at the pump, despite rising fuel prices in the wake of the U.S. war with Iran.

"On July 3rd, the Freedom Fuel Network will be lowering gas prices at 25 "FREEDOM FUEL" Stations across the Greater Philadelphia Area," Trump posted on Truth Social on July 1. "This Retailer is taking the lead, and others should follow. They are doing this because they love the U.S.A."

Mansfield alleges that unpaid fuel helped enable at least some of the discounted sales.

"KRSM was able to sell such fuel for such low prices and garner such publicity because it never paid Plaintiff for such fuel," the lawsuit stated.

On Aug. 28, the judge overseeing the case partially granted Mansfield's request for a preliminary injunction and ordered the defendants to maintain a bank account balance of at least $2.75 million, according to court records.

The suit does not specify how much of the $4 million worth of gas went to Freedom Fuel stations or indicate whether the stations have a relationship with KRSM or Kazmi.

At least six Freedom Fuel locations in New Jersey are managed by Shamikh Kazmi, brother of defendant Syed Kazmi, according to Politico.

KRSM's legal representative, Mauro Tucci, said the matter boils down to invoice discrepancies.

"KRSM disputes the allegations in this case, which is an accounting dispute over fuel invoices mis-priced by Mansfield Oil," he said in an email to CNBC. "We will not be commenting further on this pending litigation."

White House officials told CNBC the administration has had no contact or dealings with the defendants. Freedom Fuel Network did not respond to a CNBC request for comment.