The Freedom Fuel Network, a chain of gas stations that launched in July with steeply discounted prices touted by President Donald Trump, has expanded with a new location in Detroit as a lawsuit over the chain's alleged supply heats up in Philadelphia federal court.
The Detroit location, where a gallon of regular unleaded was selling for $3.47, offers the cheapest gas in Michigan, where the average price is $4.09 per gallon, according to the price tracking site GasBuddy. The Harper Avenue station is the first Freedom Fuel station outside of New Jersey and Pennsylvania, where the network has a combined 29 locations.
Freedom Fuel stations are no longer the cheapest gas stations in those states, GasBuddy data shows.
In a court filing this week, a Georgia-based fuel supplier alleged that businessman Syed Kazmi and his company KRSM — which purportedly sold some of the fuel it bought from the supplier to Freedom Fuel stations — are violating a judge's Aug. 28 order by failing to maintain a balance of at least $2.75 million in an M&T Bank checking account as a suit over KRSM's purported failure to pay for the fuel plays out.
Freedom Fuel is not a defendant in the civil complaint filed by the supplier, Mansfield Oil Co. of Gainesville,
In a court filing Thursday, Mansfield Oil Co. told Judge Gerald McHugh that the M&T account is underfunded by about $2.25 million.
That filing also says Mansfield Oil has learned from M&T that, contrary to KRSM's representations that it owns the account, the account "now belongs to some different Kazmi-related entity named 'Universal.'"
"The revelation that the account is now owned by 'Universal' also raises serious concerns that funds are being dissipated while KRSM fails to maintain the $2.75 million amount Ordered by the Court," Mansfield said in the filing.
Urs Broderick Furrer, a lawyer for Mansfield, in an email to CNBC on Thursday, said that in light of the account's status, "we have asked the Court to enforce its order and to permit limited discovery into where the money went."
Discovery is the legal process for parties in a case to exchange information that may be relevant to the issues in dispute.
McHugh, in an order late Thursday afternoon, said, "the parties shall meet and confer and provide to the Court a proposed schedule for discovery no later than September 11."
"Failure to cooperate in this process will result in the Court establishing deadlines without input from counsel," McHugh said in the order.
A lawyer for KRSM, Mauro Tucci, in an email Thursday evening to CNBC noted that the company had filed notice on Monday that it will appeal McHugh's Aug. 28 order to the 3rd Circuit U.S. Court of Appeals.
"In the meantime, KRSM remains in compliance with that order and will fully respond to Mansfield's motion," Tucci said.
Tucci on Aug. 30 had told CNBC in an email that "KRSM disputes the allegations in this case, which is an accounting dispute over fuel invoices mis-priced by Mansfield Oil."
