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Judge in Pilot Flying J fraud trial rejects complaints about racist recordings

The controversial recordings currently remain under seal.

CHATTANOOGA, Tenn., - The records and the recordings remain sealed, but a federal judge has made public his written opinion on why he allowed jurors in the ongoing Pilot Flying J fraud trial to hear racist commentary by the truck stop giant’s former president.

U.S. District Judge Curtis Collier on Monday issued his opinion on the legalities of his decision to allow federal prosecutors to play snippets of secret recordings that captured former Pilot Flying J President Mark Hazelwood and his subordinates using racial epithets, singing along to a racist country song, mocking their boss’ football team and its fans and using profane descriptors of the company’s board members.

The recordings themselves, a transcript of two secret hearings, transcripts of the recordings and nearly every motion filed both by the defense and government remain under seal. USA Today NETWORK-Tennessee is challenging the sealing orders as a violation of the U.S. Constitution.

Media's fight for lifting of sealing orders in Pilot Flying J fraud trial

USA TODAY NETWORK - Tennessee is joined in the effort by the Cleveland Plain Dealer, WBIR-TV in Knoxville, WKYC-TV in Cleveland, and the Chattanooga Times Free Press.

Appellate battleground?

Collier has not yet ruled on that issue, but he refused to seal two documents related to the racist recordings that were filed after he held a hearing earlier this month at which attorney Richard Hollow argued the media’s case for lifting the veil of secrecy.

His decision to allow federal prosecutors Trey Hamilton and David Lewen to play for jurors portions of the secret recordings that included racism, profanity and insults is widely seen as a key appellate issue should Hazelwood and his three co-defendants be convicted of a conspiracy to trick trucking companies into doing exclusive business with the Knoxville firm in return for discounts the sales executives never intended to pay in full.

Feds back more openness in Pilot Flying J fraud trial.

After winning the right in December to play the recordings, Hamilton and Lewen wound up limiting how much they presented to jurors earlier this month, scaling it down to a few minutes of a meeting that spanned hours. Collier gave jurors what is known as a “limiting instruction,” about the recordings.

Collier told jurors Hazelwood’s bad behavior was not evidence that he committed fraud, but they could consider it when pondering what Hazelwood’s defense attorney has been telling them about Hazelwood – that he was too smart a businessman to do anything to take down the firm that was paying him $26.9 million annually at the height of his career with the nation’s largest diesel fuel retailer.

He also told jurors they couldn’t hold the recordings against anyone at the defense table except Hazelwood.

Judge OKs playing of racist recordings

But even with the limiting instruction, the defense teams for Hazelwood, former vice-president Scott “Scooter” Wombold and former account representatives Heather Jones and Karen Mann contended – in motions still under seal – the judge was wrong to let jurors hear the recordings.

The judge, in his Monday opinion, disagreed.

Meeting and drinking

Fourteen sales executives and staffers of the truck stop giant have confessed they had been intentionally cheating trucking companies for at least five years before the April 2013 raid of Pilot Flying J’s Knoxville headquarters. Two others were granted immunity.

One of those garnering immunity – former sales executive Vincent Greco – turned mole when confronted by authorities in 2011. He had a recorder in his pocket when he went to former vice president John “Stick” Freeman’s lake house in Rockwood in October 2012 for a meeting on an upcoming training session at the firm’s headquarters.

The executives – all men – talked openly about the fraud scheme and a decision to train all Pilot Flying J sales staffers on the art of using the manual rebate system to defraud small, unsophisticated trucking firms owned by minorities. They candidly used the nickname “Manwell” and “Manuel” to describe the thievery.

The men were drinking. Hazelwood arrived after the meeting was already underway and had already been drinking. When the meeting devolved into racist commentary and insults about the Cleveland Browns, its fans, the city, Pilot Flying J board members and Oakland, Calif., home to the Oakland Raiders, attorney Rusty Hardin argued on behalf of Hazelwood that his client and his subordinates were no longer Pilot Flying J leaders but a group of drunk friends.

Hardin contended recordings of “racial slurs with friends while drinking and watching a football game in a private home at night” have nothing to do with whether Hazelwood was too business savvy to condone or commit fraud.

Judge: No mere frat party

Collier rejected that claim.

“This characterization overlooks the evidence that all of the people present were Pilot direct sales employees, and they had gathered in that private home for the express purpose of conducting a Pilot management meeting and planning Pilot training activities,” Collier wrote.

“It also ignores the fact that Defendant Hazelwood was the company president and the other attendees were his subordinates. Defendant Hazelwood’s presence, statements, and actions served as significant indicia of acceptable conduct to these subordinates,” he wrote.

Jury hears snippets of racist recordings

“By eliciting evidence that Defendant Hazelwood was too good a businessman and too good a company president to have participated in or tolerated the business risks inherent in discount fraud, Defendant Hazelwood has put these purported facts before the jury as a defense,” he continued.

Collier also rejected claims by Wombold, Jones and Mann that the recordings unfairly smear them in the eyes of the jury. Jones and Mann weren’t at the October meeting. Wombold was. Because of the sealing orders, it is not yet publicly known if Wombold, too, engaged in racially offensive talk.

Collier opined that “no matter how unpleasant it is,” the recordings can’t be held against Jones, Mann and Wombold by the jury and he told them so.

“They argue the jury, similar to the described potential reaction of the public, will be so horrified that it will make its decisions on an improper basis,” Collier wrote. “But the Court cannot instruct the public on how to react to this information. The public at large is free to think, feel, do, or say anything within the bounds of the law in reaction to it. The jury, however, is obligated to follow the Court’s instructions.”

The trial resumes Wednesday.

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