Chattanooga has tentatively been set as the location of an upcoming trial of former Pilot Flying J executives accused in a scheme to rip off unsophisticated trucking companies of promised diesel fuel rebates, court records show.
Prosecutors Trey Hamilton and David Lewen filed on Tuesday in U.S. District Court an agreement with defense attorneys for Pilot President Mark Hazelwood and his seven co-defendants in which the trial will be held in Chattanooga beginning on Halloween.
However, U.S. District Judge Curtis Collier, who is based in Chattanooga, wrote in an order that he would allow the defense to again try to make a case the trial should be moved even farther away from the Knoxville headquarters of Pilot, the nation's largest diesel fuel retailer. A status conference is set for June 29.
Hazelwood and a slew of direct sales managers and staffers have been accused of a plot to shortchange trucking companies millions of dollars in promised diesel fuel rebates in a scheme dating back as early as 2008. Pilot CEO Jimmy Haslam, owner of the Cleveland Browns football team and brother to Tennessee Gov. Bill Haslam, denies involvement and has not been charged.
Hazelwood, former Pilot vice president of direct sales Scott Wombold and six others face charges of conspiracy to commit mail fraud and wire fraud in the alleged rebate scam. Hazelwood also faces charges of witness tampering, and Wombold faces additional charges of lying to federal agents.
Ten other former Pilot employees have pleaded guilty, and the company board of directors has admitted legal responsibility for the scheme in a $92 million criminal enforcement settlement. The company also settled a class-action lawsuit for $87 million.
Collier is new to the case. He was assigned after a Kentucky federal judge, Amul Thapar, tapped to handle it was nominated to an appellate court judgeship earlier this year. Collier's home base is Chattanooga.
Thapar had not ruled on a defense request to move the trial out of East Tennessee altogether when Collier was assigned. Court records show Collier asked both sides in the case if they would agree to holding the trial in Chattanooga, but he left open the possibility for more argument by the defense on the trial's location at the June 29 status conference.
The defense has argued Pilot is so well-known in the East Tennessee community and the diesel fuel rebate scandal so widely publicized that it would be impossible to find unbiased jurors.
The FBI has revealed in court records that the agency had a mole who made recordings, including a sales staff meeting at which employees were trained in how to trick unsophisticated trucking firms. Recordings showed the alleged scheme had been dubbed “Manuel” because some of those firms were owned by Hispanics and because the method employed a “manual” rebate process, according to the FBI search warrant affidavit.