Pilot Flying J fraud scheme criminal, not civil, prosecutor says; deliberations underway

Four former Pilot employees have been standing trial since November.

CHATTANOOGA, Tenn., - It wasn't "sharp business practices" or a civil fraud that the former president of the nation's largest diesel fuel retailer and his subordinates carried out, a federal prosecutor told jurors Wednesday.

Assistant U.S. Attorney Trey Hamilton pushed back Wednesday in U.S. District Court against defense claims that he and fellow prosecutor David Lewen were trying to make a federal criminal case out of what was, at most, hard-scrabble business tactics by former Pilot Flying J President Mark Hazelwood and his subordinates.

Loading ...

"This case, this prosecution, is not about withholding discounts from customers who did not hold up their end of the bargain," Hamilton told jurors. "This case is about concealing, sneaking. This case is about lying to businesses ... This is a criminal fraud case."

MORE: Pilot Flying J trial: Defense for Hazelwood says feds are making a crime out of civil fraud

The case

Hazelwood, former Pilot Flying J vice president Scott "Scooter" Wombold, and former account representatives Heather Jones and Karen Mann have been standing trial since November in U.S. District Court in Chattanooga on charges including conspiracy to commit wire and mail fraud.

They are accused in a five-year plot within the direct sales division of Pilot Flying J to use promises of hefty diesel fuel discounts to lure trucking firms to do business with the truck stop giant and then shorting those firms on what they were promised.

Fourteen former Pilot Flying J executives and staffers have pleaded guilty. Two others were granted immunity. Pilot Flying J's board of directors has confessed criminal responsibility and paid out $92 million in criminal penalties and another $85 million in lawsuit settlements. The board is also picking up the defense bills for its former staffers, including Hazelwood.

Chief Executive Officer Jimmy Haslam, who also owns the Cleveland Browns, has denied knowledge of the fraud scheme and is not charged.

Former Pilot Flying J Vice President of Direct Sales Scott Wombold, right, leaves federal court after being arraigned on charges including conspiracy to commit wire fraud and mail fraud. (Photo: Michael Patrick / News Sentinel)

Agents with the FBI and IRS Criminal Investigation Division raided Pilot Flying J's Knoxville headquarters on Tax Day 2013 after having convinced former sales executive Vincent Greco to secretly record meetings at which the fraud scheme was discussed.

Loading ...

Jurors have heard roughly 20 days of testimony by 26 witnesses, viewed hundreds of exhibits, including incriminating emails, and listened to secret recordings that not only captured fraud talk but also caught Hazelwood and his salesmen making racially offensive comments, using racial epithets, and mocking the Browns, the team's fans and Pilot Flying J board members.

Deliberations underway

Hazelwood's lead attorney, Rusty Hardin, told jurors Tuesday in his closing arguments that Pilot Flying J had every right to "claw back" promised discounts when trucking companies failed to do more business at the truck stop giant.

He called the prosecution government "overreach."

But Hamilton countered that Hazelwood and his subordinates purposely targeted less sophisticated trucking firms for fraud and lied to those firms with impunity. He showed jurors an email from one trucking company owner — Mike Queen — who had no idea he was being defrauded and actually praised Pilot's executives for being so kind to him and helping him get discounts normally reserved for much larger trucking companies.

U.S. District Judge Curtis Collier gave jurors a final round of legal instructions Wednesday just before lunch. The panel is now set to begin deliberations. If a verdict is not reached by Wednesday evening, Collier said he will suspend deliberations until Monday, citing a scheduling conflict with one of the jurors.